Introducing the Hummingbot Governance Token: HBOT¶
Posted on December 17, 2021
As announced in this October post, CoinAlpha has established the Hummingbot Foundation (the "Foundation"), a new, independent open source foundation that will enable a decentralized, community-led software development model for Hummingbot, an open source toolbox for building crypto trading bots.
Like our spiritual predecessor the Linux Foundation, we believe that community maintenance is key to scaling Hummingbot to every exchange and blockchain and enabling traders to build any type of bot.
An initial interim Board of Directors has been appointed, comprised of five directors:
- Michael Feng – CEO, CoinAlpha, Inc.
- Brett Gibson – Partner, Initialized Capital and CoinAlpha, Inc. Director
- Arthur Cheong – Partner, DeFiance Capital
- Gene Cheon – CFO, Hummingbot Foundation
- Howard Chu – Hummingbot user and Eagle Club member
To retain independence, Foundation bylaws stipulate that no more than two officers or directors of an outside entity can be members of the Board of Directors. The Board oversees staff who handle the day-to-day operations of the Foundation. Initially, the Foundation will employ 8 staff members who handle: a COO, a CFO, an engineering lead, 1 product manager, 1 project manager, 2 community managers, and 1 quality assurance analyst.
The Foundation’s mission is to democratize high-frequency trading by enabling decentralized maintenance and community governance over the open source Hummingbot code repository. CoinAlpha has transferred control over the official Hummingbot code repository to a Foundation-owned Github organization, and the new repo URL is: https://github.com/hummingbot/hummingbot.
The official Foundation website, which also includes the Hummingbot documentation, is deployed at https://hummingbot.org. It is also a community-maintained open source repository: https://github.com/hummingbot/hummingbot-site.
Sustainable Open Source Maintenance¶
Hummingbot’s past 61 releases containing 12,625 commits from 112 unique code contributors have been an extended beta period that have shown that a decentralized, community maintenance model is both sustainable and scalable.
Thousands of users around the world build and run trading bots with Hummingbot every day, many of them on CoinAlpha’s Hummingbot Miner decentralized market making platform, where 3,700 individual market makers have filled $2.8 billion of trade volume for more than 80 token issuers.
This activity also benefits exchanges connected to Hummingbot. Based on income from existing connector maintenance agreements that rebate a portion of fees incurred by Hummingbot users, the Foundation is projected to be self-sustainable at inception, not even including projected future income from administering bounties.
As community maintainers enable the Hummingbot ecosystem to scale, we expect maintenance costs to grow linearly with the number of connectors and strategies. However, we expect volume and fees accruing to the Foundation to rise exponentially as more individuals and professionals use Hummingbot, further enhancing the Foundation’s projected sustainability.
This sustainability allows CoinAlpha to hand over control over the Hummingbot codebase to its community. We are proud to announce that the next release will be the official Hummingbot 1.0.0 release in January.
Starting with this 1.0.0 release, Hummingbot users and community members will be able to control many aspects of the Hummingbot codebase and the Hummingbot Foundation. Approved by the interim Board of Directors, the Hummingbot Foundation is introducing the Hummingbot Governance Token (HBOT) as the medium of community governance.
Overview of HBOT Token¶
The Hummingbot Governance Token (HBOT) has been deployed to the Ethereum blockchain with the following details:
- Issuer: Hummingbot Foundation
- Contract Address:
- Name: Hummingbot Governance Token
- Symbol: HBOT
- Total Supply: 1,000,000,000
The HBOT token is a standard ERC-20 token. It has a fixed total supply so there will never be any additional HBOT tokens created.
The HBOT Token has no monetary or economic value. The sole use case for HBOT Tokens will be to empower holders to decide how the Hummingbot codebase changes over time through voting on three types of proposals:
- Pull Request Proposals (PRP): a proposal linked to an open pull request in the Hummingbot code repository;
- Improvement Proposals (IP): a proposal linked to an issue in the Hummingbot Github repository that specifies a proposed improvement to a component of the Hummingbot codebase, and;
- Governance Proposals (GP): a proposal linked to an issue in the Hummingbot Github repository that specifies either a proposed modification to the Foundation governance system, or a proposed distribution of HBOT tokens from the treasury for a community activity such as a grant.
All pull requests, or proposed code changes to the Github code repository, will need to be submitted as a Pull Request Proposal and be approved by HBOT holders in order to be merged into the codebase and included in an official release.
See the Hummingbot Foundation Governance whitepaper for more details.
