Full End-to-End Hydra Flow (Devnet + kuber-hydra)

This guide is for developers who want to try Cardano Hydra Layer 2 quickly, without spending days wiring node APIs, keys, and transaction flow manually.

Why use Hydra L2?

Hydra gives you a fast off-chain execution environment (a Hydra Head) while still settling final results back to Cardano L1.

Typical use-cases:

• High-frequency transactions: many transfers between participants with lower latency.
• Interactive apps: games, micro-payments, and collaborative workflows where quick finality matters.
• Batching L1 interaction: run activity in Hydra, settle net result to L1 at close/fanout.

In simple terms: Hydra is useful when your users need speed and responsiveness, but you still want L1 settlement guarantees.

Why use kuber-hydra?

Directly integrating with Hydra + Cardano can be operationally heavy. kuber-hydra makes this easier by exposing a familiar API for both L1 and Hydra workflows.

With kuber-hydra, developers can:

• Reuse a consistent transaction-building model.
• Use simple HTTP relay endpoints for Alice/Bob/Carol.
• Build, sign, submit, and query with less low-level boilerplate.
• Start from a working devnet and iterate quickly.

What this full example demonstrates

The script runs the complete lifecycle end-to-end:

1. Initialize/open head
2. Fund participants if needed
3. Commit UTxOs from Alice, Bob, Carol
4. Submit in-head transactions
5. Close head and fanout
6. Verify L1 settlement

This gives you a realistic baseline for production-oriented flows: open -> transact -> close -> settle.

Prerequisites (minimal)

• Docker running locally
• Node.js 18+ (or compatible)
• kuber repository cloned locally
• Devnet ports available:
  • 8082 (Alice relay)
  • 8083 (Bob relay)
  • 8084 (Carol relay)

Quick start (easy path)

1) Start a clean devnet

From kuber-hydra/devnet:

./reset-cluster.sh
docker compose ps

You do not need to run each setup script manually. reset-cluster.sh already does it for you.

Behind the scenes it:

• Recreates runtime and credentials
• Starts cardano-node
• Seeds participant wallets
• Publishes Hydra scripts
• Starts all services (cardano-node, hydra-node-1..3, kuber-hydra-1..3)

2) Create a local example folder

From the repository root (kuber):

mkdir -p kuber-hydra/hydra-example
cd kuber-hydra/hydra-example

3) Add package.json and install dependencies

1. Create a package.json in kuber-hydra/hydra-example using Example package.json.
2. Install dependencies:

pnpm install

4) Add the script file

Create hydra-e2e.ts in kuber-hydra/hydra-example and paste Full E2E example code.

5) Run the full E2E flow

From kuber-hydra/hydra-example:

pnpm run e2e

What you should expect

On success, you will see logs showing:

• Head reached Open
• Transactions submitted inside Hydra
• Head moved to Closed
• fanout completed
• Final L1 balances printed for Alice/Bob/Carol

This confirms the full L2-to-L1 cycle worked.

Script behavior (high level)

Network and parties

The script targets three relays:

• Alice: http://localhost:8082
• Bob: http://localhost:8083
• Carol: http://localhost:8084

Signing keys are loaded from:

• kuber-hydra/devnet/credentials/alice-hydra.sk
• kuber-hydra/devnet/credentials/bob-hydra.sk
• kuber-hydra/devnet/credentials/carol-hydra.sk

Deterministic start

At flow start, ensureFreshDevnetHead() executes:

cd kuber-hydra/devnet && ./reset-cluster.sh

Then it waits until all three relays respond to queryHeadState.

Head preparation

ensureHeadOpenAndCommitted() handles different initial states:

• Open: proceeds directly
• Closed: waits for contestation deadline, tries fanout, verifies settlement, exits as recovered flow
• Idle/other: initializes head and commits missing parties

If a party does not have enough L1 balance, the script funds from faucet before commit.

