Trading Bots on HE - Market Makers or Market Takers? .:. WorkerBee PH-Pool Week 215
Today, there was an interesting discussion about bots in the Rising Star Discord server, and some people were pissed off by the profits that trading bots are "taking" from regular, human users... Before everything, I want to be transparent and say that I do have 1 account where I run the "official" trading bot developed by the Hive-Engine team that anyone can buy here...
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Second clarification, running a bot has its pros and cons, and it has its costs and risks... Bots don't get free tokens and later on, they sell them for money... They BUY tokens, and they SELL tokens... Usually, they are set up to buy tokens for the LOWER price to sell them for a HIGHER price, but sometimes, that doesn't have to happen... Selling for lower can happen for many reasons, but let's not go into that this time... Let's say that the main purpose of bots is to find ARBITRAGE possibilities on the markets and use them to make profits...
Is that good, or is that bad? Well, it depends... If there were no bots, humans would have a chance to make those arbitrage trades and make the profits manually... As they do exist, they do that for their owners automatically...
The biggest advantage of bots is when they "act" as market makers... For example, if you want to buy a large amount of SWAP.HBD, you will not have enough liquidity to buy it in 1 order, without moving the price a lot... If you use a trading bot for that, you can set it up to buy tokens until a certain price and patiently wait for those orders to be filled... In this way, your bot is a MARKET MAKER, as it created ACTIVE BUY (or SELL) orders that are waiting to be filled (the similar way you do when you don't want to sell some token at the current price, but for a specific price... you create an order and wait)...
We have to agree that having a constant buy pressure on some token can be only a good thing, so bots can be useful for that purpose... But, it could be the same the other way around, when they can be set up to create a constant sell pressure...
Back to the topic and the title of this post... There is another type of bots that we can meet on Hive-Engine... They are "hunting" for arbitrage opportunities, but they act in a bit different way...
As we have 2 types of markets on Hive-Engine (regular order book market and liquidity pools (diesel pools)), they create arbitrage opportunities... Sometimes, the price of a certain token is cheaper in the pools than it is on the markets, and sometimes it's vice versa... With trading bots running around, there are only a few cases when you can spot those differences...
If the price is close, you can MAYBE do it, but you have to be FASTER than bots... We have that "third" type of bots that don't have ACTIVE buy or sell orders at all, but their only job is to monitor the markets and hijack (human) orders! Yes, you read it well...
For example, you want to sell your token for X price which is the LOWEST SELL order in the orderbook... Even if there is NO OTHER ORDER in front of you and someone decides to buy the token for YOUR price, there is a chance that a bot will "overrun" you and take that order (for a slightly cheaper price)... If there is an arbitrage opportunity, the bot will buy a token in the pool and sell it through the order book in less than 3 seconds... I call those bots market takers as they don't have active orders in the book... Are they useful or not? I'm not sure, but it kind of sucks when your order is "hijacked".
What do you think? What is your opinion about trading bots? Are they good or bad for the markets?
Let's see the WorkerBee Pool numbers for this week...
This week, we have mined 92 BEE tokens in total!!!...
This week we didn't have new delegators and we got some new delegations from old members, too! Thanks guys! Appreciate your support!
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What about the bonus tokens?
It's turn to the SPS tokens to be given away as a bonus token today! Seeing that token chart going up, it's a pleasure to distribute them today as they can be beneficial for you guys if the price continues to go up! With all new additions to the game, and Splinterlands Land 1.75, there are big chances to see better days for the game, which means better rewards for players!
There will be distributed 270 SPS tokens to the delegators of the pool as a bonus reward today!
As always, in the end, let's give the exact numbers for this week... 92 BEE tokens and 270 SPS tokens will be distributed as a bonus... The APR (without the bonus) was 4.801%, and when we added the bonus it went up to 5.837%!
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Thanks for the news. I have no idea about these bots, I don't know how to use them; I'm waiting for one with AI support :) 😎
Oh, they won't be allowed here. 😂
Hehehehe... If they are only trading, they will be allowed... 😃
I'm not 100% sure... There are still a few Luddites here who can't get on with AI...
No this bots are not good, be it here or on some othere big pages out there 👷 .... but ... but we are psychologically forced to use them , then I also hope AI will take away all the work and money and rights from us all, because who here still needs to think more than a roborized society is normalized by a couple of IT developers.
