H2O Fundamentals: Governance and Tokenomics

What is H2O?

  • H2O is a stable asset for decentralized data marketplaces.

  • H2O is a friendly fork of Reflexer’s stable asset, RAI.

  • Initially, the OCEAN token will back H2O, but other next-generation data tokens will back H2O later this year.

  • H2O will act as a medium of exchange and unit of account.

  • H2O removes the pricing variability in decentralized data marketplaces

    To summarize, H2O will help solve multiple issues in decentralized data marketplaces, such as capital efficiency, stability in transactional operations, and efficient price discovery.

POSEIDON is H2O’s governance token. Poseidon has multiple essential functions for H2O:

  • It helps bootstrap the development of the ecosystem and incentivize the liquidity of the protocol.

  • It governs the initial parameters of the protocol.

  • Users who stake H2O to help protect the protocol will receive POSEIDON in exchange. If H2O protocol goes underwater, POSEIDON stakers are its first line of defense.

  • If this isn’t enough to maintain the solvency of the protocol, it will hold debt auctions that mint new POSEIDON and auction it in exchange for H2O to act as a second line of defense.

    An essential characteristic of H2O is that it will go through a governance minimization process post-launch. It will be a multistage process that will limit the governance control of the core contracts. Simply put, the core team will have little to no control over H2O. At the end of this process, POSEIDON holders will decide how to remove any remaining governance controls in H2O or continue to manage components they deem too challenging to ungovern.


  • 25% of the total supply will be allocated to the H2O protocol treasury for contributor compensation, treasury raises and swaps
  • 15% of the total supply will be distributed to New Order DAO, who is a permissionless incubator that built H2O
  • 4% of the total supply will be airdropped to New Order stakers as part of bootstrapping H2O activity via distribution to ecosystem members ]
  • 5% will be sold to investors to fund runway and operations
  • 4% of the total supply will be airdropped to OCEAN holders to incentivize H2O protocol use and distribute governance to ecosystem members.
  • 3% of the total supply will be allocated to OceanDAO
  • 10% of the supply will be distributed to the core team that founded the protocol and will lead operations. These tokens will be subject to a 1-year cliff (10% unlock), then a linear vest over 3 years.
  • 7% of the total supply will be allocated as Reflexer community rewards, further distributing governance among ecosystem members
  • 15% will be allocated as liquidity mining rewards hosted by New Order
  • 12% will be distributed to Ocean Protocol data farmers as liquidity incentives


H2O’s launch marks a new era for the decentralized data marketplace. It is in a prominent position to affect the data tokenization market positively. Surely, H2O will help promote efficient capital usage and participation in decentralized data markets.

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