HYDRO: LSD and LSDFi Infrastructure on Injective

2026-07-28

HYDRO is a liquid staking and LSDFi infrastructure platform on the Injective blockchain. It allows users to stake INJ and receive a liquid staking derivative while also accessing LSDFi primitives: specifically a lending module where users can borrow against their staked positions. Injective is a Cosmos SDK chain with both CosmWasm contract support and EVM compatibility, giving it a dual-VM architecture that is relatively rare in the blockchain ecosystem.

Revenue flows from the lending module, where borrowers pay interest on loans collateralised by liquid staking tokens. The protocol retains a share of borrow interest as revenue, with the remainder flowing to USDC and stablecoin lenders who supply the capital. The liquid staking component earns a performance fee on validator rewards, following the standard pattern of deducting a fee before crediting holders through exchange-rate appreciation.

Injective's dual CosmWasm and EVM architecture required the adapter to read from two different RPC layers and merge the results. The liquid staking module runs as a CosmWasm contract, while the lending module is EVM-compatible. This cross-VM data aggregation pattern was technically interesting: it required querying both the Cosmos-style RPC for staking data and the Ethereum-compatible RPC for lending events, then combining them into a single daily fee figure. All-time fees stand at $15,900 with about $691 in the past seven days.

Website: hydroprotocol.finance · Twitter: @hydro_fi