In-head transactions

After head is open, the script performs:

• Alice -> Bob: 1A
• Bob -> Carol: 1A
• Carol -> Alice: 1A

It retries on transient Hydra submission timing issues (snapshot timing / cluster timing mismatches).

Close and fanout

The script:

1. Ensures close collateral exists on L1
2. Attempts close via Alice, then Bob, then Carol relay
3. Waits for Closed
4. Waits until contestation deadline
5. Calls fanout

Settlement verification

Finally, it queries each party L1 address and logs:

• UTxO count
• Total ADA settled after fanout

How this helps your own project

Use this example as a template for:

• Opening a head for a known participant set
• Committing initial user liquidity
• Running your app logic as Hydra transactions
• Settling final state back to L1

A practical approach is to keep your domain logic separate, and call kuber-hydra only for lifecycle + transaction operations.

Troubleshooting

• If relays are not reachable, run docker compose ps in kuber-hydra/devnet and ensure ports 8082-8084 are up.
• If close fails due to collateral, re-run and allow faucet funding to complete.
• If a previous head is stuck in Closed, the script tries automatic recovery/fanout; if recovery fails, run ./reset-cluster.sh and retry.

Jump to code sections

• Full E2E example code
• Example package.json

Full E2E example code

Back to Quick start

import { readFileSync } from "fs";
import { execSync } from "child_process";
import { loadCrypto, Ed25519Key, Value } from "libcardano";
import { ShelleyWallet, Cip30ShelleyWallet } from "libcardano-wallet";
import { KuberHydraApiProvider } from "kuber-client"; // Adjust path as needed
import { UTxO } from "libcardano/cardano/serialization";

// Set your work directory and paths according to your local setup. 
// This example assumes a specific structure for the devnet, so adjust as necessary for your environment. 
const WORK_DIR = process.env.HOME + "/work/kuber/kuber-hydra/devnet";

const hydraAlice = new KuberHydraApiProvider("http://localhost:8082");
const hydraBob = new KuberHydraApiProvider("http://localhost:8083");
const hydraCarol = new KuberHydraApiProvider("http://localhost:8084");

type PartyConfig = {
  name: string;
  skPath: string;
  hydra: KuberHydraApiProvider;
};

type PartyRuntime = PartyConfig & {
  wallet: Cip30ShelleyWallet;
  address: string;
  pubKeyHex?: string;
};

const PARTIES: PartyConfig[] = [
  { name: "Alice", skPath: WORK_DIR + "/credentials/alice-hydra.sk", hydra: hydraAlice },
  { name: "Bob", skPath: WORK_DIR + "/credentials/bob-hydra.sk", hydra: hydraBob },
  { name: "Carol", skPath: WORK_DIR + "/credentials/carol-hydra.sk", hydra: hydraCarol },
];

const DEVNET_RELAYS = [8082, 8083, 8084];

async function waitForRelayHealth(timeoutMs: number = 120000): Promise<void> {
  const start = Date.now();

  while (Date.now() - start < timeoutMs) {
    const checks = await Promise.all(
      DEVNET_RELAYS.map(async (port) => {
        try {
          const state = await new KuberHydraApiProvider(`http://localhost:${port}`).queryHeadState();
          return typeof state?.state === "string";
        } catch {
          return false;
        }
      }),
    );

    if (checks.every(Boolean)) {
      return;
    }

    await new Promise((resolve) => setTimeout(resolve, 1000));
  }

  throw new Error(`Timed out waiting for relays ${DEVNET_RELAYS.join(", ")} to become healthy.`);
}

async function ensureFreshDevnetHead(): Promise<void> {
  console.log("Resetting devnet at flow start for deterministic E2E execution...");
  execSync(`cd ${WORK_DIR} && ./reset-cluster.sh`, { stdio: "inherit" });
  await waitForRelayHealth();
}

