Introducing Liquidity Bounties
Community-based market making programs
Blog » New liquidity mining campaign for Mainframe (MFT) going live on June 16, 2020!
June 8, 2020 · 3 min read
We are excited to announce that the Hummingbot and Mainframe teams have been working to launch a NEW liquidity mining campaign for MFT tokens, starting on June 16, 2020 12.00am UTC! Soon both communities will be able to earn rewards by participating in providing liquidity for the MFT token.
In this post, we are going to introduce Mainframe to the Hummingbot community, and give both the Hummingbot and Mainframe communities an overview of the upcoming campaign.
The Mainframe Lending Protocol allows anyone to borrow against their crypto by leveraging collateral assets approved by Mainframe Governance. Mainframe uses a bond-like instrument, representing an on-chain obligation that settles on a specific future date. Buying and selling the tokenized debt enables fixed-rate lending and borrowing — something much needed in decentralized finance today. Mainframe Governance is the community organized process of managing the various aspects of the Lending Protocol. Unique to the Mainframe Lending Protocol is the liquidation mechanism, rehypothecation of collateral accounts, and an incentivization layer powered by staking the Mainframe Token (MFT). The system avoids unnecessary sell pressure during liquidations. Together, the strategies for rehypothecation, liquidation, and settlement enable lower collateral requirements and allow for a more efficient increase in leveraged exposure to base assets.
Since late 2017, Mainframe has had one of the largest communities supporting its mission of economic freedom and financial access. Mainframe is backed by the top names in VC and Crypto, including ArringtonXRP, NEO Global Capital, FBG, Shapeshift's Erik Voorhees, ICON's Min Kim, Ethereum's Gavin Wood, Zilliqa's Xinshu Dong, and many many more.
Traditionally, projects have engaged professional market makers to maintain liquidity for their tokens. However, professional market makers typically charge very high fees, require up to millions in assets for trading, and operate as a black box, with limited visibility into their strategies and trading activity.
Hummingbot created liquidity mining as a data-driven and community-based alternative. Liquidity mining allows token issuers to engage their communities, as well as Hummingbot’s community, to provide decentralized, crowd-sourced liquidity.
To enable this, Hummingbot created a high-frequency, algorithmic trading bot that anyone can use for market making (as well as other strategies, such as arbitrage). Previously, this kind of specialized software was only available to professional quant funds, crypto market makers, and professional traders who have invested significantly to develop it in-house. By open-sourcing Hummingbot (the eponymous software client), we have made this technology accessible to anyone who would like to participate in the world of market making.
The next step, liquidity mining, rewards users for market making for specific token pairs. Participants earn rewards by placing maker orders for eligible pairs and adding to a token pair’s order book depth. They also earn more rewards by placing orders more (1) consistently over time, (2) at tighter spreads, and (3) with larger order sizes. This creates a quantifiable, open and fair methodology for rewarding participants for their contributions to token liquidity.
Mainframe’s upcoming liquidity mining campaign will allow members of both the Mainframe and Hummingbot communities to participate in market making for MFT tokens¹. By participating, members of the Mainframe community can support the project and its MFT token, while learning the ropes of crypto market making and earning rewards.
For full terms of the campaign, please see liquidity mining campaign terms.
To learn more about liquidity mining, see below:
Please review the Liquidity Mining Policy for the full disclaimer, including policies related to the use of Hummingbot.
The content of this Site does not constitute investment, financial, legal, or tax advice: none of the information contained on this Site constitutes a recommendation, solicitation, or offer to buy or sell any digital assets, securities, options, or other financial instruments or other assets, or to provide any investment advice or service.
No guarantee of profit: CoinAlpha does not claim that liquidity mining and participation in liquidity mining campaigns will be profitable, however measured, for the user. Liquidity mining returns are a measure of rewards compared to assets used for liquidity mining, excluding any gains or losses incurred from the underlying trading strategy.
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