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So i have few questions here, which i wasn't able to find direct answers to.

  1. Does it cost ADA from mainchain to activate/close a Hydra head ?
  2. Does Hydra have similar "channel limits" as Lightning network does? as in i create a head and set limit as 5000 ADA, can that number be adjusted afterwards?
  3. When im interacting with Hydra in general in which circumstances/possibilities i will be needing to use Cardano Mainnet to send/transfer/ funds.

I Tried to ask questions best to my ability based on my somewhat limited tech understanding.

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You're technical understanding seems to be quite fine and let me point you to some additional resources / answer your questions:

  1. Yes. Opening and closing a Hydra head costs ADA. It depends greatly on how many participants a Head has and how much funds need to be distributed. Also, different versions of the protocol will cost differently. These benchmarks are done on each commit to master and should give you a rough idea how much these transactions cost: https://hydra.family/head-protocol/benchmarks/transaction-cost/

  2. There is no limit in how much value you can store in a Hydra Head. However, we do limit to only commit a single UTxO per party right now (this limit will be removed eventually)

  3. The hydra-node will need a connection to the Cardano network and submit transactions for opening/closing a Head. Furthermore, in the opening of a Hydra Head, the funds to be made usable in it will need to be "comitted" to the head in a layer 1 (mainchain) transaction.

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