async function queryUtxosByAddress(address: string): Promise<UTxO[]> {
  const utxos = await hydraAlice.l1Api.queryUTxOByAddress(address);
  console.log(`\nUTxOs for address ${address}:`);
  if (utxos.length === 0) {
    console.log("No UTxOs found for this address.");
    return [];
  }
  utxos.forEach((utxo) => {
    const txIn = utxo.txIn;
    const balance = Number(utxo.txOut.value.lovelace) / 1_000_000; // Convert from lovelace to ADA
    console.log(`${txIn.txHash.toString("hex")}#${txIn.index} - ${balance} ADA`);
  });
  return utxos;
}

async function getTotalAdaBalanceByAddress(address: string): Promise<number> {
  const utxos = await hydraAlice.l1Api.queryUTxOByAddress(address);
  let totalBalance = 0;
  utxos.forEach((utxo) => {
    totalBalance += Number(utxo.txOut.value.lovelace);
  });
  console.log(`\nTotal balance for address ${address}: ${totalBalance / 1_000_000} ADA`);
  return totalBalance / 1_000_000;
}

async function getCip30WalletFromSkFile(skFilePath: string, hydra: KuberHydraApiProvider): Promise<Cip30ShelleyWallet> {
  const skFile = readFileSync(skFilePath, "utf-8");
  const signingKey = await Ed25519Key.fromCardanoCliJson(
    JSON.parse(skFile),
  );
  const shelleyWallet = new ShelleyWallet(signingKey);
  return new Cip30ShelleyWallet(hydra, hydra, shelleyWallet, 0);
}

async function waitForBalance(address: string, minimumBalance: number, timeout: number = 120000): Promise<void> {
  const startTime = Date.now();
  while (Date.now() - startTime < timeout) {
    const balance = await getTotalAdaBalanceByAddress(address);
    if (balance >= minimumBalance) {
      console.log(`Balance of ${balance} ADA reached for address ${address}`);
      return;
    }
    console.log(`Current balance ${balance} ADA is less than required ${minimumBalance} ADA. Retrying in 1 second...`);
    await new Promise((resolve) => setTimeout(resolve, 1000)); // Wait for 1 second before retrying
  }
  throw new Error(`Timeout: Balance did not reach ${minimumBalance} ADA for address ${address} within ${timeout / 60000} minutes.`);
}

async function fundWalletWithFaucet(walletAddress: string, minimumBalanceAda: number = 10, fundingAda: number = 10) {

  const faucetSkPath = WORK_DIR + "/runtime/cardano-node/faucet.sk";
  const faucetCip30Wallet = await getCip30WalletFromSkFile(faucetSkPath, hydraAlice);
  const faucetAddress = (await faucetCip30Wallet.getChangeAddress()).toBech32();
  console.log("Faucet Address:", faucetAddress);
  await queryUtxosByAddress(faucetAddress);

  // Get total balance of wallet before funding
  const balance = await getTotalAdaBalanceByAddress(walletAddress);

  if (balance >= minimumBalanceAda) {
    console.log(`Wallet already has ${balance} ADA, skipping funding.`);
    return;
  }

  const txBuilder = {
    selections: [
      faucetAddress, // Funding from faucet address
    ],
    outputs: [{ address: walletAddress, value: `${fundingAda}A` }],
    changeAddress: faucetAddress,
  };
  const buildResult = await hydraAlice.l1Api.buildTx(txBuilder);
  const signResult = await faucetCip30Wallet.signTx(buildResult.cborHex);
  await hydraAlice.l1Api.submitTx(signResult.updatedTxBytes.toString("hex"));
  console.log("Submitted funding transaction hash:", buildResult.hash);

  // // // Wait for the transaction to be confirmed
  await waitForBalance(walletAddress, minimumBalanceAda, 120000);

