Summary:
- The Hydra working group relaunched its monthly sessions with a stronger focus on real-world users and production feedback
- The core team shared updates on the upcoming v.1.3 release, including fee calculation fixes, snapshot improvements, memory optimizations, and progress on partial fan-out
- Key use cases, including DeltaDeFi and Masumi, presented their experience using Hydra as a scaling solution
- Production hardening and developer experience improvements were identified as the key focus areas for the next iteration.
On February 11, 2026, the Hydra working group reconvened with a renewed focus and a clear sense of direction. The monthly sessions return with a sharper purpose: put builders and operators at the center of the conversation.
The format combines focused updates from the core team, direct input from teams running Hydra in production, and open discussion around roadmap priorities.
The goal is to ensure engineering work reflects real-world usage, identify areas for refinement early, and shape the next phase of improvements around concrete adoption of Hydra.
Hydra – layer 2 scalability solution for Cardano
Hydra is a layer 2 scalability solution for Cardano designed to power high-performance DApps by providing:
- Fast finality: near-instant transaction confirmation
- High throughput: the ability to process a high volume of transactions, with throughput orders of magnitude greater than Cardano layer 1
- Near-zero fees: significantly reduced transaction costs
- Improved developer experience: simplifying the building of complex applications on Cardano.
By delivering these properties, Hydra unlocks new use cases for Cardano and is expected to positively impact monthly active users (MAU), total value locked (TVL), and overall transaction volume.
While Leios aims to increase throughput at the layer 1 level over the medium term, Hydra complements it as a production-ready platform already delivering transaction throughput orders of magnitude higher than current layer 1 capacity. More importantly, Hydra provides fast finality and near-zero transaction fees – features that Leios is not designed to address. Decentralized finance (DeFi) applications, for example, depend critically on these characteristics.
Stability, correctness, and long-standing improvements
The Hydra team presented progress toward the upcoming v.1.3 release, which focuses on correctness, performance, and operational safety.
Key fixes and improvements include:
- Incremental commit handling. The team has resolved a bug affecting incremental commits during high layer 2 activity. The issue surfaced through user feedback, highlighting the value of reproducible examples and active feedback loops.
- Memory usage improvements. Adjustments to strictness annotations reduced memory pressure and mitigated a leak observed under load. Further investigation is ongoing, but early results indicate measurable improvement.
- Bounded transactions per snapshot. Snapshots now enforce a limit on the number of confirmed transactions. Previously unbounded snapshots could delay confirmation under heavy load. The change does not alter semantics but produces smaller, more frequent snapshots and more predictable behavior.
- Fee estimation fix. The team has also corrected an inconsistency between benchmarked transaction costs and user-facing estimates. This directly affects users who frequently open and close heads. This change reduces unexpected cost discrepancies and improves trust in cost modeling.
Addressing the ‘too many UTXOs’ issue
One of Hydra’s longest-standing limitations – heads becoming stuck when handling excessive UTXOs – is now under active remediation. The team is implementing a ‘partial fan-out’ mechanism, with a validator prototype in progress.
This work is critical for production deployments that scale UTXOs. Benchmarking and validation against real-world workloads are the next priorities.
Chain sync safety and liveness
Another major improvement addresses node behavior during chain rollbacks and desynchronization. Previously, nodes could continue accepting layer 2 interactions while out of sync, creating unsafe states.
The updated logic:
- Temporarily disables layer 2 inputs while catching up
- Accepts only chain-derived inputs during resync
- Exposes drift metrics to improve observability.
This strengthens Hydra’s liveness guarantees and improves operator awareness.
Developer experience
The team also showcased an example application built using the Hydra SDK. The demo simplifies onboarding by:
- Auto-generating keys
- Providing command scaffolding
- Removing the need to run a local Cardano node by integrating with Blockfrost.
This targets a persistent barrier: reducing setup friction for new builders.
Real-world adoption: DeltaDeFi and Masumi
The most significant signal from the meeting came from teams already running Hydra in production or near-production settings.
DeltaDeFi: scaling a DEX with federated trust
DeltaDeFi presented their architecture and mainnet deployment strategy.
Their goals include:
- Sub-second order placement confirmation
- Zero-fee order modification and cancellation
- API-based trading
- Removal of centralized database dependencies used in earlier layer 1 designs.
Hydra enabled them to achieve these properties while maintaining on-chain custody safeguards. Funds remain on layer 1, while compressed state commitments operate inside a Hydra head.
Notably, DeltaDeFi deliberately adopts a federated trust model among head operators, diverging from a purely adversarial ‘code is law’ assumption. This approach prioritizes operational reliability and institutional accountability.
Friction points cover reliability under thousands of UTXOs, stable open/close and incremental commit flows, and performance under high-frequency order updates.
This feedback reinforced two roadmap priorities: operational stability and ledger performance under scale.
Masumi: micropayments for agent networks
Masumi shared a distinct use case: an agent-to-agent payment network enabling programmable, conditional micropayments.
The platform processes:
- Task-based agent payments
- Dispute windows
- Refund logic
- Nested agent hierarchies.
At present, transaction fees and eight-minute confirmation times on layer 1 make granular payments economically infeasible. Hydra offers a path to:
- True micropayments
- Step-based compensation
- Scalable smart payment flows.
Addressing the current state and opportunities, Masumi’s priorities include implementing partial fan-out to ensure safe resolution, improving performance with thousands of UTXOs, and ensuring dispute-compatible smart contract execution within Hydra.
This use case extends beyond simple transfers – it requires conditional logic, dispute resolution, and high transaction volume, making it a very good fit for Hydra’s design and features.
Roadmap: priorities and direction
Looking ahead, the roadmap centers on hardening Hydra for production use. Immediate efforts focus on completing and benchmarking partial fan-out, strengthening reliability under sustained load, and improving performance when handling larger UTXO sets. Alongside this, the team will continue refining developer experience and observability to make debugging and integration more straightforward.
To ensure priorities reflect real-world needs, the team will circulate a structured feedback questionnaire and use monthly working group sessions to gather direct input. This will lay the groundwork for a more structured, community-driven model, with the longer-term vision of forming a Hydra alliance – a technical and product steering community that helps guide priorities and trade-offs. Additional funding avenues, including potential open source committee support, are also under consideration to strengthen ecosystem participation.
Conclusion
Hydra is steadily moving to operational maturity. The renewed working group format, combined with structured feedback and broader ecosystem engagement, reflects this shift.
As reliability, performance, and developer experience move to the forefront, Hydra’s direction will increasingly be shaped by those building and running it. Continued collaboration – through shared metrics, reproducible cases, tooling contributions, and roadmap input – will define the next phase of Hydra’s evolution.
Hydra is a force multiplier for Cardano, enabling high-performance DApps with fast finality, high throughput, near-zero fees, and an improved developer experience. By bringing these use cases to Cardano, Hydra will positively impact a number of monthly active users, total value locked, and transaction volume.
To get involved, see the repository and join discussions on Discord. The next meeting will be held at the end of March – follow IOG on X for the updates.
Disclaimer: Product roadmaps and technical updates are provided for informational purposes only. Specific features and release timelines are subject to change at the Company’s sole discretion.
