Liquidity DAO Q1 2022 (Term 1) Progress Report

Report

Summary Accomplishments:

  1. Built connector between Harmony network base connector and Hummingbot.
  2. Launched internal tracking tool and market making campaign on OKX.
  3. Better refined “Liquidity Score” through deeper understanding of liquidity metrics.
  4. Using internal tokens (8,008 per governor) to make a market on OKX when ONE first launched on the exchange.
  5. Partnered with Hummingbot to launch ONE/USDT pair for 12 weeks + 8 weeks extension on Kucoin.

DAO Mandate

1. Promote liquidity on the Harmony blockchain

The maturation of decentralized finance has caused a Cambrian explosion of transaction activity across different blockchains. While Harmony’s speed and scalability allows it to be an cross-chain aggregator that bridges multiple chains, achieving organic DeFi liquidity presents a massive chicken-and-egg problem, since a critical mass of venues, liquidity providers, and traders are all needed for transaction volume to grow organically.

Traders need high-quality exchange venues with deep liquidity in order to participate, while liquidity providers need well-documented exchange APIs along with tooling that enables them to interact with those APIs programmatically, but they also need organic taker volume in order to sustain providing liquidity.

To address this problem, Liquidity DAO will coordinate bounties, hackathons, and other programs to promote liquidity provider adoption and transaction volume on the Harmony blockchain. The programs will incentivize developers to build Hummingbot connectors and trading bot strategies for DEXs, bridges, and other DeFi applications on Harmony.

2. Decentralize liquidity provision for the ONE token

While liquidity is important for all tokens, there doesn’t yet exist a market standard for how to measure liquidity for one token versus another. This has led to an opaque market for liquidity in which token projects feel compelled to hire market makers, often shadowy crypto hedge funds, to provide liquidity for their tokens in exchange for hefty fees.

In addition, projects have no way to independently verify how much liquidity was provided, while market makers who have access to a significant portion of a token’s free float could manipulate the market. The lack of transparency and information asymmetry has allowed large hedge funds to realize tremendous profits, at the expense of both traders and token projects.

Liquidity DAO will take an open, transparent approach to measuring and promoting liquidity for the ONE token. It will incentive developers to build applications that report liquidity metrics related to ONE and other tokens across various centralized and decentralized exchanges. Afterwards, it will organize liquidity mining campaigns on both centralized and decentralized exchanges to drive those liquidity metrics in an open, transparent manner.

Initial Formation Proposal

Harmony and Hummingbot launch Liquidity DAO | by Peter Abilla

Deliverables

  • Connector bounties: Bounties that reward contributors for building standardized integrations to exchange, lending, asset management, and other DeFi protocols on Harmony, in order for those venues to be programmatically accessed via Hummingbot strategies
    • Published first bounty to Gitcoin for ONE Connector and assessed Gitcoin for our purposes
    • ONE Connector for Hummingbot developed and accepted by Hummingbot Foundation.
      • The initial Harmony (gateway) connector enables other connectors to be added for Harmony-based AMM-based DEXs like SushiSwap, ViperSwap, and DeFi Kingdoms. This enables Hummingbot traders to run the Arbitrage strategies to arbitrage between any Harmony-based DEX and any other CEX or DEX supported by Hummingbot.
    • Allocated budget and in discussion with multiple DEXes to support creating connectors to their DEX to improve harmony ecosystem liquidity
  • Liquidity mining campaigns: Campaigns that reward community members for providing liquidity to the ONE token on both centralized or decentralized exchanges
    • Supported ONE launch on OKx by loaning each governor 8008 ONE tokens to be used for providing liquidity on OKx exchange. The tokens were returned by governors at end of campaign
      • More than 14 million ONE were filled by governors representing about 5+% of total filled order since OKx launch.
      • The 8008 tokens were returned by the governor with any losses covered by the DAO which amounted to x amount of ONE
      • This is replaced by the launch of in-house bounty
    • Launch Harmony ONE liquidity campaign on Hummingbot for 12 weeks
      • Promote Harmony ONE to a community built on providing decentralized liquidity
      • Reward were provided in ONE to promote usage of harmony blockchain wallet
      • Unique Miners,
      • Filled orders
      • Other relevant stats
    • Launch of in-house Harmony ONE liquidity campaign on 15 March 2022
      • Unique Miners: 7 (All miners are also part of hummingbot community)
      • Filled Orders: 148k ONE in first week
      • Launch proposal to support DAO’s in-house liquidity campaign on hummingbot governance
  • Application bounties: Bounties that reward community members for creating applications such as front-ends or data services related to Harmony or ONE token liquidity
  • Research grants: Grants that rewards community members for publishing research into liquidity-related topics, such as new theoretical approaches to measure token liquidity in a multi-chain world, or optimal liquidity provision strategies based on academic research.
  • Strategy hackathons: Hackathons that incentivize community members to create and submit trading bot strategies tailored for the unique properties of Harmony Protocol and its dApps, i.e. DEX arbitrage, DEX liquidity provision, DEX liquidation, flash lending, cross-chain bridges, NFT arbitrage, NFT liquidity provision, etc.

