Black Whale Community Funding
Introduction
In the vast Cosmos ecosystem, there is a group of passionate individuals who are actively trading and building on various protocols. We are the Black Whale. We have years of experience in equity and DeFi trading and have been running highly profitable bots that take advantage of opportunities in the DeFi space.
We have taken a keen interest in Kujira’ s FIN (the first decentralized order book exchange in the Cosmos) as we believe there will be huge profits to be made from employing market making and various quant trading strategies.
When FIN launched, our market making bot went live hours after the KUJI/USDC pair was listed and started placing limit orders, profiting from the bid ask spreads.
We believe we can do more for the Kujira community in our quest to make FIN the best central limit order book in the cosmos.
Most centralized exchanges offer automated trading services because it is profitable and simple to use. As a result, these services are highly popular among both advanced and rookie traders.
We strongly believe a similar service should exist on FIN. A decentralized order book exchange needs a decentralized market making service.
Product Overview
On our app, users will be able to connect their wallets and deposit funds into any of our available vaults.
Our smart contracts will calculate the user’s share as percentage against the total value of existing deposits in the vault.
Black Whale’s bots will manage the funds in the vaults and trade using its market making algorithm.
Upon withdrawal, the contracts will returns the deposited fund with the accumulated profits or losses.
Black Whale will charge an annualized 4% management fee on all funds deposited into the vault.
Black Whale is committed to the sustainable growth of the Kujira’s ecosystem. We will contribute 50% of our management fees and revenue share with all KUJI stakers.
After our flagship market making vault, we plan to create vaults for the following strategies in future:
- Trend following strategies
- Swinging trading strategies
- Short term reversal strategies
- Enabling fund managers to run custom strategies
Goals
As builders within the community, we are putting forward a proposal to receive a grant to help us provide a Market-Maker-as-a-Service (MMaS) protocol to Kujira community with the following goals in mind.
1. Decentralize market making
Not everyone has the skills or capacity to run bots. Hence, we want to provide the tools to empower the Kujira community to profit from market opportunities on FIN. We believe that profits should be shared among the Kujira family.
2. Provide liquidity on the FIN order book to allow users to trade with narrow spreads
Narrow spreads are crucial for an order book to be useable and offer a good trading experience. Our bot will place bids and asks constantly which contribute to keeping the spreads tight.
3. Build tools around FIN to attract new users to the Kujira ecosystem
Market making bots are highly popular on centralized exchanges. We believe our market making bots will attract new users into the Kujira ecosystem. We are here to stay and we want more users to join us.
Core Team
All members in our core team have strong technical abilities with experience working as software developers, cloud engineers and IT consultants in both TradFi and DeFi spaces. We have great confidence in building an amazing product that will add value to Kujira.
Member 1: Background is mostly in tech / finance. I’ve worked in the asset management, hedge fund, and banking industry building trading systems and web applications as a quant and full stack software developer. On terra I built bots to arbitrage between DEXes and take advantage of mispricing in pairs.
Member 2: Over a decade of experience as an IT consultant specializing in cloud solutions. He’s also highly experienced with app development, passionate about equity and DeFi trading, building bots and has strong analytical skills.
Member 3: The third member is a full stack software developer that has years of experience building web applications and APIs for large companies. Currently working full time as a cloud engineer.
Proposed Grant allocation
Total funds needed: $120k USDC
With a 4% management fee and a 50% revenue share with the community, we expect to repay the grant amount in 3 years.
Assuming that we manage $2M USDC worth of funds, a 4% management fee would be $80k USDC per year of which $40k USDC would go to the community. Hence it would take 3 years to repay the grant. Moreover, this is a conservative estimate. If we take into account the growth of FIN and the Kujira ecosystem, we expect our vault funds and revenue to grow as well. This would allow us to repay the grant in a shorter period of time.
The funds will be used to cover the following expenses for a duration of 6 months
- Bot Developer
- Smart Contract Developer
- UI Designer and Developer
- DevOps Engineer
- Smart Contract audit cost
- Hosting cost (Servers and security services)
- Miscellaneous expenses (Marketing and giveaways)
The funds will be released gradually in batches through governance voting as we complete each milestone. The expected timeline is shown in the table below. As the community funds are based in $KUJI tokens, we will calculate the amount of $KUJI tokens to be released by taking the amount of funds divided by the mid price of the KUJI/USDC pair shown on FIN at UTC noon on the day we complete the milestone.
For example, on the 19th of July $24k USDC is scheduled for release to jump start our project. If the price of KUJI on FIN is $0.40 at UTC noon on the 19th of July, we will receive $24k/$0.40 = 60k $KUJI tokens.
On 20th August, we if hit our mile stones, $48k USDC is scheduled for release. If the price of KUJI on FIN is $4 at UTC noon on the 20th of August, we will receive $48k/$4 = 12k $KUJI tokens.
If the price of KUJI goes up over the next few months, we will receive fewer and fewer $KUJI tokens from the community fund as we hit our milestones and unlock the next batch of grants. This will allow the community to deploy more funds towards other projects to grow the ecosystem.
After each release, the KUJI tokens received will be split into 10 market orders and sold gradually throughout the day on FIN.
Roadmap
Upon receiving the funding that we need, we will start the project. Here are the milestones
- Beta Phase completion: 4 months
- Final Phase (Production): 2 months after beta
Beta Phase Milestones
- Website up
- Smart contracts completed
- Bots running with test funds
Final Phase Milestones
- Smart contracts audited
- Bots are fine-tuned
- Website allows users to deposit funds and start profiting
FAQ
What are the benefits of running a bot?
https://learn.bybit.com/trading/reasons-to-use-grid-trading-bot/
Can a market making bot lose money?
Yes.
A market making bot is a bet that markets are mean reverting where the prices moves up and down within a certain range. When the price is at the lower end of the range, the bot starts buying and when the price is on the upper end of the range, the bot starts selling.
However, if a token’s price go above its user defined range, the bot would sell its entire position and will not be able to benefit from the rising price. In this case, it would have been more profitable to just buy and hold the asset.
Also if the token’s price goes below the range, the bot will use all its funds to buy the token and will generate losses as the prices falls below its range.
How does Black Whale’s market making bot work?
Black Whale’s bot uses sophisticated algorithms to determine which price levels to place buy or sell orders and adjust its trade size depending on its inventory. It aims to achieve 50:50 ratio of token to stable coins in its inventory to achieve highest risk adjusted returns. Our bot is fully automated and can run without any human intervention, adjusting its own limit orders based on market conditions and inventory size.
Are profits guaranteed by using Black Whale’s bots?
No. Crypto trading carries substantial risk and the possibility of both significant profits and losses. All trading strategies are used at user discretion and user own risk. Black Whale will not be liable to you for any loss that might arise from use of our services.
