Cardano deploys the first Hydra Head, 3 years after proof-of-concept

Cardano, a smart contracting platform, has deployed the Hydra Head on the mainnet, marking a significant achievement three years after the proof-of-concept was introduced in 2020.

This development is crucial to Cardano’s ongoing efforts to enhance transaction processing capabilities for decentralized applications (dapps) in the current Basho stage.

Hydra Head is the first of a series of layer-2 protocols designed to bolster the platform’s scalability and adaptability for various use cases, prioritizing swift and cost-effective transactions.

It is particularly important as Cardano gradually improves its mainnet to handle enterprise-level, high-throughput dapps.

The live Hydra Head on Cardano uses secure state channels, which are secure and private within the “Head”. Through these channels, participants can instantly settle transactions off-chain, with confirmation made after the channel is closed.

It is worth noting that the system adopted in Hydra resembles that of the Bitcoin Lightning Network (LN), which also utilizes state channels.

As such, with Hydra, users must first deposit funds. Moreover, Cardano researchers envision connecting these Heads in the future, effectively establishing a network of Hydra Heads.

The development of the Hydra Head began with the implementation of a proof-of-concept protocol called hydra-node. The hydra-node allows developers and individuals to run one or more instances of the hydra-node online, creating a Hydra Head with limited participants. This enables them to simulate and observe the functionality and behavior of the Hydra protocol in a controlled environment for research and development purposes. Thus it lacks user-friendly wallets and interfaces.

This is due to Cardano’s intention to improve transaction processing by focusing on latency, the time taken for a transaction to be confirmed. Hydra’s layer-2 system was created, capable of instant validity. Although targets like “one million TPS” remain aspirational, Cardano aims to provide a flexible system capable of scaling according to demand by increasing the number of Hydra Heads.

Cardano’s Development Journey Ahead

In the short term, Cardano will continue to develop the hydra-node and Hydra Head protocol to establish a solid and stable foundation for real-world applications. These applications will benefit from fast settlement times and low-to-no-cost transactions. 

Additionally, Cardano would continue exploring the support of multiple heads per node, persistence, and Head protocol extensions.

The team is investigating methods to interconnect multiple Hydra Heads, expanding the reach of the layer-2 solution, and efforts are underway to simplify the integration and utilization of Hydra.