Metrics

Transaction volume on Harmony Protocol powered by Hummingbot

Initial Harmony DEX to hummingbot gatewayV2 was completed. However gatewayv2 is not yet launched hence there is no transaction volume

Trade volume on Harmony-based DEXs powered by Hummingbot

Initial Harmony Connector were built. Harmony DEXs bounties are still ongoing. Hence no trade volume

Number of unique contributors to bounties and hackathons

Harmony ONE Liquidity Bounty on hummingbot:

Unique Miners: 25

Harmony ONE Liquidity Bounty (in-house):

Unique Miners: 7 (All users are from hummingbot)

Harmony ONE Connector Bounty: 1

ONE liquidity metrics: slippage, order book depth, TVL

To define the liquidity metric for ONE during the next term

New deliverables for the next three months

Continue working on the planned activities

  1. Publish ONE Liquidity Metric to be used to keep track of liquidity changes.

  2. Order Book data is currently being collected to perform retrospective analysis

  3. Analyze order book data to generate a metric for liquidity

  4. Create tools to keep track the liquidity score

  5. Create bounties for connectors to connect hummingbot to harmony ecosystem

  6. Create connector bounty on hummingbot

  7. Create research bounties for liquidity research

  8. Create application bounties to report liquidity metrics on harmony

  9. Manage liquidity mining campaigns

  10. Continue managing liquidity bounty with hummingbot and in-house bounty

Accounting

Assets

Discord: Harmony ONE Liquidity DAO

Telegram: ONE Liquidity DAO

Website/ Notion: liquidity.finance

Google: one@liquiditydao.finance

Github: ONE-Liquidity-DAO · GitHub

Treasury Transactions

Date Transaction ID Reason ONE Transactions USDC Transactions
3/23/22 68, 69 Hoang converted USD returned $ 40,152.87
3/15/22 58 to 66 Governors paying back borrowed ONEs 32,032.00
3/6/22 52 to 57 Hoang converted USD returned $ 8,450.00
2/28/22 51 Hoang bounty conversion $50K (362,739.00)
2/25/22 50 Max send in (8008 + earnings) 17,612.00
2/9/22 49 Ed paycheck (12,434.00)
2/9/22 48 Fanglin paycheck (6,047.00)
2/9/22 47 Wei paycheck (42,752.00)
2/9/22 46 Kai paycheck (6,380.00)
2/9/22 45 Hoang paycheck (38,411.00)
2/9/22 43 Andrew paycheck (2,415.00)
2/8/22 42 Max paycheck (10,162.00)
2/1/22 39, 40, 41 To CoinAlpha on USDT payment (46,372.00)
2/1/22 38, 44 To CoinAlpha on ONE payment (26,848.00)
1/3/22 12 to 37 Governors OKEx Loan (72,072.00)
1/2/22 10, 11 Incoming transferIncoming transfer 1,323,858.00
Current Balance 746,870.00 $ 48,602.87
ONE Value USD Value at $0.1888 Floor
TOTAL Governors pay (118,601.00) $ (22,391.87)
TOTAL Bounties (362,739.00) $ (68,485.12)
TOTAL Campaign (73,220.00) $ (13,823.94)

