Hydro is a transport protocol layer for DEX (decentralized exchanges). Though Decentralized exchanges provide many advantages used as non-custodial trading, reduced (to even none) counter-party risk and transparency, they still account for very less trading volumes. Hydro says that this is mostly due to lack of incentives and a high barrier to entry. The Hydro protocol will solve this by using a Federated system to share the liquidity between major decentralized exchanges. Users can stake their tokens to enter a liquidity pool. The staked tokens can be retrieved by providing liquidity. Market makers also get paid in HOT tokens.