This proposal seeks to:
- Pre-authorize $100,000 USDC for the retention of market making services.
- Authorise the Policy Team to serve as a commission entrusted with the review and approval of spread levels and other terms.
- Direct Cosmic Cactus LLC to sign a contractual agreement with the MM/s.
Motivation
Hubble Exchange’s Order Book is set to launch shortly. The Limit Order Book (LOB) Design is a stark contrast from AMMs. AMMs have the ability for one-click liquidity provisioning. On the other hand, a Limit Order Book design, although has the potential to be more capital efficient, requires sophisticated MMs to actively manage liquidity by configuring their own strategies. Providing liquidity to a LOB requires a technical integration. Although there are tools targeted at retail MMs, such as Hummingbot, that are able to abstract the technical integration away, these still require configuring a strategy.
Sophisticated Market Makers who operate at scale require trading volume and liquidity to justify an integration to any novel exchange. Liquidity begets liquidity. To solve this chicken and egg problem, Hubble Exchange DAO looks to onboard and retain a Market Maker to guarantee the consistent provision of liquidity to its markets at launch. This liquidity provision will bootstrap taker volume from traders and kickstart these markets, encouraging more MMs to integrate.
Terms
Market Making (MM) agreements are inherently confidential in nature, safeguarding the interests of market makers. One crucial aspect of this confidentiality is the non-disclosure of critical elements, such as spread levels.
Market makers, who play a pivotal role in maintaining liquidity and facilitating trades, often request such non-disclosure to protect their competitive advantage and prevent undue manipulation of market prices. By keeping spread levels confidential, market makers can effectively manage their trading strategies and minimise the risk of their proprietary knowledge being exploited by competitors. Due to the nature of having to keep matters confidential, the terms of the agreement cannot be published in this open forum.
How does the DAO endorse terms they have not seen?
This proposal seeks to provide authorisation to the Policy Team to act as an intermediary between the DAO and the specific market maker. The Policy Team will be authorised to review and approve the terms of the agreement, having the DAO’s best interest in mind.
The delegation of power would allow Hubble Exchange’s growth to continue without hindrance whilst being able to balance the interest of all stakeholders involved.
Authorise Cosmic Cactus LLC to sign contractual agreement with the MM/s.
Cosmic Cactus LLC was incorporated through HP022 for the purpose of entering into off-chain contracts on behalf of the DAO.
- For
- Against
- Neither