A new proposal has been posted to the Firo Crowdfunding System.
- Title: Hummingbot Miner FIRO/BTC & FIRO/BUSD campaigns extension
- Author: tincho
- Proposal type: Miscellaneous
- Link: click here
Use this topic to discuss this proposal!
TL:DR:
- Hummingbot campaign provides important exchange health metrics on Binance in return for around 5400 USD/month of which 4000 USD in FIRO is given to users who help provide liquidity.
- Important to support weaker pairs on Binance such as FIRO/BTC.
- No inventory needs to be provided for market making since the community is providing it.
The CFC requested me to provide clarification on this campaign extension given that the core team was previously funding this and to explain the rationale for this.
Firo is primarily a community-funded project, even the block reward can be seen as a form of enforced community contribution as it comes from the block reward via mutual consensus.
The current block division funds the masternodes, miners, core team and the community fund and there is no preference or locked up amount given to investors/VCs. Similarly, all these amounts are given over time and are not available in large lump sums. Everyone else is on an equal footing.
While this is great for general democratization and decentralized distribution, it means that there’s no one that has ready access to lots of FIRO that can be used to provide liquidity on exchanges. Currently, the inventory being used by Firo’s market makers are solely provided by me in my personal capacity on loan (without interest) to Firo, and the market makers adopt a neutral stance purely to provide market liquidity. This means there is no directional stance on this and inventory is kept in roughly 50/50 for each pair.
These inventories are spread across three exchanges and four pairs, FIRO/BUSD, FIRO/BTC on Binance and FIRO/USDT on Bitmart and Bittrex and they total around 200k USD.
Organic liquidity is not bad on FIRO but needs to be bolstered especially on the lesser used pairs to maintain good exchange health. Exchanges not only look at trading volume but also the number of participants in the market and also the liquidity depth.
Liquidity depth can be summarized as how much money is on the books, and particularly where most trading happens which is in the ±2% band. This allows users to buy and sell without too much slippage and also cushions against volatility.
There are a few ways to improve this liquidity. The first is attract more users to Firo and have it be done organically. This is the best but the hardest to attract, especially in a bear market. The FIRO/USDT pair on Binance has pretty good organic take-up and is not supported by our market makers.
The other is to engage a market maker and provide more inventory to them or loan inventory from someone at an interest rate. This usually comes with other provisions be it an interest rate charge on the loan, lock-in periods, onerous option agreements where the market makers can buy FIRO at a guaranteed lower price from you and furthermore a risk of trading loss on your inventory. While this is possible, my personal belief is that this isn’t in the core team’s best interest and I’m already providing all the liquidity that I can using my own funds at no cost.
The third is something like this, where instead of engaging a market maker, we can incentivize users to provide the liquidity themselves hence the concept of ‘liquidity mining’. No actual ‘mining’ is involved.
Hummingbot campaigns work by providing a fixed reward pool in which everyone who opts in can earn rewards for providing liquidity (putting bid/ask orders) on either side of the book as long as they are in the specified range of ±2% from the market price. They achieve this by having the user create a ‘view-only’ API key and keeping track of the orders they place on the CEX.
They then divide the rewards based on the liquidity provided and also weighting them so that the closer it is to the market price, the more rewards they get. So in an example:
Let’s say the price of FIRO is $100 and the campaign is being run on FIRO/USDT.
Someone putting a sell order at 100.1 and buy order at 99.9 will be rewarded more than someone who is putting a sell order at 102 and buy order at 98 assuming the amounts provided are equal.
Users don’t need to come up with their custom bots and those with reasonable familiarity and can follow instructions can set up Hummingbot’s open source bot quite quickly to do it. There’s no GUI yet but the guides are fairly simple and are probably simpler than let’s say setting up a masternode.
I attach the report of how the previous campaign went and there are around 40+ active participants at any one time, with almost 100 unique participants participating in total.
Each campaign (for about 5400 USD a month (4000 USD rewards + 1400 USD platform fees) generates about
- 40k USD volume per day organically or
- 40+k USD liquidity (or 20+k USD per pair) in the important ±2% bands.
- Form about 6% of Binance’s volume
40k USD total in the important ±2% bands for a cost of around 4000 USD (rewards) + 1400 USD (platform fees).
A more detailed report is attached below (though I am seeking clarification on some numbers as they don’t add up, I’ve used the lower figure in the estimate above).
There is some urgency in the matter as we would like to maintain continuity in the campaign so that miners would continue to run them rather than drop off then have to reattract them.
FIRO- Report.pdf (4.1 MB)
Category changed from ‘Miscellaneous’ to ‘CFC’
After seeking clarification the actual numbers are actually better:
- 71k USD volume per day organically which forms about 8.58% of BInance volume on those pairs.
- 37.3k USD liquidity in the important +2% bands.
FIRO- Report (updated - March 2023).pdf (4.3 MB)
The reason for the discrepancy in the earlier report:
“I do confirm that we had an issue there for multiple markets dashboard, the (28.2+42.1)/2=35.1K is actually the global AVG which doesn’t take into account the separation between market averages, this should have been fixed in your dashboard.”
@sproxet @Fiendish @rasikhmorani @rehrar @RyanApeFiro @OhGodAGirl @nrsimha
With the necessary quorum of 5 members out of the 7, the proposal for the Humming Bot Miner FIRO/BTC & FIRO/BUSD Campaigns Extension has passed.
Approved by:
Nrsimha
Sproxet
OhGodAGirl
Fiendish
Rehrar
Status changed from ‘idea’ to ‘Funding Required’
Payment of 776.0 FIRO sent
Payment of 2424.0 FIRO sent
Payment of 3400.0 FIRO sent
Status changed from ‘WIP’ to ‘Completed’