}

async function getMaxUtxoAdaByAddress(address: string): Promise<number> {
  const utxos = await hydraAlice.l1Api.queryUTxOByAddress(address);
  if (utxos.length === 0) return 0;
  const maxLovelace = utxos.reduce((max, utxo) => {
    const value = Number(utxo.txOut.value.lovelace);
    return value > max ? value : max;
  }, 0);
  return maxLovelace / 1_000_000;
}

async function ensureCloseCollateral(parties: PartyRuntime[]): Promise<void> {
  const minimumLargestUtxoAda = 8;

  for (const party of parties) {
    const largestUtxoAda = await getMaxUtxoAdaByAddress(party.address);
    if (largestUtxoAda >= minimumLargestUtxoAda) {
      continue;
    }

    console.log(
      `${party.name} largest L1 UTxO is ${largestUtxoAda} ADA (< ${minimumLargestUtxoAda} ADA). Funding collateral buffer...`,
    );
    await fundWalletWithFaucet(party.address, 12, 12);

    const updatedLargestUtxoAda = await getMaxUtxoAdaByAddress(party.address);
    if (updatedLargestUtxoAda < minimumLargestUtxoAda) {
      throw new Error(
        `${party.name} still lacks a large-enough collateral UTxO after funding (largest=${updatedLargestUtxoAda} ADA).`,
      );
    }
  }
}

async function commitToHydraHead(cip30Wallet: Cip30ShelleyWallet, hydra: KuberHydraApiProvider, partyName: string) {
  // Select UTxOs to commit (e.g., the first one with a value greater than 4 ADA)
  const walletAddress = (await cip30Wallet.getChangeAddress()).toBech32();
  const l1Utxos = await queryUtxosByAddress(walletAddress);
  const selectedUtxos = l1Utxos.filter((x) => x.txOut.value.greaterThan(Value.fromString("4A")));
  if (selectedUtxos.length === 0) {
    throw new Error(`Not enough balance on ${walletAddress} in L1 chain for commit example`);
  }
  console.log(`\nSelected UTxOs for commit (${partyName}):`);
  selectedUtxos.forEach((utxo) => {
    const txIn = utxo.txIn;
    const balance = Number(utxo.txOut.value.lovelace) / 1_000_000; // Convert from lovelace to ADA
    console.log(`${txIn.txHash.toString("hex")}#${txIn.index} - ${balance} ADA`);
  });

  const txIn = selectedUtxos[0].txIn;
  const utxoToCommit = [`${txIn.txHash.toString("hex")}#${txIn.index}`];

  // Build the commit transaction using Hydra API
  const commitResult = await hydra.commit({ utxos: utxoToCommit });
  console.log(`Transaction to be signed (${partyName}):`, commitResult.hash);

  // Sign the transaction using the CIP-30 wallet
  const signResult = await cip30Wallet.signTx(commitResult.cborHex);

  // Submit the signed transaction to the L1 chain
  await hydra.l1Api.submitTx(signResult.updatedTxBytes.toString("hex"));
  console.log(`Submitted Commit transaction hash (${partyName}):`, commitResult.hash);

  // // Wait for the transaction to be confirmed and head state to change
  await hydra.l1Api.waitForUtxoConsumption(selectedUtxos[0].txIn, 280000);
  console.log("Commit transaction confirmed.");

}

async function buildPartyRuntime(): Promise<PartyRuntime[]> {
  const runtime: PartyRuntime[] = [];
  for (const party of PARTIES) {
    const wallet = await getCip30WalletFromSkFile(party.skPath, party.hydra);
    const address = (await wallet.getChangeAddress()).toBech32();
    const pubKeyHex = wallet?.shelleyWallet?.paymentKey?.public?.toString("hex");
    runtime.push({ ...party, wallet, address, pubKeyHex });
  }
  return runtime;
}

async function prepareHeadForTestFlow(parties: PartyRuntime[]): Promise<void> {
  const initialHeadState = await hydraAlice.queryHeadState();
  console.log("Current head state:", initialHeadState.state);

  if (initialHeadState.state !== "Idle") {
    throw new Error(`Expected Idle after reset, got ${initialHeadState.state}`);
  }