In addition, HBOT token holders will be able to appoint members of the Hummingbot Foundation’s Board of Directors. One of the first planned Governance Proposals (Q1 2022) will allow HBOT token holders to confirm the members of the interim Board of Directors or otherwise appoint an alternative Board.
HBOT token holders do not have any financial rights or any claims to the assets or resources of the Hummingbot Foundation.
HBOT Token Distribution¶
The goal of the HBOT distribution plan is to disseminate HBOT tokens into the hands of stewards who have the long-term goal of expanding the Hummingbot project. With this in mind, the Hummingbot Foundation has authorized the distribution of HBOT tokens and future plans as follows:
|HBOT Distribution (Total Supply = 1,000,000,000)|
|Hummingbot Community Pool||40.0%||400,000,000|
|Year 1 Reserve||9.0%||90,000,000|
|Year 2 Reserve||9.0%||90,000,000|
|Year 3 Reserve||9.0%||90,000,000|
|Year 4 Reserve||9.0%||90,000,000|
|Hummingbot Foundation Team||1.0%||10,000,000|
We believe that this distribution plan ensures that existing stakeholders, who have been involved in the Hummingbot development process, have experience with the software and codebase, and have expertise in related fields to market-making bots (in trading, markets, and software development) will have a say in the future governance of Hummingbot. Meanwhile, future code contributors will also be engaged and have the opportunity to participate in Hummingbot governance.
Hummingbot Community Pool (40%)¶
Retroactive Distribution (4%)¶
The Hummingbot Foundation is allocating 4% of the total HBOT token supply (or 10% of the community pool) to be distributed to historical Github code contributors and to users and traders who have participated in Hummingbot Miner.
Github code contributors: In line with the Foundation’s mission to promote the Hummingbot open source community, the Foundation is allocating a portion of HBOT tokens to Github contributors to the Hummingbot codebase as of the v0.46.0 release, excluding any code contributors who were full-time employees of CoinAlpha at the time of contribution.
Also included are 3 Github users who have made significant code contributions to the Hummingbot community:
- https://github.com/supervik created a popular performance calculation CoLab notebook
- https://github.com/syuukawa created the original hummingbot_chinese Github repo
- https://github.com/jellebuth provided code improvements to the cross-exchange market making strategy
This distribution will give developers who have contributed to the Hummingbot code base in the past a voice in the future governance of the Hummingbot source code.
- Allocation per developer: 75,000 HBOT tokens
- Total eligible developers: 62
- Total allocation: 4,650,000 HBOT tokens or 0.465% of total HBOT token supply
Hummingbot Miner users: Users on the Hummingbot Miner decentralized market making platform have played a vital role in the Hummingbot community, providing the majority of feedback, bug reports, testing, and feature requests for the Hummingbot codebase. These users have been essential to where the Hummingbot code base has gotten to today, and we expect their continued active participation in the future of Hummingbot.
Why distribute to Hummingbot Miner users rather than all Hummingbot users? Since Hummingbot is client software that users install and run on their local devices or on cloud-hosted servers, there is no way to centrally track and verify Hummingbot usage globally. However, since Hummingbot’s main purpose is to build and run market making bots, we believe that a significant portion of the Hummingbot user base participates in the Hummingbot Miner platform. Since Hummingbot Miner users need to provide a read-only API key in order to access the platform, we can verify their level of activity and distribute tokens based on that historical activity.
A total pool of 35,350,000 HBOT tokens will be allocated to users of Hummingbot Miner (“miners”). To minimize concentration of tokens, each registered miner is subject to a token allocation cap of 800,000 HBOT tokens (or 2% of the total retroactive distribution pool). Meanwhile, the minimum amount of tokens that each eligible miner will be able to claim is 1,000 HBOT tokens. Subject to these constraints, the tokens will be distributed to miners based on their pro-rata share of the total USD value of rewards they have earned on the Hummingbot Miner platform as compared to the total USD value of rewards paid out in total through the platform. We anticipate that the limited distribution to pre-existing Hummingbot Miner participants to look like this:
- Average allocation per miner: 14,017 HBOT tokens
- Total eligible miners: 2,522
- Total allocation: 35,350,000 HBOT or 3.535% of total HBOT token supply
- Eligibility: Earned at least USD 1 equivalent on liquidity mining rewards on Hummingbot Miner, between launch (March 2020) to December 13, 2021, 11.59pm UTC
Future Community Activities (36%)¶
36% of the total HBOT token supply (or 90% of the community pool) will be reserved by the Foundation for distribution to support future activities of the Hummingbot community. This distribution of HBOT tokens will be directed by Governance Proposals voted on by token holders through the Foundation. The community may choose to approve Governance Proposals to direct future distributions through the Hummingbot Miner platform or the launch of a grants program to allow future contributors to the Hummingbot code base a voice in Hummingbot governance, for example.
