i also think that trade, and the current benefits it gets for each race and the potential federation is overpowered. especially when combined with colonize moon planetary advice - this is seriously exploitable. With enough moons the trading races can establish so many trade routes.... and the moon and trade resource bonuses along with the relationship increase is game breaking.... victory is really rather simple (and fast) once your trading partners are properly setup...
even with reduced rates of relationship increase over time this will still be an issue i reckon, and there has to be something better we can do here....
first off, I think that the colonize moon advice should be limited to one moon every year/per race (the endeavor of colonizing a moon and setting up resource harvesting there has got to be a relatively time consuming process).
next, you could nerf the trading relationship bonus to only give a bonus once (+5?) - when the route is established - no incremental relationship boost over time just for a trade route.....
and then we get a new mechanic.... an interim step between a system of independent races and the federation..... imagine a 'Trade Union' that could be set between two races assuming that they had say 5 (or 10?) trade routes established between their worlds, and a mutual relation of +30? (50?)
this 'trade union' between two races would be where the incremental relationship boost over time would kick in, a small but steady boost as long as these trade routes remained open and successful - and this would eventually lead those two races to the point where they might consider forming a true federation...
i like casualsax's idea of the embassy in relation to this Trade Union - once the union is established, constructing an embassy/trading post on the other races homeworld could give a slight boost to the incremental relation bonus over time.
all of this would make the 'form federation through trade approach' much more of a long term endeavor involving the colonizing of moons, harvesting of resources, establishing of multiple routes and long term business partnership between races in a trade union, and eventual unity in a federation - and it would be a process open to so many more open to mishaps, problems and sabotage - requiring much more player input, and in general being much harder to pull off for the hydral!
........this idea of the interim step between independent races and the federation could then be taken further.... for example...
a 'Military Coalition' could be formed between two races who have a mutual relation of +30, and have spent a total of 5 or 10 years (longer?) fighting wars at the same time, against a common enemy. (note, there could also be a +5 mutual relation boost when a race declares war against another's current enemy to help this along)... and once this coalition is established, the continued success (i.e. non-betrayal/non-collapse due to race death) of the coalition would cause the races to gain the relation boost over time between each other, which would lead eventually to the opportunity of a federation born of a military alliance. A race could establish a 'military base' on the home world of their coalition partner which would give a similar bonus to the embassy/trading post in the trading approach.... further still this could be a way of getting one race to help another more easily in a military sense, i.e. two races in a military coalition could be more likely to send their ships to help defend the planets/outpost of their ally and also to assist them with assault on their enemies.
perhaps other kinds of 'coalitions/unions' between two races could be created... for example... a 'Scientific Foundation' could be established when two races had researched and shared 20 (?) techs with each other and a research lab could be set up on the others world to boost the relation bonus over time........ and union ideas that i'm sure we can come up with
also, i'm guessing that one member of a union would be rather upset if their embassy/base/lab was blown up! and would most likely blame their partners (assuming the terrorists that the hydral hired did their job right!). This might cause a radical drop in relation between the two former partners.... there are all sorts of ways this could be played with, new mechanics and possibilities that these interim partnerships could add to the game in terms of helping them form and also breaking them apart.
anyway, i think you get the point... and i hope some of that made sense.... for sure trade needs a nerf (as you've all rightly said), and I reckon the strategic game is in need of more mechanics to complicate, diversify and extend the experience in ways that require plenty of player input along the way.
i think interim coalitions of different varieties between two races would be a nice fit for this
what do you all think?
EDIT: also, this might well be a really good way to increase the challenge of the strategic game.... and, for example, if the AFA were on to these hydral tactics and sabotaging your efforts to even bring about these partnerships, well, then things could get a lot more interesting!