Hummingbot 1.0 and HBOT Distribution Plan
January 27, 2022
Hummingbot is an experiment to create decentralized, self-sustainable open source software, powered by user trading activity and governed by HBOT token holders. Our aim is to create a community-owned and maintained toolbox that lets anyone in the world become a high-frequency trader or market maker.
After 61 beta releases spanning almost 2 million lines of code written by 113 unique contributors, we are excited to announce the launch of Hummingbot 1.0, the first official release of the Hummingbot software.
What is Hummingbot 1.0?¶
It is not because Hummingbot is mature software that we are announcing the 1.0 release. Quite the opposite, as a rapidly evolving, community-driven project, we still field many requests from users to add connectors to various centralized and decentralized exchanges, support new asset types such as options and NFTs, and improve the software's ease of use. Currently, there are 35 open pull requests from community developers.
Instead, we believe that Hummingbot 1.0 marks its official handover to the community, because the project is now self-sustainable. Now that the Hummingbot Foundation has taken over the Hummingbot codebase and the exchange fee share partnerships that sustain day-to-day operations, as well as implemented the HBOT governance system, Hummingbot is finally ready to become a community-owned and community-maintained software project.
The Hummingbot Foundation's long-term goal is to support the Hummingbot ecosystem similar to what the Linux Foundation does for the Linux ecosystem. As a crypto-native project, we will also try to follow Ethereum's lead in building a truly decentralized open source ecosystem. As Vitalik Buterin highlighted in a recent blog post:
Any single centralized organization will inevitably have blindspots and at least a few categories and teams whose value that it fails to understand; this is not because anyone involved is doing anything wrong, but because such perfection is beyond the reach of small groups of humans. So there is great value in creating a more diversified and resilient approach to public goods funding to take the pressure off any single organization.
Therefore, we aim to distribute the HBOT token in order to incentive community members to help maintain the Hummingbot codebase and govern the Hummingbot Foundation. Below, we explain what the HBOT token represents and how the HBOT distribution plan benefits the Hummingbot ecosystem as a collective.
Open source client software¶
Hummingbot is not a protocol, but rather open source client software that helps users create trading bots on various centralized and decentralized exchanges. Unlike a protocol, Hummingbot is a modular local software client that encourages community developers to fork and extend its code. With 1200+ forks and 113 contributors to its Github repository, Hummingbot is one of the most decentralized developer ecosystems in crypto.
Just as crypto has pioneered a community-driven, token-powered approach toward building protocols, the same approach is needed for clients. As Signal co-founder Moxie Marlinspike wrote in a recent blog post about web3:
“One thing that has always felt strange to me about the cryptocurrency world is the lack of attention to the client/server interface. When people talk about blockchains, they talk about distributed trust, leaderless consensus, and all the mechanics of how that works, but often gloss over the reality that clients ultimately can’t participate in those mechanics. All the network diagrams are of servers, the trust model is between servers, everything is about servers.”
Client software like trading bots play an important, symbiotic role in providing liquidity, exploiting arbitrage opportunities, and improving market efficiency for exchanges and protocols. Trading bots need access to wallet private keys and exchange API keys in order to automatically respond to market conditions, which is why Hummingbot is an open source, publicly auditable software client that gives users complete freedom to decide how they want to use it.
As the industry-leading crypto trading bot framework, Hummingbot has become an indispensable tool for many traders, developers and market makers around the world, both individual and professional. Hummingbot is a public good that should be governed by its community.
Self-sustainable public good¶
Hummingbot is one of the only internally-funded and self-sustainable public goods projects in crypto. From 14+ agreements with exchanges that rebate fees based on user trading activity along their respective connectors, the Foundation is cashflow positive from inception. As the number of exchange connectors and users increase, we expect this cashflow margin to increase significantly greater than maintenance costs, and excess proceeds will be held in the Foundation treasury available for HBOT token holders to decide how to allocate.
To give the community transparency into operations, the Foundation will publish the monthly fees shared and the estimated fee-generating volume collected from each exchange partner, along with the share paid to staffing costs, maintainers, and allocation to the community. The Foundation plans to publish a Monthly Report listing these sources and uses of funds, starting in February 2022.
DAO governed by HBOT holders¶
Since fees shared from exchange partnerships fund day-to-day operations, the HBOT token can be reserved exclusively for governance. Similar to participants in a Decentralized Autonomous Organization (DAO), HBOT token holders control many aspects of the Hummingbot Foundation, including the ability to approve all pull requests to the codebase, electing Board of Directors, and allocating how HBOT is distributed. 100% of the HBOT token supply will be distributed to past and future users of the Hummingbot software, and the Foundation will never sell or issue more HBOT tokens.
As mentioned in the HBOT announcement, 36 million tokens (36% of total HBOT supply) will be distributed to the Hummingbot user base over the next 4 years following inception of the Hummingbot Foundation.
|Year||% of Total Supply||Tokens|
In order to improve and iterate on the distribution process, the Foundation divides the process into Epochs, fixed 5-month periods with specific HBOT distribution targets across various categories of work that incentivize community usage and development of the Hummingbot software. After each epoch, the Foundation will conduct an open retrospective and try to improve the process for the next epoch.
Epoch 1 plan¶
- Start: Feb 1, 2022
- End: June 30, 2022
- Goal: Distribute 30 million HBOT tokens
During the first epoch, the Foundation governance process is being applied for the first time, so we believe that distributing 30 million HBOT tokens, or ⅓ of the annual target, is a reasonable goal.
During the first epoch, the Foundation goals are to:
- Distribute HBOT tokens to users of the Hummingbot software
- Partner with exchanges to enable community developers to build/maintain a connector and reward users for using the connector
- Grow the number of users by making Hummingbot easier to use, more flexible, and more powerful
- Diversify the number of maintainers that maintain individual components in the Hummingbot codebase
We divide the 30 million distribution target across three categories of Hummingbot Governance Proposals (HGPs) that HBOT token holders can submit. All governance-related proposals are voted on in the main Snapshot space, which is reserved for HGPs.
|Category||Total HBOT Available||Target Number of Grants|
|Liquidity Distributions||15,000,000||10 platforms|
|Dev Grant Budget||10,000,000||50 dev grants|
|Initiative Budget||5,000,000||5 initiatives|
Join the first community call!¶
We will start an monthly open community call on the Hummingbot Discord to involve the community more. During the first call, we plan to:
- Explain the HBOT distribution process in more detail
- Show examples of proposals in each category
- Highlight ideas for upcoming community initiatives
- Answer questions from developers and users
- Date: Tuesday, February 1, 2022
- Time: 9:00 EST / 14:00 GMT / 21:00 Asia
- Link: Discord event