Allocate $200,000 USDC from the treasury to Bitlink as inventory for the purpose of arbing in the AVAX-PERP vAMM on Hubble Exchange.
Allocate $7,000 USDC/mo to Bitlink to cover operational expenses to continue their arbitrage services on the AVAX-PERP vAMM.
Motivation
A dedicated market participant is required who will consistently arbitrage the mark price on Hubble Exchange with centralised exchanges, such as Binance and FTX.
This will lead to the mark price following the index price in a relatively more consistent manner. The mark price following the index price closely is in the best interest of Makers and Traders with open positions on Hubble Exchange.
Terms
Hubble Exchange will provide Bitlink with $200,000 in funds which must be returned in full to Hubble Exchange at the end of this arrangement. Bitlink will maintain custody of these funds and use them to arbitrage the mark price against index on Hubble Exchange.
Cost to Hubble Exchange:
7,000 USDC per month to be sent to Bitlink as a service provider fee.
Bitlink will be responsible for:
Trading fees and funding payments.
Gas fees
Profit and Loss while arbing.Gas FeesBitlink will be responsible for gas fees for up to $1000. Any gas fees incurred to Bitlink beyond $1000 will be paid by Hubble Exchange DAO. Example: if total gas costs are $1500 then $1000 will be paid by Bitlink, while $500 will be paid by Hubble Exchange.
vHubble Rewards
Bitlink will not be eligible for vHubble incentives for traders. Bitlink will disclose all addresses through which we are interacting with the Hubble Exchange contracts so their addresses can be blacklisted from receiving vHubble rewards.
Termination
Either Hubble Exchange or Bitlink can independently choose to terminate this arrangement at their discretion with no penalties at any time. A 30 days notice must be provided. Mutual consent is not required to end the arrangement. Upon termination, Bitlink will return the custody funds ($200,000) to Hubble Exchange.
About Bitlink?
Bitlink is a strategic investor in Hubble Exchange. There is a pre-existing alignment of incentives.
Bitlink Capital is a proprietary trading firm based in HongKong and Cayman Island. We have concentrated on HFT across a variety of cryptocurrencies, markets and multi-strategies since 2014.
By the end of 2019, Bitlink’s AUM was 100 million USD, and daily turnover reached 200 million USD. Moreover, as a global-visioned proprietary trading firm, Bitlink has worldwide presence. We established partnerships with exchanges across the world, providing liquidity to world class exchanges such as Huobi, Liquid, Bithumb, Coinbase etc.
Hubble Traders;
This proposal will give Bitlink 200,000$, not 2 but 200,000$ to trade against real traders, and take profits from real traders. It is a crisis of fair competition.
Pls come out and vote against it. This proposal is favor a Bot trader and against human traders, it is favor a Big Whale with risk free and against real risk takers with our own money, it is unfair trading competition. Pls vote against it.
Bitlink like all traders always have a free right to trade on Hubble, but giving them 200,000$ and 7,000$/month operational expenses to do arb and make their own profits is unethical.
This proposal is a centralized economic intervention which is against FREE MARKET. and a TRUE FREE MARKET is the most important factor of DEX.
This proposal is from INSIDE TRADERS, you know them right?
Pls come out and vote against it.
The exchange 100% needs an entity (market maker/arbitrageur) to constantly bring the price on hubble on par with the rest of the market. Having this entity onboard is probably the surest way we attract more organic trading volume longterm.
Unfortunately, I don’t think we should be paying a “Strategic Investor” 7k/month to ensure the project they invested in succeeds, especially since the DAO has agreed to front them $200k for the trades.
Providing this service should have been one of the terms of their seed investment.
What hubble should (probably) provide Bitlink if possible:
The requested $200k
Upto 80% trading fee discounts on trades made on hubble: if technically possible to implement, if not we run the numbers monthly and refund upto 80% of trading fees paid.
The exchange absolutely needs an AMM to keep the price on Hubble aligned the most possible with the index price.
However, paying 7k USD per month for this service seems to be high considering that the entity will keep the revenue generated by the arbitrage opportunity with 200k USD loan.
On the other hand, the entity is forced to use the protocol which generates higher gas fees for them and decreases the arbitrage opportunity depending on the number of transactions.
From my point of view, a fair proposal would be to allocate 200k USD from the treasury to the entity and fully cover the gas fees generated to interact with Hubble’s smart contract.
Hey, couple of questions. Is the mark price really that out of sync with the index price? Is this even necessary given how young Hubble is? If the arbitrage opportunities exist more market participants should naturally join over time and bring it in line.
Second, did you consult any other MM firms or just your “strategic investor”? Honestly those numbers seem very high for a single market. Likewise if they are an investor they should not need any extra incentives. They should be doing it already for the arbitrage profit and to support their investment in Hubble.
Having a market maker or arbitrage on the platform is helpful to improve price action and volume, Hubble will definitely need this. However, I think the time has not come yet. There are a couple of reasons why:
Mainnet opened a few weeks ago and organically cumulative volume reached 10 Million $, and also daily trading volume is between 750.000-1.000.000 $ range, for the first month I thinks these numbers are just fine.
Hubble has only 1 trading pair which is AVAX-USD, when we make agreements with Bitlink for AVAX-USD, when we add other pairs there will be another agreement that will be costly for Hubble Treasury.
The reward system for Makers and Traders is working just fine and in near future, there is a possibility to create a new Trading competition so it will attract new users, organic growth, and organic volume.
Having said that, if the amount given to Bitlink were less than or equal to 75.000$ without any operational cost I would be on board with the team, however, 200k is really huge money to only bring non-organic volume is not good for treasury in my opinion. I know that the Hubble team is open to any discussion for any proposals and I want to start an argument for this 200K being used for a new trading competition or lowering the amount will given to Bitlink or any other makers.
The reason I say this is because even though this agreement will create constant 1M+ daily volume, it will not be organic and via competitions these volumes can be doubled and growth might sustained.