by Michael Feng
Following the recent announcement of the Hummingbot Foundation, we’re excited to announce that the foundation plans to collaborate with Harmony to launch ONE Liquidity DAO (“Liquidity DAO”), an open, independent collective that will promote liquidity on the Harmony blockchain and for its tokens, primarily by building open source Hummingbot infrastructure.
Harmony is committing $2 million to fund Liquidity DAO over the next 4 years. “Liquidity is a critical factor in the development of an organic DeFi ecosystem, and a DAO that promotes liquidity in an open, transparent manner is highly aligned with our vision to decentralize the Harmony network and launch 100 independent, self-governed DAOs", said Stephen Tse, Harmony Founder & CEO.
Liquidity DAO is a decentralized autonomous organization that will be independent of both Harmony and Hummingbot Foundation, and it serves as the model for other long-term partnerships that the Hummingbot Foundation hopes to establish with top blockchain protocols.
The Hummingbot Foundation’s mission is to support as many exchanges, protocols, and trading techniques as possible across the DeFi ecosystem. It’s an ambitious goal that will only work with a decentralized approach, in which partnerships like Liquidity DAO give true ownership to the individuals who are driving it. In the long term, the Hummingbot Foundation will likely turn into a collection of DAOs that collaborate around a shared open source codebase.
Below, we explain how Liquidity DAO works and why we decided to work with Harmony as our initial partner for this experimental model in self-governance.
How Liquidity DAO works
Here is the official proposal that outlines Liquidity DAO’s principal mandates, metrics, activities, and budget.
As an independent organization, Liquidity DAO’s first action will be an open election of 9 governors to lead the DAO and allocate its funding towards various initiatives. Similar to other Harmony DAOs, the governors will have complete independence once the DAO is funded, while governor oversight is provided via transparent compensation, objective deliverables, and frequent elections. From Harmony's DAO Guidelines:
Governors of each DAO have delegated autonomy over its assets and initiatives. Harmony helps define 3 broad mandates, recruit 9 governors, define the deliverables and metrics for the first 3 months, and fund at maximum $1M. We recommend $75 to $350 per hour as the self-assessed salary, 3-month election terms, retroactive peer bonus and performance feedback, 80% passing votes, and openly tracking timesheets and deliverables for each member.
While applications are open to everyone, Hummingbot and Harmony expect that the elected governors will be existing members of our respective communities. Since governorships are part-time, compensated roles with frequent re-election cycles, a number of strong, experienced candidates have already expressed interest. After the election, Harmony will fund a multi-sig wallet containing the initial budget and hand over control to the governors.
Liquidity DAO will have independent authority to decide what work to perform and what initiatives to fund. Given the DAO’s mandates, we expect that a majority of the work will be Hummingbot connectors and trading strategies that result in pull requests to the Hummingbot codebase. In order to be merged and included in an official release, these pull requests need to pass through Hummingbot Foundation governance. This bifurcation enables both organizations to collaborate while retaining independence of decision making.
Hummingbot and Harmony have a long history of collaboration. We both started as part of an informal ex-Google founder community, and Harmony was our first partner for an experiment in decentralized market making that gave us the conviction to build the Hummingbot Miner platform.
In addition to those partnerships, along with many informal gatherings over basketball and beers, we chose to work with Harmony as the first partner for creating Liquidity DAO for these reasons:
DAO culture and infrastructure
Earlier this year, Harmony announced plans to kickstart 100 DAOs in order to drive decentralized governance over the Harmony network. Since then, multiple Harmony-related DAOs have self-organized, held elections, and commenced operations, including Developer DAO, Incubator DAO, and Research DAO.
Leveraging Harmony’s DAO setup and governance processes for Liquidity DAO ensures that we’re building on top of battle-tested infrastructure. More importantly, both Hummingbot and Harmony share a community-led, builder-first ethos that is critical to a successful first DAO.
As exemplified by Research DAO, the Harmony community has a strong focus on cutting edge research, which will be important in accomplishing one of the key DAO goals: defining and measuring the utility of liquidity to Harmony.
While liquidity is one of the core metrics used by users, traders, and other market participants to assess a token’s utility, it’s unclear how to precisely measure liquidity and the utility that it provides. Meanwhile, fragmentation of liquidity continues to grow due to a growing number of markets on every protocol, along with more silo-ed centralized exchanges due to regulatory barriers. Liquidity DAO plans to take an open, transparent approach to defining, measuring and facilitating liquidity for Harmony tokens.
Growing DeFi ecosystem
Finally, there exists a burgeoning DeFi ecosystem on Harmony, with over $300 million in Total Value Locked (TVL) on Harmony apps including SushiSwap, DeFi Kingdoms, and ViperSwap. Liquidity DAO plans to promote liquidity and adoption for these apps by funding Hummingbot exchange connectors and organizing hackathons for bot trading strategies.
Today: Elections announced
- Today, this post will be published on the Hummingbot/Harmony blogs, as well as on the Harmony governance forum.
- Governor candidates have 3 weeks to submit applications to introduce themselves and present their qualifications
Since a diverse mix of governors with expertise in trading, engineering, community and project management is ideal, candidates may want to highlight in their applications:
- Experience as web3 developers (e.g., LinkedIn, Github)
- Experience as traders and liquidity providers
- Familiarity with Harmony and its development ecosystem
- Familiarity using or developing on Hummingbot
- Links to their open-source contributions or other past work (links, demos, videos)
- Experience writing technical documentation
- Experience managing projects and organizing events
November 29: Community AMA on Reddit
On November 29, we will host an AMA on the Harmony subreddit during which both the Harmony and Hummingbot communities will have a chance to ask questions about Liquidity DAO and the governor candidates. Register on our events page!
December 1: Voting begins
- On December 1, a proposal on Harmony’s Snapshot will be created and announced across all channels
- Elections will be held for a period of 1 week
- Candidates are encouraged to promote themselves and share their Forum post across different channels
December 9: DAO commencement
- On December 9, voting ends and 9 governors will be elected for a 3-month term
- Multi-sig wallet creation and funding