NFT bots for Hummingbot

Author: fengtality 0x352

Original Post Date: 10 Jan 2022

NFT bots are a compelling area of exploration for Hummingbot. This thread captures some recent discussions on Discord exploring concepts related to NFT bots.

Please chime in with your thoughts on this topic, so that the community can congregate on an initial design for how to support NFT bots in Hummingbot.

@mobiwan :

NFT connectors are inevitable. Most NFTs are illiquid compared to coins and fungible tokens, so they would desperately benefit from market making. And who better to democratise this than Hummingbot?

BTW, check out the Star Atlas game’s marketplace. It’s built on Serum (Solana DEX), and scalpers figured out how to make custom bots for game ships and other NFTs from day one. It’s a bit of a nuisance because they tend to be whales who constantly undercut retailers and drive the floor price down, but that’s basically what miners do too. All’s fair in love and market making. And it would be sweet if you could do this with Hummingbot too.

@n0x:

I saw something about arbitrages on opensea while I was searching for useful peace of code to steal from for a liquidator bot, but I didn’t know that nft arbitrage was a thing :smile: I thought that they were exchanging some kind of collateralized debt or payment (like when you provide liquidity using Uniswap V3 and you get an nft and not tokens and not LP-tokens ) :°D It would be cool to be able to flash-loan, flash-swap and batch transactions… :°D

in the end, since it’s the defi world, we can just “borrow” the code of who is doing better… audited stuff for free… like dsproxy (makerdao defisaver ecc ecc…) or less audited but cooler stuff like bentobox (sushiswap)

@fengtality :

BTW, check out the Star Atlas game’s marketplace. It’s built on Serum (Solana DEX), and scalpers figured out how to make custom bots for game ships and other NFTs from day one. It’s a bit of a nuisance because they tend to be whales who constantly undercut retailers and drive the floor price down, but that’s basically what miners do too.

that’s really interesting. i checked out the Star Atlas marketplace but TBH i haven’t really followed NFTs since the CryptoKitties days. When you say the bots are trying to drive the floor price down, can you be more specific? what is the logic that the bots are applying?

@mobiwan :

in my understanding, the trading strategy is basically scalping: buying ship nfts for cheap in massive volume, then constantly placing limit ask orders at the tightest spreads, while still guaranteeing a profit. they used bots for this which i believe were custom built. in the marketplace, you would always see thousands of ships listed at the lowest prices, so it was very hard to sell yours for any higher.

i witnessed this first hand a few months ago when i sold a ship on the marketplace. it had appreciated a fair bit so i placed a limit order below the hordes on the floor, ie. at the lowest ask price. within seconds, the hordes/bots reposted their ships at a lower price than mine, effectively undercutting me. this happened a few times in a row, and i didn’t want to post and wait it out, so i placed my limit order at the highest bid (essentially a taker trade) and took my meagre profits.

you can’t see any of this action right now in the star atlas marketplace because everyone has bought up all the ships (hundreds of thousands), and are staking them for atlas

@fengtality:

Wow, thank you for that detailed explanation! My guess for the bot logic is that they use the global order book and past trades to train a model that estimates the market price of an NFT based on its features, similar to how Zillow does it for houses.

Once you have prices for every asset, it’s the same as a CLOB market but everyone has a different pricing model. Because of that, you want to do lots of trades on cheap NFTs and bet that you’ll make money on average in the long-term.

in hummingbot’s upcoming serum connector, it could be relatively easy to support nfts as a first-class asset because they’re very similar to fungible tokens in solana (both fungible and non-fungible tokens are basically spl tokens, with some variations – see Token Program | Solana Program Library Docs). if so, that would open up nft trading opportunities to the hummingbot community.

Nice - we’ll try to take this into account when designing the trading interfaces for Solana. Since NFT bots will more effective on long tail, they’ll likely only be worthwhile on low-latency chaisn

@JOE:

the FloorDAO that came out the other week is an interesting approach on NFT liquidity The Floor Sweeping Flywheel. We are intent on unlocking liquidity… | by FloorDAO | FloorDAO

@Stalkopat:

Thank you for sharing. I have read the blogs. Does FloorDAO also have a market maker bot that users can install, so they can provide liquidity for NFTs?

According to the Blog post they use normal AMMs like sushi and uniswap to trade the “fungiblized” ERC20 tokens So its really just depositing capital and the AMM does the rest

n0x:

did you see this: https://nft20.io/? this may ( I didn’t look deep into it ) be used to arbitrage nft tokens :smile: On github I saw someone trying to build a flash-swap-alike function for nft plus someone that was arbitraging fungible’s nft from opensea with ash ( ash are tokens minted burning fungible’s nft )