(Proposal Draft) Distribute 10% of miner rewards in HBOT tokens

Author: zzzou 0x2dA

Original Post Date: 9 May 2022

Hi everyone! I would like to share a little suggestion here and see what do you, both commmunity and Hummingbot team (Foundation, Coinalpha), think of it.

It was a great idea to include HBOT tokens as rewards in the miner and I have a suggestion going a little further, that I think would be very beneficial to the HBOT and I believe is also in line with the reason it exists.

To put it very simply, my suggestion is to pay out, say, 10% of miner rewards in HBOT tokens. These HBOT tokens would be acquired on the open market, either by the participating projects themselves at the moments they would see most fit, or the conversion could be done by the team before the campaing starts if parties agreed so. There are several quite obvious strong benefits supporting such a move, but please, let me briefly explain.

First of all, HBOT was described as a governance token. In order to properly serve such purpose, it needs to be distributed among people who are active users/stakeholders not right now, but at any relevant moment in the future. Securing a continuous circulation of tokens would serve this purpose perfectly. Also, buying HBOT tokens for this purpose on the open market would allow those who are no longer interested in the project, to get out and these tokens would move forward towards those who are showing interest at that very time.

I do realize there is also downside to this and that is mainly one thing, IMO: liquidity providers get 10% of the rewards in different form than currently - with various individual implications. On the other hand, If profitability dictates and even these 10% are needed in other form than HBOT token, nothing can stop the miner to swap the HBOT into any other token he/she see fit. Also, much more active market for HBOT fuelled by the conversions for mining rewards would be of great help here.

Suggested discussions:

  1. Percentage used for HBOT payouts - of course, 10% is just a random nr. - such, that seems to do no harm, but is not insignificant in terms of resulting generated volume…

  2. Would Hummingbot team be willing to make conversions to HBOT?

  3. Should conversions take place at the beginning of a campaign and fix amount of rewarding tokens at this time for the weeks to come? Or should it rather happen once a week? I believe the former makes more sense, but I am not familiar with internal processes which might change the perspective.

  4. Would you mind as a miner and HBOT holder to receive 10% of your rewards in HBOT tokens?

P.S.: this is not a draft itself yet, rather just a discussion opening. I might attach draft later behind this text…

Author: PHBR0 x58B

One observation though:

Miner campaings are run and managed by Coinalpha, wich is a separate entity from Hummingbot Foundation.

This looks like a decision that should be defined by Coinalpha, since they are the ones who negotiate with the projects how a Miner campaing reward should be allocated.

Author: zzzou 0x2dA

Hi PHBR, exactly, hopefully we will get some feedback from them. On the Discord, it was actually a HBOT team member carlito (although from Foundation, not Coinalpha), who suggested to put it here and afterwards up to governance voting, saying “We would like to suggest to create a New Thread at Commonwealth forum…” indicating there were more team members supporting such a move. I have no idea, how much overlap is there between Foundation and Coinalpha, but still, I would not expect Foundation to point us into a dead end.

In any case, it would be great to hear some sort of confirmation directly from Coinalpha, whether they would be willing to implement such a change, had it been approved by the governance vote.

Thank you PHBR for pointing this out, this is a crucial point, indeed. Apart from this, would you support a proposal like this?

Author: Carlito 0x0c3

Discord reply by Lawnel (chray13#0388)

I am thinking outloud here:

I don’t like the proposal tbh, who will decide what the price of HBOT is ? is there some market where we can trade it ? who will take the 10% earnings that the exchange will pay ? HBOT token are here helping contributing into the community (at least for now) by coding into the library. I like the fact that miners could have some tokens on some chosen token for different reasons as a plus, but reducing the profitablity will just harm little miners… in addition, doing as proposed will simply give more power to top miners that could decide for the future of HB leaving small ones without a voice… and chosing only what they don’t have already inplace

sorry for my english

(posted a copy of discord replies here for future reference.)

Author: zzzou 0x2dA

Thank you for posting it here, my reply was:

Hi @Lawnel, great, thanks for your opinion and feedback. Yes, there is market on Uniswap, it is AMM, so even if there would not be any other market, the price would be decided there - transaction ID could serve as a proof. Nobody would take anything, everything (100% of those 10% :)) would go to miners.

So, as said, it should NOT reduce profitability, you can by no means decide to sell the HBOT you receive into whatever token/coin you like.

But you are completely right at certain aspect, for very small miners, HBOT is currently quite hard to use as it is on ETH cain, so the fees are a bit killing it. But that is a problem, that could be solved with another proposal and unfortunately not with this one. IE, It could help to bridge HBOT to other chain with smaller fees, I would certainly support such proposal. It would by itself not give more power to the smaller miners, but at least would make it easier for them to move the tokens around/buy/sell. If you would really like to give more voting power to the smaller miners, you could probably propose some special sort of voting calculation, but you know, it would be probably gamed by the big ones anyway.:slight_smile:

Author: Alkhalifah 0xa5f

I like your idea because I am trying to accumulate as much HBOT as possible, and due to high ETH gas fees and the high slippage on the Uniswap pair, it is difficult for me to time my DCA into HBOT.

However and as a liquidity miner, I manage my bot parameters in a way to ensure profitability based on weekly rewards excluding HBOT drops. Therefore, if we take 10% of the weekly rewards and convert them to HBOT, I might need to sell some of HBOT tokens to ensure that my liquidity mining strategy and exchange accounts are in the green. This will make it much more complicated for me to manage my liquidity mining bots due to the high volatility of the HBOT token.

