STEEM Witness @roadofrich / Blokfield.INC

You can find details of Part 1 of this proposal in the link below.
https://steemit.com/proposal/@roadofrich/proposal-for-sbd-liquidity-provision-and-market-making-mm-bot-development-for-the-steem-ecosystem

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The idea of developing a market-making (MM) bot originated from a simple suggestion in the STEEM Witness chatroom. Since then, various opinions and feedback have been shared, and we’ve organized them into key points. Notably, many users seem to have misconceptions or negative perceptions regarding MM bots, and we aim to address these concerns in detail.

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Key Questions and Answers

1. Does the MM bot for arbitrage between exchanges manipulate prices?

No, the MM bot we are proposing does not manipulate market prices.
It operates passively, reacting to price changes in the market. The primary function of the MM bot is to provide sufficient liquidity to exchanges and create an environment where anyone can trade easily.

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2. What losses might occur without an MM bot?

The losses we refer to are relative losses rather than absolute ones.
When liquidity is insufficient, the trading environment becomes less attractive, discouraging users from participating in the ecosystem. This can weaken the overall competitiveness of the STEEM ecosystem.

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3. Why is an MM bot necessary?

The STEEM internal exchange currently processes very low trading volumes.
As a result, users who cannot or do not want to use HTX (e.g., due to KYC restrictions) have no choice but to rely on the STEEM internal exchange. However, the lack of liquidity makes trading difficult.

By deploying an MM bot, we aim to supply sufficient liquidity to the STEEM internal exchange and establish an environment where all users can trade with ease.

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4. If the MM bot is profitable, why don’t you operate it yourself?

Our team has previously operated an MM bot on Upbit, generating profits successfully.
However, the trading environment on HTX is vastly different. Wide order book gaps and high levels of wash trading make it difficult to execute efficient trades.
Under the current conditions, running an MM bot for direct profit is not an attractive option.

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5. Is the proposed development cost reasonable?

We have proposed a budget below the industry average.
Typically, MM teams for centralized exchanges (CEX) charge approximately $3,000 per month per trading pair.
Additionally, since this proposal involves development costs, we have suggested the minimum necessary budget to address concerns about the use of SPS (Steem Proposal System) funds.

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Plan After SPS Approval

1. Primary Goal: Developing and improving the MM bot
   Our initial focus will be on building an environment that ensures sufficient liquidity on the STEEM internal exchange, allowing users to trade seamlessly.

2. Long-Term Goal: Building a Layer 2-based DEX to replace the STEEM/TRON multi-chain system
   In the past, we developed STEEM-BSC and STEEM-TRON bridges, but these systems proved unstable and carried significant risks.
   Instead, we believe that a STEEM Layer 2 DEX would be safer and more practical.

   • For example, creating a USDT token to enable STEEM/USDT and SBD/USDT trading environments.
   • However, sufficient liquidity would still be essential, and the stable operation of the MM bot would be a prerequisite.

Once the MM bot establishes stable liquidity, we can expand further by implementing STEEM/TRX and SBD/TRX swap systems with lower transaction fees.

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Proposal Background

The purpose of this proposal is to address the insufficient development of the STEEM ecosystem.
While it is possible for individuals to create and operate bots for profit, this is unlikely to happen in a market with limited profitability.

For years, we have waited for the STEEM ecosystem to grow on its own, but little progress has been made.
With this MM bot proposal, we hope to supply liquidity to the ecosystem and lay the groundwork for sustainable growth.

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Important Notice

The current document is not an official SPS proposal.
We are currently gathering feedback and conducting thorough discussions. If, after this process, we determine that submitting an SPS proposal is feasible, we will proceed with the official submission.
We encourage everyone to freely share their opinions and contribute to the discussion.