# Phase III: Decentralizing Hydra Node Allocation

* **Objective**: Decentralize the Hydra Node allocation process with Providers, utilizing Plutus smart contracts on Cardano to manage critical operations, ensuring transparency and security in line with Cardano’s principles.
* **Tasks**:
  * Transition the Hydra Node allocation algorithm from off-chain to smart contracts.
  * Migrate payment processes (fee collection, reward distribution) to smart contracts.

<figure><img src="/files/UjIMwjezSOosulyCg3dA" alt=""><figcaption></figcaption></figure>

**Figure 01**: Architecture diagram for the decentralized Hydra Node allocation process in Hydra HUB.


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