The Beached Whale and the End of an All Out Algo War: Two Market Makers Come Clean through Open Source
The Beached Whale and the End of an All Out Algo War:
Two Market Makers Come Clean through Open Source
Steemians!
It's @jasonmcz again from Firstblood.io, I am writing this post along with my co-worker @zackcoburn , who's the other market maker in this post. We hate to say this but unfortunately this will be the LAST chapter of the trilogy on our voyage in making market here. If you missed my previous blogs on this topic, you may go to these two links to catch up: Chapter I and Chapter II. (Reading those posts can certainly get you caught up on some of the topics I will be discussing today.)
The Fork and The Pre-Closure
I think some of you here would agree with me that Market Making is a fun activity. Why? Because it involves a lot of problem solving skills and you can learn from what your opponents are doing by watching how they are posting their orders on the orderbook and how they react to you when your fresh orders hit the book. Also it makes you money!
$$$$$$$. The kind that buys you stuff.
And something changed all of these on our internal market, it was an UTC timestamp.
2016-07-26T15:00:00 UTC (11:00:00 EDT)
It was this UTC time stamp marked the end of Algo Wars and Liquidity Points Race because the new update is taking out of the very same liquidity reward that got most market makers in this game at first place.
Although, it seems like every market maker that we know all saw this coming sooner or later because it was over-due for putting a stop on that flawed reward system.
537 hours and 537 Payouts
| 441 | @abit |
| 67 | @complexring |
| 8 | @hopeless/@inbamn |
| 4 | @grumlin |
| 3 | @jl777/taker |
| 3 | @xeldal |
| 2 | @tinfoilfedora |
| 1 | @anonbtc2 |
| 1 | @chitty |
| 1 | @creator |
| 1 | @cryptogee |
| 1 | @james-show |
| 1 | @jasonmcz |
| 1 | @smooth-a |
| 1 | @steemit200 |
| 1 | @steempower |
Couple market makers did well and some didn't, and by some, I meant MOST. As you can see on this chart, how Liquidity King @abit gamed away 441 rewards or 82.12% of the total out the system.
Using a 7 day moving average of $3.13/Steem that's whopping $1,656,396 worth of liquid steem although of course he wasn't able to get that much because he's losing spread on doing every (wash) round trip against himself and others -- such as @jasonmcz , @zackcoburn, @jl777, @complexring and many more.
Final Hours and End of an All Out Algo War
As a prop trader for last 7 years, I gave the very last hour of every trading day a name -- power hour -- because anything could happen during that last hour, whales could be buying up, speculators could surge on the volume and better-informed traders/hedge funds could be loading up interesting shit that one one ever heard of before a major event hits the press. STEEMIT Internal Market is no exception, it had its very own version of it and it's pretty damn bloody.
Before that UTC timestamp, it was a battle field.
Here is a snapshot of what happened before the fork:
- @abit was wrecking up 10,000 - 20,000 STEEM orders occasionally, both on the bid and ask, which left the rest of the market makers with no choice but to give up. Props to him, he really stepped up his game in the final hours! The liquidity points was in the 20MM level as opposed to 2-3MM normally.
- @complexring and I were monitoring market closely looking for a chance to fight back on the liquidity ladder. Remembered clearly one night we saw @abit went offline, we thought we had a chance to climb up but quickly discovered our orders were blocked by @abit's great wall again.
- @jl777 and his @taker (maker) were posting 77.00 STEEM all over the place, climbing up the ladder slowly but efficiently although later on he confirmed he lost a bunch of money by using this strategy.
- And others have already given up....
The End & The Open Source
With no liquidity reward and quickly discovered lack of trading volume on internal market (perhaps more in the future when STEEM grows its community), we've decided to take a break from making the market on the internal exchange. As of today, I have 'undeployed' all my capital from the orderbook and we have officially open sourced our retired bots to github.
You may now fork it or clone it from this link:
https://github.com/zackcoburn/steembot
Requirements:
-python3
-https://github.com/xeroc/python-steemlib
special thanks to @xeroc for his amazing libirary
How to run:
To run Steembot, modify run.sh with your username and private key. Then run sh run.sh.
Hopefully this open source will open up to those people who might be interested in making some extra cash from spread collecting and in doing good for the community by providing liquidity on the book!
Nice post. Many are not aware of the many different aspects of Steem. It is good to hear how things look from the trading and market making perspective.
Thanks @smooth, you played a important part in this as well. Hope we can find a resolution to this issue before the next hardfork soon.
good job
keep wacthing this post :D
It is a very important thing to test steemit network, and investigate it's behavior while big market fluctuations, new changes coming in , etc. It will tell us later, if steem is strong enough to resist any other bad events.
check it out and vote me pls
https://steemit.com/travel/@chicken1990/tens-of-thousands-of-islands
Thank you for sharing
Thanks for your clear position on this matter as well as the info. Thrive on and namaste :)
Thanks, I wish i had more technical knowledge to understand better, need to study more :)
@renk read my previous posts! You will be able to put the picture together!
yes me too... :-)
Super Awesome... It was a bit hard at first but after diving into the rabbit hole reading all your previous issues, I learned a lot.
I can see why its fun being a market maker. It gets your adrenaline rushing and you're getting paid.
Really hoping for a more optimal solution that would benefit the future of the community though.
looking forward to your mag this weekend!
An end to the flawed liquidity system. Next step the curation game ... inch by inch
Great post. I've started reading through your previous posts to edumacate myself. But I'm still stuck on the kimchee recipe. I love good kimchee. mmmmmmmmmmmmmmmmm.....
Hahahahahaha @gikitiki make sure you try that at home! Kimchi is really good!
Great article, always learning something new here :) Thanks for sharing your knowledge! Love it! Alla x
Hi @allayummyfood Thanks for the support! Loved your youtube videos!
thanks a lot :)
This is so interesting. I'm gonna read the other posts aswell. Thanks for sharing. I'm very very new to all of this.
Hi! This post has a Flesch-Kincaid grade level of 8.7 and reading ease of 79%. This puts the writing level on par with Leo Tolstoy and David Foster Wallace.