By Michael Feng 🤖

The ONE Liquidity DAO ("Liquidity DAO") is an open collective that exists as both an arm of the Harmony Protocol ecosystem, as well as a wing of the open source Hummingbot Foundation.

It is an experimental, independent organization comprised of members from both the Hummingbot and Harmony communities that will promote liquidity on the Harmony Protocol and for the ONE token by leveraging the open source Hummingbot codebase and its community of liquidity providers.

Core Values

Connectivity: improve market efficiency by integrating across exchanges, bridges, pools

Organic liquidity arises from seamless pathways that connect pools of capital wherever they may be (centralized exchange, DEX, blockchain, fiat account, etc) to one another, along with well-documented APIs and tooling that enables liquidity providers to confidently deploy millions of dollars of value across those pathways.

The DAO will fund initiatives that build the liquidity infrastructure for the Harmony blockchain and the ONE token.

Transparency: open-source connectors & strategies with public metrics & analytics

In traditional finance, information about liquidity is extremely opaque, with hedge funds who tightly guard their algorithms, no way for average users to access exchange order books, and a dearth of publicly available liquidity data.

The DAO takes the opposite approach: it will conduct research in public to assess how to measure liquidity for the ONE token, publish liquidity metrics about the Harmony blockchain, and open source formerly black-box liquidity provision algorithms.

Alignment: balance slippage for traders, fees for makers, vs risk for holders

A liquidity ecosystem can be viewed as a multi-sided market, in which each stakeholder (traders, market makers, holders, exchanges, protocols, developers) plays a part in driving liquidity but also depends on one another. In order for an ecosystem to grow optimally, there should be incentives for each stakeholder to continue investing time and capital, along with disincentives that prevent them from over-extracting rents and diminishing overall system growth.

The DAO will organize campaigns that balance incentives between the stakeholders in the Harmony liquidity ecosystem.


Mandates

1. Promote liquidity on the Harmony blockchain

The maturation of decentralized finance has caused a Cambrian explosion of transaction activity across different blockchains. While Harmony's speed and scalability allows it to be an cross-chain aggregator that bridges multiple chains, achieving organic DeFi liquidity presents a massive chicken-and-egg problem, since a critical mass of venues, liquidity providers, and traders are all needed for transaction volume to grow organically.