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Hummingbot Blog

  • in Miner
  • 6 min read

Does Community-Based Market Making Work?

Analyzing 2 months of data from $ONE Makers

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Two months ago, in conjunction with our friends from Harmony Protocol, we started an experimental program called $ONE Makers to see if ordinary individuals using Hummingbot to run market making bots could effectively provide the same level of liquidity as professional market makers.

Both we and Harmony viewed $ONE Makers as an experiment. In particular, we wanted to answer the following questions:

  • Could people actually make money or would they get destroyed by more sophisticated players?
  • How many people are needed to effectively replace a professional market maker?

Read on and find out!

Interview with Liquidity Miner Dominator008

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It's been just over two months since the launch of the $ONE Makers liquidity bounty program. With intense competition, bounty hunters have diligently worked to climb the ranks on our newly launched, real-time leaderboard. The trading volume for $ONE in July and August totaled an impressive USD $5.98 million.

In this post, we're excited to introduce Dominator008, who clinched the #1 spot in the August reward period and has earned over 10 ETH in the previous period. Dominator008, a software engineer by profession with a deeply technical background, joined $ONE Makers in mid-July. He is currently utilizing hummingbot to trade various pairs, including ONE.

Interview with Liquidity Miner David Salter

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Three weeks have passed since the launch of the $ONE Makers liquidity bounty program in collaboration with Harmony Protocol. We've witnessed $ONE's trading volume soar beyond 130 million. Bounty hunters are vying fiercely to ascend our leaderboard.

In this edition, we spotlight David Salter, who currently holds the #6 rank (as of July 22, 2019) and has accrued approximately 1ETH in bounty rewards. Boasting a solid technical background, David has extensive experience in the telecommunications and finance sectors. His journey into cryptocurrency trading began in July 2017, and he now consistently achieves 0.5%-3% profit per trade using Hummingbot during his trading sessions.

Join us as we delve into David's experiences and gather insights from his trading strategies!

Introducing Harmony Liquidity Bounties

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A new approach to solving one of the biggest problems that face issuers of digital tokens: liquidity.

For the first Liquidity Bounty, we have partnered with our friends at Harmony Protocol, a Layer 1 blockchain project with key innovations in sharding and network transport, founded by a highly technical team from Google, Apple, and Amazon.

  • in Academy
  • 8 min read

Exchange Types Explained: CLOB, RFQ, AMM

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Since Hummingbot is an open source bot platform that connects to many different exchanges, we have developed a deep understanding of the nuances between various exchange types.

In this post, we discuss the three main methodologies that digital asset exchanges use to facilitate asset transactions. We hope that this post helps crypto traders and developers choose the right exchange for their needs.

TLDR

Exchanges perform the fundamental role in free markets of bringing together and coordinating buyers and sellers. Exchanges provide a venue for these parties to discover one another, negotiate and agree terms, and ultimately transact. Exchanges have adopted multiple methodologies to achieve this:

  • in Academy
  • 4 min read

Hummingbot vs Uniswap: Two Approaches to Liquidity

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Since both Hummingbot and Uniswap are both open source projects that allow users to make money by providing liquidity, many people have asked how they compare to each other.

Below, we shed more light on their similarities and differences and explain why the two projects are highly complementary.

Hummingbot is Live!

Welcome to decentralized market making.

Hummingbot is now public and open-source, and we’re beyond excited to bring this high-frequency market making trading bot to the masses.

The software is currently available on our Github and Docker.

How to Think about Liquidity - BlockCrunch

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This post is adapted from a BlockCrunch podcast featuring Michael Feng, co-founder of Hummingbot.

Why is Liquidity Beneficial for Exchanges and Token Projects?

Liquidity offers a major benefit of price discovery: ensuring market prices are fair. When purchasing liquid assets like Apple shares from platforms like Robinhood or E*TRADE, you're assured that reselling them won't lead to significant losses. Conversely, in less liquid markets, such as certain crypto markets, you might encounter a situation where the buying price is 20% higher than the selling price, a phenomenon known as the bid-ask spread.

  • in Academy
  • 10 min read

The Thin Crust of Liquidity

The role of market makers and importance of liquidity in the crypto industry

Eric Noll was getting frustrated. It was November 2011, and the senior Nasdaq executive was struggling to explain to a mostly disinterested House of Representatives panel why the changing stock exchange landscape was wreaking havoc for smaller public companies:

Today's US markets are increasingly fragmented and volatile. Liquidity in US stocks is dispersed across 13 exchanges and over 40 other execution venues. The declining cost of launching and operating electronic order crossing systems has led to a proliferation of decentralized pools of liquidity. However, the unintended consequences of that market fragmentation have been a lack of liquidity and price discovery in listed securities outside of the top 100 traded names. Such fragmentation of trading creates a thin crust of liquidity that is easily ruptured, as occurred on May 6th (i.e. the 2010 Flash Crash)

Stifled yawns from Congressional onlookers aside, Noll was describing an unintuitive but important phenomenon that would make Milton Friedman roll over in his grave: more competition from exchanges leads to less liquidity for small issuers and greater systemic risk.