NEM Liquidity Mining: Community Market Making Campaign Results
Article Hummingbot docs
Summary
This case study describes a 2020 campaign that rewarded individuals for providing liquidity in XEM trading pairs on Binance through Hummingbot. The model aimed to enlist token holders and community traders as distributed liquidity providers, with tutorials intended to make automated market making accessible to less experienced participants. The report says 142 people had earned rewards by December 15 and attributes as much as 11% of XEM trading volume, and up to half of volume in some less liquid pairs, to miners.
It also reports about US$23.5 million in filled order volume, average weekly rewards of 13,800 XEM, and peak miner open-order volume of US$43,000 for XEM/BTC and US$36,000 for XEM/ETH. These are campaign-specific figures reported by the organizers, not an independent evaluation. The article argues that community providers achieved order-book depth comparable to professional market makers, but gives limited methodology for comparison and does not establish effects on spreads, market quality over time, or provider profitability. Results should therefore be read as a historical project case study rather than a general estimate of liquidity-mining outcomes.
Key ideas
- The campaign incentivized community members to place liquidity-providing orders in XEM pairs.
- The report gives participation, trading-volume, filled-order, reward, and open-order figures through December 2020.
- Tutorials and demonstrations were used to help new users participate in market making.
- The reported results are campaign-specific and do not independently establish market impact or miner profitability.
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Full text
# NEM Liquidity Mining Case Study --- date: 2020-12-17 authors: - coinalpha categories: - Miner --- # NEM Liquidity Mining Case Study  ## Summary Over the past few weeks, we have seen great participation from NEM liquidity miners and exceptional XEM token performance. With liquidity mining, NEM is able to introduce the project to a broader trader community and motivate individual traders to promote its token liquidity. During a little over 1 month of the liquidity mining campaign period, **142 distinct individuals have participated and earned rewards as of December 15th, 2020. They accounted for as much as 11% of total XEM trading volume on Binance**, and as much as 50% for the XEMETH trading pairs. This result has demonstrated Hummingbot liquidity mining’s ability to not only help long-tail token projects graduate from its league but also well serve and add great value to Top 20 projects like NEM. Both the Hummingbot and NEM communities feel excited about the result, and will continue working hard on the ongoing success of the campaign.  > **“I like the idea of paying a community rather than paying a market maker. I like the decentralized nature of it.” -- Nicholas Pelecanos, Head of Trading at NEM** ## Liquidity mining enables NEM to engage Hummingbot’s 8,000-member strong trading community With founders of high caliber, a quality team, a solid lineup of campaign partners in the crypto industry, and sophisticated and useful content curated on the site, Hummingbot liquidity mining won NEM’s trust when NEM first came across it. This new community-based approach to liquidity provision caught NEM’s eye because it places the individual community members at the center stage and empowers them to contribute to the NEM ecosystem. The benefits of this approach lie in its ability to strengthen the project awareness, community engagement and adoption. Through the liquidity mining campaign, NEM is able to introduce its project to a trader audience and embrace Hummingbot’s 8,000-member strong community. With more than 140 liquidity miners during the past month, the campaign has demonstrated NEM’s commitment to enhancing its token liquidity and tradability by incentivizing a decentralized trader community of liquidity providers (mostly non-professionals) and existing token holders. Compared with professional market makers, the NEM liquidity mining campaign by mobilizing a community of individual “market makers” garnered similar results in terms of order book depth. ## Everyone can be a liquidity miner: market making made accessible Throughout the liquidity mining campaign, NEM actively marketed the campaign to its community and, together with Hummingbot, created a few tutorial and demo videos targeted both rookie users and experienced traders. Although Hummingbot may seem intimidating and quite complicated for new users or rookie traders, these educational materials unlock the opportunity for NEM’s existing token holders to participate in market making, previously only possible for hedge funds and professional traders. ## Results of the liquidity mining campaign We saw consistent growth in the number of unique miners and open order volume committed to providing XEM token liquidity. Below are some of the key metrics of the past one month: * As of December 15th, 2020, **142 distinct users** participated and earned rewards * **Liquidity miners were accounting for as much as 11% of XEM trading volume**, and as much as 50% for the less liquid trading pairs on Binance * As of December 15th, **liquidity miners accounted for ~US$23.5mm of filled order volume**, an average of ~US$4mm of weekly volume while paying average weekly rewards of only XEM 13,800 * **Open order book volume created by miners peaked at US$43K for the XEM/BTC pair and US$36K for the XEM/ETH pair while the total current volume of the three eligible pairs is ~US$73K** fter the first day of adding the new trading pair XEM/USDT, showcasing the cost effectiveness of this campaign to generate order book depth Detailed statistics (November 3th, 2020 to December 15th, 2020) are presented below:     ## About NEM NEM Group supports the development of Symbol from NEM, a trusted and secure enterprise blockchain that smooths business friction, increasing the flow of data and innovation to supercharge the creation, exchange and protection of assets. NEM Group comprises three separate entities: NEM Software, NEM Trading, and NEM Ventures. NEM Group shapes the future of blockchain by nurturing a strong and healthy ecosystem that will contribute to the development of blockchain technology for generations to come. For more information: * [Hummingbot Miner’s app](https://miner.hummingbot.io/): current liquidity mining campaigns * [NEM liquidity mining quick start guide](https://www.youtube.com/watch?v=7Hc1IciDM7w) * [NEM liquidity mining demo](https://www.youtube.com/watch?v=YKt42GOIX_Q) * [Hummingbot Help Center](https://support.hummingbot.io/) * [Liquidity mining whitepaper](https://coinalpha.com/liquidity-mining-policy) * [Join the discussion](https://discord.hummingbot.io) For exchanges and projects that would like to learn more about liquidity mining, please contact us at partnerships@hummingbot.io.
Shown in full with attribution under the source's licence. Licence: Apache-2.0
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.