Maybe it is worth exploring other ways of making HBOT more accessible to DCA by bridging HBOT to other chains with lower fees.

Author: zzzou 0x2dA

Hello, and thank you for your input everyone. Just to not lose the big picture here, let me sum it up and perhaps include some more details where it seems needed. This proposal, if implemented, would have mainly these effects:

  1. Securing continuous redistribution towards relevant actors;

  2. Creating volume – very important for market participants who want to enter or exit the market;

  3. Create net positive pressure on the market - of course, implementing this proposal will not inevitably lead to price rise, as there are many other factors affecting the market at any time in both directions, but this one will be one of the key factors contributing towards moving the market up. I guess I do not have to go into detail, but just to be sure everyone understands, the reason for this effect to take place is because there will be always some receivers of the HBOT token that will decide to hold rather then sell right away and value of their tokens is the net positive pressure directly applied to the market.

  4. Boosting market confidence – mainly as a result of previous points - this proposal would lower the risk for users who would like to perform their governance rights, but are rightly considering a possibility of being punished monetarily for holding the governance tokens in case of a market decline. As explained, this proposal is not an insurance against decline, but is lowering the associated risk, which is what counts – although we cannot say right now, how big will the effect be, we can be absolutely sure on which side of the axis from zero will the effect eventually lie. All of these reasons along with what have already been said, are why I believe this proposal would have a tremendous effect on the future of HBOT and therefore is in every HBOT holder’s interest to vote for it once the opportunity arise.:slight_smile:

That said, I completely understand some miners who are hunting every cent and are afraid that the decision to sell due to profitability reasons will incur costs by itself (mainly transaction fees).

This on mind, I am thinking, perhaps we could amend the proposal in a way, that would result in attaching some extra HBOT tokens to what miners should receive. I am thinking perhaps again just 10% extra might do, basically to cover eventual transaction costs.

That means, miners could get 110% of value of exchanged HBOT tokens instead of 100%. Very rough estimate according to current data would be that 200 000 HBOT would be bought weekly (it would not be happening weekly probably, but it does not matter for this estimation) off the market and therefore 20 000 would have to be added weekly from Hummingbot community pool which makes it around 1 mil. tokens distributed this way yearly. And if I remember correctly, there should still be hundreds of millions tokens in the community pool, which makes it very insignificant drainage.

Seeing the numbers, the bonus could perhaps be even 20% or more – let’s leave some room for discussion here. Please, voice your opinions. Some might argue, that these extra tokens might destroy the positive effect of the proposal, but fortunately, that is not the case, because these tokens from Community pool are meant to be distributed sooner or later anyway and it is just being decided of when and how, so we can leave these extra tokens out of the equations.

Author: fengtality 0x352

Hi @zzzou I like the amended proposal in which the Foundation adds HBOT bonuses if the Miner reward sponsor elects to converts out a portion of their reward pool to HBOT.

Most campaigns pay out rewards in USDT, so perhaps if they elect to pay out 20-50% of the reward pool in HBOT, the Foundation could add a bonus that effectively increases the reward.

I’ll raise this idea with the CoinAlpha team.

Also, the Foundation has been discussing this topic as well, and we published a couple of ideas (Exchange Certification, Monthly Trading Competitions) as well. Please let us know what you think!

Author: zzzou 0x2dA

Hello @fengtality , sorry for a delay in response, I have been away for a while. First of all, thank you very much for your reply!

I also think the amended proposal is the way to go. From what you wrote I am wondering whether there might be a slight difference in our approaches and it might be actually for the best to merge them.

What I had on mind was creating a stable system-wide approach, where every campaign would transform 10% of rewards by default and another 10% worth of HBOT would be attached from the reward pool. In other words, making it a rule valid for all.

That is also a reason why I was thinking of such a small % - just 10%. It seems to me that there are certain advantages in making it this way and above all I see one:

  • certainty for HBOT owners that as long as there are any campaigns, HBOT will be distributed this way;
  • less important is equalizing conditions among campaigns which might make miners less picky - a benefit for campaigners;
  • another thing is that once HBOT is a stable appearance in every campaign and miners will get used to it, it will be also easier for them to work with it/transform/etc.

That said, while making ad-hoc deals with campaigners does not give the same stability and certainty to HBOT for the future, I see where you were heading with higher percentage of HBOT reward share perhaps along with higher bonus. This is certainly doable on ad-hoc basis. So, if we merge these approaches - we would get something like this:

10% transformed into HBOT and 10% bonus would be a standard and if the campaigner agrees to transform higher percentage in HBOT - say up to those 50%, bonus will be also higher, IE:

  • 10% in HBOT - 10% HBOT bonus - a standard valid for everyone
  • 20% in HBOT - 15% HBOT bonus
  • 30% in HBOT - 20% HBOT bonus
  • 40% in HBOT - 25% HBOT bonus
  • 50% in HBOT - 30% HBOT bonus

I am just not sure whether to go all the way to 50% from the start. Perhaps right now, I would set a limit to 20% and unlock 50% options once there are more exchanges for HBOT and overall more liquidity for the token. I could imagine that the liquidity limits unlocking further (higher) options could be decided upon beforehand. But 20% is in my opinion doable even in current conditions.

Please, let me know what you think of such approach. Thank you!