The Polkadot Treasury has allocated 2 million DOT tokens, valued at approximately $14.4 million, to benefit the DeFi project Hydration, aimed at enhancing liquidity and efficiency. The Omnipool platform, which provides single-sided liquidity provisioning, will receive these tokens. This announcement, dated June 10, 2024, aligns with Polkadot's mission to improve and expand its network.

At the time of the announcement, a single DOT was priced at $6.44.

The fund allocation will occur in two phases, each distributing tokens worth $1 million to support Hydration's development. The first phase will release 1 million DOT tokens to introduce new liquidity to Polkadot’s ecosystem. The second phase will distribute another 1 million tokens to bolster the Hydration Omnipool and enhance the liquidity layer for the Polkadot 2.0 ecosystem.

The first phase offers liquidity providers (LPs) rewards with an annual percentage yield (APY) exceeding 200%. Omnipool’s single-sided LP design facilitates this reward system, allowing users to earn rewards by depositing a single asset or participating in the incentive farm with stablecoins and Bitcoin (BTC).

The second phase will supplement the 690,000 DOT tokens already allocated to the Hydration Omnipool.

The overarching goal is to advance liquidity management on the Polkadot network, managed by OpenGov and the Polkadot Protocol.

Jakub Gregus, co-founder of Hydration, described this as a pivotal moment, emphasizing the critical role of the liquidity injection for the Polkadot ecosystem's health. He highlighted Omnipool’s design for its accessibility and efficiency in crypto trading, and noted that the Polkadot Treasury’s fund allocation demonstrates their potential future impact.

Despite the announcement, DOT, Polkadot’s native cryptocurrency, has seen little benefit. It has dropped by 0.40% in the past 24 hours, 8.12% over the last 7 days, and 3.98% in the past 30 days. While the market cap remains above $3 billion, it has slightly dipped. However, the 24-hour volume has increased by 26.56%.

This development follows Pudgy Penguins’ collaboration with Mythical Games to launch a Web3-based mobile game on the Polkadot network, set for release in 2025. Two years ago, Polkadot marked its 4-year anniversary with the unanimous approval of a JAM upgrade.

Polkadot is expected to execute the allocation soon, though the timeline for both phases has not been shared.