The Hummingbot Foundation’s initial plan is to release an equal amount of the community tokens over the course of four years (i.e., 9% of total HBOT token supply per year). No more than 9% of these tokens will be released in any given year. However, any previously undistributed tokens (e.g. any unclaimed retroactive distribution tokens or unawarded development grant tokens) will be rolled over and may be distributed and re-allocated at any time as directed by token holders.
CoinAlpha Investors (37.9%)¶
CoinAlpha’s investors have played a key role in supporting the creation and development of the Hummingbot codebase. The Hummingbot codebase originated as the proprietary software stack for a quantitative hedge fund operated by CoinAlpha from 2017-2018. Afterwards, CoinAlpha investors supported the decision to modularize and streamline the codebase in order to enable community contribution starting in April 2019, as well as the subsequent 2 ½ years of operation and development as an open source project. As such, the Hummingbot codebase represents substantial intellectual property value that is being transferred from CoinAlpha to the Hummingbot Foundation.
CoinAlpha’s equity holders represents a diverse group of angel investors, crypto funds, and traditional venture capital firms. As such, the Foundation values their guidance, input, and continued involvement with the Hummingbot open source project going forward, and the Foundation expects to continue to benefit from the active participation of this constituency.
Consequently, the Foundation has allocated 37.9% of total HBOT token supply to CoinAlpha equity holders. Investor tokens are subject to a 1-year lock-up from grant, and will release linearly over the subsequent year (year 2).
CoinAlpha Team (21.1%)¶
The Foundation has reserved 21.1% of the token allocation for CoinAlpha team members, advisors, and service providers. Similar to investor tokens, team tokens are subject to a 1-year lock-up. Unlike investor tokens, team tokens will be subject to a linear release schedule over the subsequent 3 years (years 2 to 4).
Hummingbot Foundation Team (1.0%)¶
The remaining 1.0% token allocation has been reserved for current and future Hummingbot Foundation team members. As employees of the Hummingbot Foundation, future team members will play an important role in carrying out the Hummingbot Foundation’s mission and ensuring that token holders’ directives are carried out.
Any such tokens granted to Hummingbot Foundation team members will also be subject to a 1-year lockup with a 3-year linear unlock schedule.
Retroactive Distribution Process¶
To ensure that Retroactive Distribution recipients securely receive their HBOT tokens, the Foundation will transfer HBOT tokens directly to the Ethereum wallet of each recipient, incurring all gas fees in the process. We believe that this will enable thousands of community members to participate in governance when the first proposals are available after the Hummingbot 1.0 release in January.
The historical HBOT token distribution process will run for approximately two and a half months:
- Start date: December 17, 2021
- End date: February 28, 2022 11.59pm UTC
Afterwards, any unclaimed tokens will revert to the Hummingbot Foundation and will be added to the Year 1 Reserve.
The Hummingbot Foundation plans to use Snapshot as the primary governance system for all proposals. Voting is expected to commence in mid-to-late January 2022 with the Hummingbot 1.0 release. All proposals and voting can be found on the official Hummingbot Snapshot hosted at https://snapshot.org/#/hbot.eth.
See the Hummingbot Foundation Governance whitepaper for additional details about the governance process, such as proposal types, minim token balance requirements, and quorum/approval thresholds.
HBOT token holders may delegate their votes to other members of the Hummingbot community by enabling delegation at Snapshot Delegate. In order to limit delegation to the HBOT tokens and Hummingbot Foundation matters (and exclude delegation for other tokens you may own that also vote on Snapshot), make sure to enter
hbot.eth in the Space field.
Users who have delegated their tokens can still override any delegation by directly voting their tokens. Voting outright always overrides any delegation. As the Hummingbot Foundation becomes firmly established and community participation increases, HBOT token holders in the future may choose to propose to disable voting by delegation, thereby allocating greater voting power toward community members who vote outright only.
HBOT tokens allocated to CoinAlpha investors and team members are locked up in
TokenVesting smart contracts that enforce a 1-year token lockup period followed by a straight-line release schedule. For investors, tokens have a 1-year linear release schedule in year 2, whereas for team members and service providers, the tokens have a 3-year linear release schedule between years 2 to 4. In order to allow for investors and team members to participate in governance voting, these
TokenVesting contracts are enabled for delegation, permitting locked tokens to be voted by a delegate during the applicable lockup period.
In the future, however, HBOT token holders may choose to propose to disable or limit voting delegation, as community members may see fit.