“ONE Makers” Initiative — What is it and why is it relevant?

A project is only as strong as its community.

This is why we are starting a brand new initiative “$ONE Makers” in association with Hummingbot, a decentralized market making platform where anyone can supply liquidity to $ONE regardless of who they are.

Not only will the participants have a chance to strengthen the liquidity of $ONE, but to reward their efforts we will be allocating a certain amount of $ONE tokens. These will be distributed to the $ONE Maker Campaign participants to give back to our community.

In the upcoming weeks, users will be able to participate by following these simple steps

  1. Sign up to the wait list here — The product will be launched in the next few weeks
  2. Follow Harmony on Twitter for instructions on how to start market making for $ONE
  3. Stay tuned. We’ll be releasing details of the prize pool in the new few weeks.

Our mission is “to scale trust for billions of people & create a radically fair economy”, and the “$ONE Makers” initiative is a starting point for completely rethinking how we empower our community to take over something that was heavily centralized in the past. And in the process, we will be rewarding everyone who is involved instead of a select few parties.

Below we’ll detail further into the world of market makers and why this initiative is important for us.

Wait, what is Market Making?

Financial markets rely on market makers to provide liquidity to traded assets. In simple terms, a market maker is a person or institution who places orders to buy or sell an asset and keeps the asset order book moving. They play a critical role in providing liquidity to financial markets, by ensuring that exchanges can guarantee a reasonable trade price to their customers at all times.

For example, if you are trading, you don’t want your buy order to go from $1 and immediately to $5 the next second, just because there’s no one providing that price range in the market. Market Makers fill that gap so that traders can have reliable trading experience on the exchanges.

Brokerage houses are the most common market makers. They have access to financial markets and execute trades on behalf of their customers. They maintain a substantial inventory of the assets being traded (for example, stocks) so that they can sell off the asset as soon as a customer places an order. Similarly, when a customer wishes to purchase an asset, they immediately buy it from the market. For every trade, they charge a small commission, and these small profits add up to yield big returns.

The Current Market Making Scenario

Market makers need to maintain a sufficient amount of capital reserve, in order to execute trades promptly as and when an opportunity arises. This brings market making almost entirely under the purview of big trading firms and banks. Speed of order placement is crucial in market making. These trading firms possess the infrastructure required to deploy sophisticated market making algorithms at a large scale. In some cases, they even integrate deeply into an exchange’s architecture, in order to gain minor technical advantages over their rivals.

Prominent stock exchanges in the US, such as the New York Stock Exchange and the American Stock Exchange, have Designated Market Makers, who operate in the capacity of official market makers for given security. This leads to a tendency of centralization, and these official market makers end up having significant influence over which stocks would have more liquidity and more visibility to customers.

Market Making in Crypto

In the unregulated world of crypto, the issue of liquidity is an even bigger concern. Top market cap coins like BTC, ETH, and XRP have no dearth of liquidity. But navigate down the pages of Coinmarketcap and pick a coin, and you’ll realize how difficult it is to trade it without significantly changing the market price. Even top coins listed on relatively unknown exchanges suffer from this lack of liquidity.

Projects have to shell out thousands of dollars and more in terms of their tokens per month to employ the services of professional market making firms. Similarly, exchanges also have to pay thousands of dollars to make the market on a given trading pair. More often than not, new projects and exchanges do not have this amount of capital to spend on market making. Add to it the fact that many exchanges generate fake volumes, and individual market makers are even more reluctant to set foot inside them.

As prices in crypto markets fluctuate much more rapidly than traditional securities markets, market makers in crypto are even more dependent on state-of-the-art trading algorithms. They collect and analyze real-time order book data, use sophisticated machine learning-based models, and develop high-speed, automated trade execution engines. Trading firms which possess this technology have absolutely zero incentive of sharing it with people operating as market makers in individual capacities.

This centralization of market making capabilities can be easily exploited by relatively well-off projects to corner a significant portion of the crypto market share and liquidity, at the expense of those which are financially weaker.

Decentralization in Market Making

Decentralization has always been one of the core principles of crypto. However, crypto market making itself has become extremely centralized today. We at Harmony have always believed that equality lies in the core of decentralization. The ability of market making should be nestled within the hands of the general public, as they are the best judges to decide which projects deserve more attention (and liquidity).

With this vision in mind, we are glad to announce that we have found a suitable partner in Hummingbot. Hummingbot’s primary objective is to decentralize market making. Using Hummingbot, users can create and customize automated, algorithmic trading bots for making market orders. It is extremely easy to use, and even non-technical users can execute high-speed trading algorithms. Hummingbot also supports cross-exchange market making, so that users can benefit from arbitrage opportunities. By lowering the steep technical barrier, Hummingbot allows anyone to earn profits through market making.

Hummingbot’s Liquidity Bounty

Hummingbot has designed a community-driven bounty system called the Liquidity Bounty. Users can use Hummingbot to provide liquidity to token issuers and earn rewards in the process, depending on their trading volume. This reward will be an addition to the profit that they make from their usual market making activities.

Token issuers too wouldn’t have to pay a huge sum upfront to market making firms. Instead, they can reward tokens to market makers as and when they fulfill certain objectives. They will have the satisfaction of rewarding deserving community members, instead of centralized trading firms whose sole purpose is to increase their profit margins.

This process will be completely transparent, from the point of view of both the users and the token issuers. Data will be collected from bounty participants and analyzed to ensure that they haven’t engaged in wash trading, volume faking, or other such unwanted activities.

ONE Makers, the Liquidity Bounty for Harmony Protocol

We are glad and honored in equal parts to announce that Hummingbot’s first Liquidity Bounty will be in association with Harmony Protocol. We have always believed that having a strong supporting community is essential for the long-term survival of any project. Our worldwide community has organically grown over the last 12 months, and we want to further strengthen it as we transition from testnet to mainnet.

Harmony Protocol’s token $ONE has been listed on both Binance’s centralized exchange and Binance DEX and has performed exceptionally well in terms of trading volume and price action since listing day, peaking at $2.95 billion worth of $ONE per day in volume. The Liquidity Bounty will further strengthen our token’s liquidity. It will also provide us an opportunity to give back to our loving community members, through a pool of tokens reserved for this purpose which will be announced in the coming weeks.

As market makers provide more liquidity, we grow together as a project and a community. Through decentralized market making, we provide our community the power to determine our growth, with both of us connected through our token ecosystem. For more information, don’t forget to sign up here.