Requested Amount: 5,000,000 DOT

Date: 28-04-2025

Short Description: Allocate 5M DOT towards DeFi incentives on Hydration, the liquidity backbone of Polkadot. These incentives will be distributed over the course of 12 months to the following initiatives:

• 2M DOT stablecoin incentives;
• 2M DOT LP incentives;
• 1M DOT incentives to mint GIGADOT

Summary

Decentralized Finance (DeFi) plays a foundational role in any healthy blockchain ecosystem, with Polkadot not being an exception. As the broader crypto market enters a phase of maximum competition, strategic incentives are essential to attract users, deepen liquidity, and strengthen the competitive edge of Polkadot’s ecosystem.

This proposal seeks Treasury support to fund DeFi incentives that will catalyze growth, foster adoption of ecosystem based products, and reinforce Polkadot’s position as a foundational layer for open, interoperable finance.

The proposal document begins by laying out the motivation behind the proposed incentives, together with a brief reflection on the success of the previous Polkadot Hydration liquidity campaign which kicked off in June 2024. Building upon that, it examines the three buckets of incentives that we propose for the upcoming 12 months, together with their success metrics. It concludes with some details on the execution of the proposal.

Please read the full proposal here.

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EDIT [12-05-2025]: In order to alleviate concerns around the full 5M DOT leaving custody of the Polkadot Treasury in one go, the funds will be kept in a pure proxy on Hydration with "any" proxy privileges shared between the Hydration Treasury & Polkadot root (7KQx4f7yU3hqZHfvDVnSfe6mpgAT8Pxyr67LXHV6nsbZo3Tm). This ensures:

• Opengov can reclaim unspent funds at any time
• The balance can still be tracked on doTreasury along with all other Treasury stashes

EDIT [15-05-2025]: Here is a table demonstrating how the DOT rewards can be distributed and the target TVL for each of the assets based on a $5 DOT price - as with the previous campaign, these will be adjusted based on ecosystem needs and analysis of their respective performances:

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EDIT [28-05-2025]: After considering feedback from multiple parties and the upcoming launch of Polkadot Hub, we've agreed on the need for a more hollistic approach to liquidity incentivization with a broader view of how these incentives are deployed across different protocols.

We will shortly launch a referendum on Hydration committing to returning 3M of the 5M DOT if this proposal is successfully passed with significant support. The remaining 2M DOT will be distributed over a period of 6 months on Hydration, during which time we will work with Velocity Labs, Parity & Web3 Foundation on a wider and coordinated ecosystem incentivization campaign

This will help the ecosystem have better longer-term sustainability of incentives through the Polkadot Treasury - ensuring maximum support for the launch of Polkadot hub while creating synergies with existing DeFi products like Hydration