I'm really happy to announce this project. We're still at a very early alpha phase, and in full transparency what we've created is currently only open to DEVs, but I expect by the end of month that it'll be open to everyone.
What's a Market Maker?
A market maker a program that simultaneously places a bid and an ask on the same pair on an exchange. An example is what I've been manually doing over the last few months. I'll log into my computer and I'll place buy orders for Steem and sell orders for Steem on hive-engine. Why would I do both? Because I don't list them at the same price. So, every time that they trade I make a small gain from the spread. This however has been fairly tedious to do. So, I'm personally quite excited to have a smart contract market maker.
Does it matter that it's a smart contract?
YES! Why? Because there's nothing that you have to run. It's built into the hive-engine node. So, as a user, you stake some BEE/ENG, have an account with both sides of the pair you want to trade, put in some configurations, and the market maker will place orders for you automatically.
Normally this kind of software is expensive and you're charged hundreds of dollars. Here it's free so long as you're staking bee/eng. Normally this is the kind of thing that you have to download and install. Here you just enter some settings online and you're good to go. The code is literally baked into the Hive-Engine.com node.
First results?
Cryptomancer, the genius behind the code, has been running the market maker for a week. He's been trading SIMS on hive-engine. He started with 200 HIVE. He now has 226 HIVE. that's a 13% gain IN A WEEK!!!
He's also reporting using @enginemaker on steem-engine. He's sharing that he started with 247.5 STEEMP and 200 SWAP.HIVE. Thus far it's up 14 STEEMP and 26 SWAP.HIVE.
Where did the money come from? Again, the bot makes a small margin on all these trades. So, as long as money is sloshing back and forth the market maker is able to make the trade and keep a small cut above.
Active orders placed
Trade history
Why is it devs only for now?
The backend is now functional. It's not complete as there are a variety of trading strategies we want to code in. The front end is designed but hasn't been implemented as our European Dev has been on vacation. He's back tomorrow and we should be seeing a simple UI in place so you can configure this easily. So, hopefully in the next two weeks non super-human devs will be able to start their market makers on hive-engine and steem-engine.
Devs get started!
If you are a dev and want to get started you can check out this github repo-
https://github.com/hive-engine/steemsmartcontracts-wiki/blob/master/Bot-Controller-Contract.md
It's pretty cool. Cryptomancer broke the program into two parts. First part is the configurations. Second part is the tool that actually places the orders. Market making is the first piece that we'll implement, though in theory now that we have a bot configuration and a piece that makes the actions we can make this baby do just about anything that involves posting onto Hive/Hive-Engine.
Just another step in the Hive-Engine ecosystem-
NFT markets
fungible token creation and trading
automated market maker
simplified cryptocurrency swap coming soon...
We're building a robust ecosystem of tools and projects.
But aggroed, you should be working on Splintlands!!!
This is true. And I have good news. This market maker works for DEC. So, for all the splinterlands players that are interested in earning DEC you can now (if you're a dev) or soon (if you're not) have the ability to run an automated market maker and get you some sweet sweet DEC gains. Here's hoping that DEC becomes even more liquid and easier to trade than ever before.
Is there anything to be worried about with this thing?
When price is steady and money is just sloshing back and forth this bot will simply make money. If trades aren't happening it'll sit there passively and basically cost nothing to run while it waits for trades. The main trouble is when markets start swinging one way or the other. This simple bot will buy all or sell all of your tokens as the price is moving strongly in one direction. So, you could be left holding bags on big price swings. We'll work on adding configs to prevent this. If you spot some big changes you can always turn the bot off for a while.
We've tested this early alpha version ourselves, but this is something that you definately want to keep an eye on. We're not responsible for your trading losses. I suggest if you choose to play with this thing get a separate account, park some tokens and BEE/ENG on it, and purposefully limit worst case scenarios.
Happy trading to the devs and I hope to have this open to all by the end of the month!
Sounds great. I'm in.