  await hydraAlice.initialize(true);
  console.log("Hydra head initialized from Idle.");

  for (const party of parties) {
    console.log(`${party.name} Address:`, party.address);
    await fundWalletWithFaucet(party.address);
    await commitToHydraHead(party.wallet, party.hydra, party.name);
  }

  const openWaitMs = await hydraAlice.waitForHeadState("Open", 300000, true, 3000);
  console.log(`Hydra head is OPEN (waited ${openWaitMs} ms).`);
}

async function submitHydraTransactions(parties: PartyRuntime[]): Promise<void> {
  const byName = Object.fromEntries(parties.map((x) => [x.name, x])) as Record<string, PartyRuntime>;

  const txPlan = [
    { from: "Alice", to: "Bob", value: "1A" },
    { from: "Bob", to: "Carol", value: "1A" },
    { from: "Carol", to: "Alice", value: "1A" },
  ];

  console.log("Submitting Hydra head transactions between all parties...");
  for (const tx of txPlan) {
    const sender = byName[tx.from];
    const receiver = byName[tx.to];
    const maxRetries = 8;
    let submittedHash = "";

    for (let attempt = 1; attempt <= maxRetries; attempt++) {
      try {
        const builtTx = await hydraAlice.buildWithWallet(sender.wallet, {
          selections: [sender.address],
          outputs: [{ address: receiver.address, value: tx.value }],
          changeAddress: sender.address,
        });
        const signedTx = await sender.wallet.signTx(builtTx.cborHex, true);

        try {
          await hydraAlice.submitTx(signedTx.updatedTxBytes.toString("hex"));
        } catch (error: any) {
          const type = error?.data?.type;
          const message = String(error?.data?.message ?? error?.message ?? "");
          const isAcceptedButReportedAsError =
            type === "TxSubmissionError" && message.includes("Request created");
          if (!isAcceptedButReportedAsError) {
            throw error;
          }
          console.log(`Hydra submit accepted by relay with async response (${tx.from} -> ${tx.to}).`);
        }

        submittedHash = builtTx.hash ?? "";
        console.log(`Hydra tx submitted: ${tx.from} -> ${tx.to} (${tx.value}), hash=${submittedHash}`);
        break;
      } catch (error: any) {
        const type = error?.data?.type;
        const message = String(error?.data?.message ?? error?.message ?? "");
        const isSnapshotTimingError =
          type === "TxSubmissionError" && (message.includes("SnapshotConfirmed") || message.includes("NetworkClusterIDMismatch"));

        if (!isSnapshotTimingError || attempt === maxRetries) {
          throw error;
        }

        console.log(`Hydra tx retry (${attempt}/${maxRetries}) for ${tx.from} -> ${tx.to} due to snapshot timing. Waiting 4s...`);
        await new Promise((resolve) => setTimeout(resolve, 4000));
      }
    }

    if (!submittedHash) {
      throw new Error(`Failed to submit Hydra tx from ${tx.from} to ${tx.to}`);
    }

    await new Promise((resolve) => setTimeout(resolve, 2000));
  }

  const headUtxos = await hydraAlice.queryUtxos();
  console.log(`Hydra head UTxO count after transfers: ${headUtxos.length}`);
}

async function closeAndFanoutHead(parties: PartyRuntime[]): Promise<void> {
  const beforeClose = await hydraAlice.queryHeadState();
  if (beforeClose.state !== "Open") {
    throw new Error(`Expected head state Open before close, got ${beforeClose.state}`);
  }

  await ensureCloseCollateral(parties);

  console.log("Closing Hydra head...");
  const closeProviders = [
    { name: "Alice relay", hydra: hydraAlice },
    { name: "Bob relay", hydra: hydraBob },
    { name: "Carol relay", hydra: hydraCarol },
  ];

  let closeSucceeded = false;
  let closeErrors: string[] = [];

