Hummingbot, in partnership with San Francisco-based blockchain, Solana, has announced that preparation for the launch of a liquidity mining campaign was almost complete.
The firm disclosed this in a blog post that the campaign would enable communities to participate in contributing liquidity for the SOL tokens and earn token rewards.
The Solana campaign would begin on May 26, 12.00 am UTC, and offer total rewards of 7,500 USDC over 12 weeks. Notably, eligible token pairs during the campaign are SOL/BTC, SOL/BUSD, and SOL/BNB.
Essentially, liquidity mining involves a decentralized and crowd-sourced approach that allows participants to join in the crypto market. It enables users to earn token rewards based on their trading activity. Moreover, this leads to trading support for the token and also helps the project grow.
Resolving liquidity fragmentation
According to the announcement, this campaign would help reduce the issue of liquidity fragmentation. Incidentally, it is one of the major challenges within the digital currency markets currently.
The team noted that if left unchecked, the issue of liquidity fragmentation could lead to other criticalities such as;
- Adverse selection: This scenario happens when certain market participants take advantage of asymmetric information. As a result, they stand the chance to benefit from selective transactions at the expense of other participants.
- Monopolization of risk: It is a fact that there are high coordination costs of negotiating and maintaining bilateral contracts. And this leads to most exchanges and issuers only engaging with a few market makers, thereby increasing their dependence on them for liquidity.
- Verification difficulty: For non-exchange market participants, it is extremely difficult to verify compliance with non-manipulative trading practices. This is especially the case with token issuers compensating market makers for their services.
To tackle these challenges, Hummingbot has come out with the liquidity mining platform. Moreover, it would create an opportunity for users to learn more about bot trading and also try it out.
Solana expressed their commitment and vision for a more efficient market. Noting Hummingbot’s successful track record and desirability as a reliable partner, the blog post stated, “We’re excited that they’ve prioritized their next integration with Solana to continue disrupting this sector”.
Hummingbot also announced details of the partnership in its official blog where it explained at length the mechanism behind liquidity mining and its advantages for the users.
Hummingbot specializes in data engineering and machine learning for financial applications. It has also created an open-source high-frequency trading bot for cryptocurrencies. The bot has institutional-grade trading capabilities and reliability with a user-friendly design. Even novice and non-technical users can easily access algorithmic trading and market-making with help of the Hummingbot program.
In other related news of strategic partnerships, SingularityNET collaborated with Arizona State University’s Lightworks Innovation Accelerator. Also, Aave and MYYKEY recently announced coming together to promote DeFi. Earlier, Uppsala, Danal teamed up to create the first-ever crypto AML solution.