Governors Hours

Name Latest Entry Total Hours Total Billing Per Hour Rate Paid
Kai 3/22/22 20.92 $ 4,032.00 $ 192.73 2/9/22
Max 2/8/22 18.88 $ 2,324.50 $ 123.12 2/9/22
Wei 3/12/22 80.76 $ 10,689.00 $ 132.36 2/9/22
Fanglin 1/12/22 8.43 $ 1,264.50 $ 150.00 2/9/22
Hoang 3/25/22 125.13 $ 16,321.75 $ 130.44 2/9/22
Ed 2/8/22 9.3 $ 2,600.00 $ 279.57 2/9/22
Sunita 2/8/22 12.5 $ 1,200.00 $ 96.00 No
Sukanta 2/7/22 10.43 $ 2,607.00 $ 249.95 No
Andrew 2/15/22 15.38 $ 2,104.00 $ 136.80 2/9/22
TOTAL 301.73 $ 43,142.75 $ 142.98

Current community statistics

Telegram: 35 members

Lessons learned

  1. Telegram is not useful to keep track discussion. Discussion were moved to discord and notion while telegram is kept as a tool for conversation.

  2. Lack of treasury management as funds are kept idle in treasury

  3. Lack of dedicated community manager to build the community while developing the necessary tools.

  4. Published first bounty to Gitcoin and assessed Gitcoin for our purposes

  5. Gitcoin is excellent for getting developer interest; but it is not ideal for large projects/large payments as it does not support funding via multi-sig wallets; payments have to be made from the personal wallet of one of the Governors.

Operations Plan

Train and equip community to participate in more substantial way

  • Promote hummingbot connector to harmony eco system for more miners to use
  • Engage community with content

How to manage and grow the existing treasury

  • Stake portions of funds into harmony ecosystem to earn passive yield such as DefiKingdom
  • Hedge portion of funds to ensure funds are still available to payout bounties

How the DAO may become self-sustaining

  • Provide liquidity consultancy services

Other

  1. Supported Hummingbot at ETH Denver; talked about the DAO’s plans
  2. Conducted weekly governance call
  3. MEXX - introduced MEXX to Jack from Harmony, which has led to MEXX being listed as a Harmony partner
2 Likes

Hello,
Lots of new initiatives were started and we are excited to see how things will evolve in the next term with the new set of Governors. Definitely lots of things to be done and many new innovation to surface from this DAO. Interesting explorations of forming new economic model for the DAO to self-sustain, better tooling and modeling outputs, etc. Please join in voicing your views and opinions to help shape this well for all.

Regards
SG

1 Like

Great initial quarter! The fact that you were able to accomplish so much despite it being the first quarter of operation illustrates the power of decentralization and encouraging different skill sets in the DAO. I agree that sustainability should be the long-term objective. Keep up the good work!

Hello Michael,
Thank you for taking the initiative to germinate this idea Liquidity as a DAO effort to bring in smart people with really diverse backgrounds to come together and work in formalizing the initiative.
We have lots to do, this term and the coming terms. It would be a great to celebrate more wins with so much support for all. It would be great to brain storm some more ideas to help fan out this effort.

Thank you
SG

Hey Liquidity DAO, I’m on the Harmony DAO Operations team and my role is DAO relations. I’ve set up the 1DAO Alliance Discord where all DAO communications will be conducted. Meeting announcements, DAO tooling, etc. Please have your DAO members join this Discord and upon joining comment in the general chat subchannel describing what DAO you are from. Thanks!