Liquidity mining first month recap
Liquidity mining first month recap
Blog » Liquidity mining first month recap
Yingdan Liang & Carlo P. Las Marias
April 3, 2020 · 3 min read
It has been one month since we launched liquidity mining, a way for users to earn rewards on crypto assets by providing liquidity to our exchange and project partners. Obviously, this was a very challenging time to launch due to the coronavirus outbreak. Our first concern of course is hoping that everyone in our community stays safe and well.
Despite the extreme recent volatility and uncertain times, we have achieved really encouraging and promising early results. Thanks to everyone who joined and participated, ran market making bots and spread the word about the campaigns during this time. We really appreciate all the feedback and involvement from our very engaged and supportive community!
While liquidity mining does not compensate miners for filled order volume, promoting deeper order books and slippage reduction (by incentivizing consistent market orders at tighter spreads) has proven to increase trading activity. The graphs below show filled order volumes that resulted from miners’ placed maker orders:
- In the first four weeks, our miners generated $9.7 mm of filled order volume
- 654 sign-ups to the Miners App
- 363 distinct users have connected the miners app to their Binance accounts
- 207 distinct miners have configured bots and have earned rewards
- A total reward of USDC 12,000 has been paid out, on average one miner earned USDC 1.96 reward per day
- The top miner has earned 1.47K USDC rewards
- 38 miners have earned rewards > 100 USDC
At the peak, we had as many as 192 bots running at one time! Even after experiencing the market crash on March 12, it was encouraging to see the number of bots running to continue gradually climbing (note: the dips were due to either Binance API outages or miner app system maintenance/upgrades). We are very excited to see miners actively participating in these campaigns!
We saw a good distribution of bots across markets. Many of the top miners were also participating in multiple token pairs in order to earn rewards across campaigns. Meanwhile, some miners were switching between different campaigns in order to participate in token pairs with lower total participation in order to generate a higher proportion of rewards, market dynamics at work!
Due to the higher than expected participation, the engineering team has been scrambling throughout the first month in order to scale the system to handle the large number of bots that were running.
Liquidity mining is a data-driven approach to market making. Even with the limited amount of initial data from one month, we are starting to get some insights into miner behavior as well as adjust the levers to influence behavior.
The graphs below show an example of miner behaviors in ZIL-USDT, distributions of orders placed by spread.
- Week 1: launch of campaign with max spreads of 1%. Many users participating were also participants in platform testing, running bots with tight spreads.
- Week 2: increased participation and market volatility resulted in increased distribution of spreads.
- Week 3: following extreme market volatility, max eligible spreads were widened to allow participants and new users to use safer configurations.
- Week 4: markets starting to stabilize, with users starting to tighten spreads
- Week 5 (start of month 2): eligible spread band was lowered and markets were continuing to stabilize, allowing users to bring spreads tighter.
The graph below shows the spread curve used to weight miner orders when allocating rewards. This, along with the total amount of rewards, are the main factors that we can use as levers for influencing miner behavior in order to achieve a project or exchange’s objectives.
We’ve received a lot of amazing feedback from our community members around the globe. Here we’d love to share a bunch with you.
We are working on bringing more new projects onto the platform and hope to launch new campaigns soon! We recently announced that we are working with Binance on bringing new token projects listed on Binance to launch new campaigns. One of our launch partners, Solana, is currently in the process of getting their token SOL listed on Binance, after which we will be launching a campaign for SOL pairs.
For exchanges and projects who would like to learn more about liquidity mining, please contact us at firstname.lastname@example.org.
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