August 11, 2025
Building the Hydra Transaction Stream Plugin: Enhancing Cardano’s Layer 2 Capabilities
Sundae Labs Team
Hydra has long represented a critical component of Cardano’s scalability roadmap, offering the ability to execute high-throughput transactions through isomorphic state channels. However, realizing Hydra’s full potential requires more than just theoretical capability—it's about giving devs the tools to integrate Hydra into production-ready, everyday apps like dApps or big enterprise setups
Our recent Catalyst project at Sundae Labs addressed this by developing the Hydra Transaction Stream Plugin—a framework designed to make Hydra more extensible and adaptable. This plugin provides a structured way to manage off-chain transaction streaming, supporting new features while preserving the system’s architectural integrity.
Why the Hydra Transaction Stream Plugin Boosts Scalability
In Hydra’s event-driven architecture, extending functionality often meant making direct changes to the core logic, which introduced complexity and risk. The Transaction Stream Plugin addresses this by offering a standardized interface for asynchronous transaction processing. It’s like adding modular ports to a system, allowing seamless integration without disrupting the main operations. This enables developers to:
- Integrate external services without interrupting Hydra’s workflow
- Implement custom logic for specialized use cases, such as Gummiworm
- Add monitoring and observability through extensible modules
- Replace the storage layer with production-grade databases
By facilitating these capabilities, the plugin positions Hydra not just as a scaling solution, but as a foundation for broader innovation.
Validated Through Real Implementations
To illustrate the plugin’s value, we created practical examples that demonstrate its versatility:
- Hydra Ogmios: By switching from an HTTP API to a binary protocol over a unix socket, we developed Hydra Ogmios—a service that delivers the familiar Ogmios API directly from a Hydra node. This approach eliminates unnecessary JSON serialization and deserialization, improving efficiency.
- Scrolls Integration: Scrolls, developed by TxPipe, is a chain indexing framework. Leveraging the unix socket plugin, we enabled Scrolls to connect to Hydra, allowing existing tools to consume the Hydra event stream seamlessly.
- S3 Backup: For persistence, we built an S3 sink plugin that stores each event in S3 rather than on local disk. This is particularly useful for scenarios prioritizing high availability and observability over maximum throughput, and it can be adapted for other blob storage systems or batched operations.
These implementations show how the plugin serves as an enabling technology, extending beyond a single feature.
Design Considerations and Approach
We began development with a formal Architectural Decision Record (ADR) to establish principles of safety, extensibility, and compatibility with Hydra’s architecture. Key objectives included:
- Processing transaction streams without blocking Hydra’s consensus pipeline
- Maintaining a clear separation between core protocol logic and extension modules
- Providing an API that is expressive yet resistant to misuse
These guided our iterative development and testing, resulting in a framework that supports diverse extensions with minimal overhead.
Next Steps
With the plugin now complete and operational, Sundae Labs will continue exploring its applications and contributing to the Hydra ecosystem. It will play a key role in our longer-term Gummiworm Layer 2 scaling solution. Our goal is to help Hydra evolve into a production-ready platform that supports Cardano’s sustained growth. The Hydra Transaction Stream Plugin represents an important step in that direction.