Sorry man 🤷♂️ i never like AI and bot ideas on market, it is not free market .
You don't have to apologize... lol... I asked people for opinions and I appreciate you sharing yours... Unfortunately, I don't see that we can stop bots from taking our (current) jobs... It's inevitable...
Ive heard alot of stories of this bots, and how a friend lost all his trading due to using a bot just because of a slight mistake. am not against it though if its good or bad as every one has choices, the bot was brought into existencr for a reason, we just need to know its operation before deciding either to use it or not. and your post explained every detail understanding of it Thanks alot.
Yeah, bots aren't humans, but they work as humans program them to work... It's impossible to create a perfect bot and there is always a risk that it can "burn your account"...
trading bots are everywhere not just hive engine, on betting people use them to set a buy price and a sell price after the buy, a stop loss...some bots move up and down the orders to manipulate quotes
That's crazy to see how fast they change orders... Especially when you look at some centralized trading platforms...
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I don't like them, but they will always exist as people want to generate profits. You can't complain too much because the market needs liquidity, but it sucks to be hijacked.
Thank you for running the pool and for the BEE/SPS tokens.
That's what annoys me the most... When they act as market makers, I don't have a problem with them... but hijacking isn't that at all... it just "steals" orders from people and gives 0 value to the market's liquidity...
These market bots can be very annoying for me man XD Sometimes I try to sell tokens and I want to have the lowest sell bid but the bots get ahead of me within 3 seconds. They do it again and again and again! I don't know how many times they can do it in 1 minute but I've seen them do it 10 times lol.
Something similar was an issue on Solana a few months ago as there, your transaction would be "overbid" by bots (they pay a bigger transaction fee)... But, they realized it's bad for ordinary people and they found a way to prevent it...
On Hive-Engine, there are no transaction fees and bots are competing with normal users only by SPEED... Of course, we can't compete with them on that...
I agree with you... It is annoying a lot!
Deisel pools easily solve the problem, I guess people are concentrating on the negative side of bots otherwise, they do arbitrage and put liquidity for everyone.
Hive-Engine is such a small market, I do not think any trader can survive on it's income, they should explore some good liquidity market.
Yeah, H-E is a small market, but if you follow the bot accounts and their transactions, you will see that it is possible to survive on its income... 😉
Hmm. So I underestimated the H-E market transactions.
They wouldn't exist if they are not be profitable... 🙂
I think trading bots are largely a good thing, great at capitalising on market inefficiencies and moving/providing liquidity on both sides to the market. But I acknowledge that they can also do the inverse, given that they're just tools created by humans, who sometimes can get greed beyond their own good :)
Is the third type of bots that hijack orders similar to MEV?
Not sure what MEV bots exactly do... If they just go through the market and balance out the pools to get some profits, then these hijackers are not the same...
The issue on HIVE is that we don't have transaction fees and a bidding system for fees... So, they just do transactions faster and override humans... If you tried to fill some SELL orders on H-E, you probably had that experience... I saw that @incublus shared here in the comments that he had that many times...
Right right. If I'm not mistaken, MEV bots are based on a bidding system for fees. But this situation then on H.E is a bit of a nuisance.
I previously wasn't aware of this mechanism, so I may have had the experience on H.E without acknowledging it. Now, I'll be on lookout and try not to be forgetful of it :)
I just read the post today. I was wondering why do I have a lot of sps more that usual. Thank you!
hehehehe... You are welcome!
I think there's a place for everyone or every bot in the market. It's part of the ecosystem and there's no running away from it.
Thanks for the update and tokens!
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You are welcome! Thanks for sharing your opinion!
I don't like if this happens either. But market makers as a whole are necessary, maybe even more on H-E, where the volume is low even on the most traded tokens.
Not sure if this kind of bot is market "makers." If you don't make your click to fill the order, they will not do anything... So, they exist only to TAKE your order (hijack)...
On the other side, I do agree that market makers are important... Those bots that create orders in the order book...
Yes, absolutely, this would be a market taker. Maybe from my comment it wasn't clear that I made a distinction between them.
Oh, sorry... You quoted my line where I was talking about the other type, while you were thinking about the "regular" (market maker) bots... That's why I got confused...
We are on the same page.. ;)