Choosing the right market is the key to liquidity mining success. Here are some tips for selecting markets:
The Factor Score is a score created by Hummingbot to convey the risk faced by liquidity providers for a given token. It is important for miners to understand the risk involved in different pairs, not only the yields provided, before selecting them for market making.
The score is calculated based on publicly verifiable data points such as market capitalization rank and number of days since first publicly listed. To learn more:
You can use the volatility risk factor to select markets in Core, or Growth to start your market making strategies. Those markets are relatively more liquid.
In-depth tips on how you can identify crypto trends using:
You can also run custom scripts on Hummingbot using these indicators.
Inventory risk is the risk of holding the assets that you market make on, which may fluctuate in value. It is one of the biggest risks market makers hold.
This article explains the concepts of inventory risk and shows us how we can lower inventory risk using inventory skew, filled order delay, hanging orders, and ping pong.
Explains mainly how spreads are related to inventory risk.