Nice!
This should add some liquidity and make things interesting for HE tokens.
Any plans on decentralazing Engine more? Incentives for node owners?
We plan to introduce a witness system that will function in a similar way to Steem & Hive witnesses. Some work on this was done earlier in the year, but we encountered some issues during testing that still need to be worked out. It's not clear at the moment when we will get back to this, as there are several other higher priority projects in the pipeline, but it will be coming at some point.
Very nice for liquidity, but what's the point of opening it up to everyone? If everyone has a market maker they will just trade each other or only one of them will take the trades right?
This means no profit for someone and a lot for someone else. Depends whose algorithm reacts faster. If it chooses randomly which account gets the trades, it will reduce profits massively while staying exposed to the same risk.
What really matters is the amount of money in the market maker. One whale could take care of the whole thing and make nice profits, makes more sense.
On another note, what other use-cases does the BEE/ENG token have?
Other use cases for BEE/ENG will be added over time. For example we plan to gradually introduce more types of bot services after the market maker, which will also be powered by staked BEE/ENG.
If there are a lot of market makers running on a single market, they will compete with each other and gradually narrow the spread. However, it's likely people will have their trading configuration set differently, and orders will be placed/updated at different times in a way that should more or less be fair to everyone assuming that market volumes remain at a steady level throughout the day.
Well, you can always look for trading pair that has no market-maker yet. Also there are different strategies, risk management etc. :)
Ah, I see...
Bring the algos to hive-engine then
Finally an update to the hive-engine platform :D Now, over-collateralized loans, pretty please? :D
This.
I think that this is not going to work if you make the code public. If everybody else knows the rules according to which you trade, this will be easy to game I am afraid.
To some extent that concern is mitigated by the fact that people can change their trading configuration to respond to any such attempt to game the system. Also we intend to introduce a number of measures to make it more difficult for people to do so. If enough market makers are running on a single market, it will also be very hard for someone to deduce all the ways in which they may interact in a manner that allows them to take advantage.
I think you might be right - if the effort is too high compared to the potential profits. The bigger the potential profit is, however, the bigger the incentive to game the system. I have built a non-public trading bot for Steem Engine last year, and I was not overly successful I must admit...
I've also been running a private market maker bot of my own design for the past year on various Engine markets. The design of that early bot heavily influenced the design of this smart contract system. Overall it has made more than it lost, but it does require a lot of babysitting and watching the markets so I know when to change the configuration or turn off the bot temporarily when things move against me. People shouldn't make the mistake of thinking this is a passive income strategy that they can just turn on and then leave alone. It needs active management and is more of an art than an exact science.
Will be very interesting to see how this all goes, I'm excited to see what people do with it and how the markets will be impacted!
if you want to, I can give it a non-pubic try later at some point. But at the moment I am busy with my soccer manager game project Rabona...
Very interesting.
You choose what pair to trade right? Just so it doesn't sell everything xD
Yes, you can configure it for just the pairs you are interested in trading.
Amazing!
Very cool, hope hive-engine is soon listed on hivedapps.com, which also needs to add a DeFi category in my opinion.
I'm definitely going to keep an eye on this one!
Nice, this should help a lot of tokens with liquidity and so on. :D
A really good thing indeed, will try it for sure!
Amazing stuff
NICE, I do a lot of trading with the 3commas bot on Biance, its nice to see a bit of automation come to the hive as well. If you need a tester, hit me up!
Any chances you guys work with other exchanges so that he tokens have the option to get listed elsewhere ? Even a couple small ones like mercatox or crex24 would be awesome and imo a game changer for he tokens and hive.
Completely off topic here, but I recently started a community for stock image sharing and bil.prag has told me that you mentioned plans to set up an nft site for this sort of thing. While I have no skills in that area, if the community can help in any way we'd be happy to.
Sure. Should be coming out in September I imagine.
I am extremely interested in this. Who are the best Devs to contact? Looking forward to the market maker tools!