In the latest discussion #264 (https://hydration.subsquare.io/posts/264) it is clear the HDX has suffered the most due to underperforming assets. This has resulted in a large H2O accumulation and lower HDX liquidity. I would like to see a discussion/action around recovering the losses, recovering depth and using the accumulated H2O.

Current situation is the protocol has around 44 HDX positions resulting in 126million HDX and 150k H2O (total H2O is equivalent to around 78M HDX)

ref101 (https://hydration.subsquare.io/referenda/101) was intended to deepen HDX liquidity in preparation for HDX supply/borrow by adding 154M HDX to the existing supply. As it is now only 128M and below what we want to add this shows how much liquidity has been lost like highlighted in discussion #264

Thoughts for rectification of the current situation:

• Pull all protocol HDX liquidity and replace with a position around 200M HDX (this is 126M HDX + H2O HDX equivalent)
• DCA H2O into HDX

Concerning the DCA, we currently have an ongoing one which is around 1500 H2O a day and buys per block. No regard is taken towards HDX price.

An alternative approach (suggested by Giraffe in a discussion we had around this) could be to stop the current one and do a rolling DCA:

• H2O -> HDX
• Amount per trade: 131 H2O
• Frequency: 2,400 blocks (4h) -> 786 H2O/day
• Max price: 0.00303958 H2O per HDX = 1.60x todays spot ≈ $0.0155 (min amount out 43,098 HDX)
• Max retries: 17 (tolerates 6 months above ceiling, worst single pause 3 months) - or 16 (3 months tolerance, 1.5 months worst)

Feedback would be appreciated 🫡

Last note: While I have created this discussion without any request or input from the team if there is support for this then I would love help/or implementation from the team to get the referendum made as the call would be too technical for me then the previous ones I have done.