  for (const provider of closeProviders) {
    try {
      console.log(`Attempting close via ${provider.name}...`);
      await provider.hydra.close(true);
      closeSucceeded = true;
      console.log(`Close accepted via ${provider.name}.`);
      break;
    } catch (error: any) {
      console.log(error);
      const message = String(error?.message ?? "Unknown close error");
      closeErrors.push(`${provider.name}: ${message}`);

      const currentState = await hydraAlice.queryHeadState();
      if (currentState.state === "Closed") {
        closeSucceeded = true;
        console.log(`Head reached Closed after close attempt on ${provider.name}.`);
        break;
      }

      console.log(`Close failed via ${provider.name}.`);
    }
  }

  if (!closeSucceeded) {
    throw new Error(`Unable to close head. Errors: ${closeErrors.join(" | ")}`);
  }

  const closedWaitMs = await hydraAlice.waitForHeadState("Closed", 300000, true, 3000);
  const afterClose = await hydraAlice.queryHeadState();
  console.log(`Hydra head state after close: ${afterClose.state} (waited ${closedWaitMs} ms).`);
  if (afterClose.state !== "Closed") {
    throw new Error(`Close failed. Expected Closed, got ${afterClose.state}`);
  }

  // Wait until the contestation deadline has passed before attempting fanout.
  // The head may expose contestationDeadline in different fields; check both.
  const headInfo: any = await hydraAlice.queryHead();
  const contestationIso = headInfo?.contents?.contestationDeadline ?? headInfo?.postChainTx?.contestationDeadline ?? null;
  if (contestationIso) {
    const contestationDate = new Date(contestationIso);
    const now = new Date();
    if (contestationDate > now) {
      const waitMs = contestationDate.getTime() - now.getTime() + 1000; // add small buffer
      console.log(`Waiting ${Math.ceil(waitMs / 1000)}s for contestation deadline to pass before fanout...`);
      await new Promise((r) => setTimeout(r, waitMs));
    }
  } else {
    // fallback short wait if contestation deadline not available
    console.log("No contestationDeadline found on head — sleeping 5s before fanout as fallback.");
    await new Promise((r) => setTimeout(r, 5000));
  }

  console.log("Running fanout...");
  await hydraAlice.fanout(true);
  console.log("Fanout request completed.");
}

async function verifyL1Settlement(parties: PartyRuntime[]): Promise<void> {
  console.log("Verifying L1 UTxOs after fanout...");
  for (const party of parties) {
    const utxos = await hydraAlice.l1Api.queryUTxOByAddress(party.address);
    const totalLovelace = utxos.reduce((acc, utxo) => acc + Number(utxo.txOut.value.lovelace), 0);
    const totalAda = totalLovelace / 1_000_000;
    console.log(`${party.name} L1 settlement: ${utxos.length} UTxO(s), ${totalAda} ADA at ${party.address}`);
  }
}

async function runHydraE2EFlow() {
  await loadCrypto();
  await ensureFreshDevnetHead();

  const parties = await buildPartyRuntime();
  await prepareHeadForTestFlow(parties);

  await submitHydraTransactions(parties);
  await closeAndFanoutHead(parties);
  await verifyL1Settlement(parties);

  const finalHeadState = await hydraAlice.queryHeadState();
  console.log("Final head state:", finalHeadState.state);
}

runHydraE2EFlow();

Example package.json

Back to Quick start

{
  "name": "hydra-example",
  "version": "1.0.0",
  "private": true,
  "license": "MIT",
  "dependencies": {
    "libcardano": "2.2.8",
    "libcardano-wallet": "2.2.8",
    "kuber-client": "3.3.1"
  },
  "devDependencies": {
    "@types/node": "^25.2.3",
    "tsx": "^4.20.3",
    "typescript": "^5.8.3"
  },
  "scripts": {
    "e2e": "tsx hydra-e2e.ts"
  }
}