Miners earn rewards while participating in our Liquidity Mining campaigns by running a market-making bot that maintains orders on exchange order books. Every snapshot (1-minute interval), Hummingbot Miner checks for eligible orders in the exchange using the read-only API keys connected to the platform.
In other words, you can earn rewards every minute when you meet the following requirements:
- You have open limit orders on the participating trading pairs
- The spread of your orders are within the maximum spread
- Your read-only API keys from the exchange are connected in Hummingbot Miner
Every campaign has a weekly reward pool for every participating trading pair.
But not all miners get an equal share of the rewards. You will have to compete against other miners for a portion of the total reward pool. The amount of reward you earn depends on the following:
- The amount (size) of your orders
- Order spreads (price distance to the order book mid-price)
- How long you maintain your orders in the order book
You can also see in the snapshot view how you are performing versus other miners.
Simply put, the tighter your spreads are, the bigger the size of your orders, and the more consistent you are with placing orders in the market over time, the bigger rewards you can get since you are more exposed to market making risks. (Read our blog about What is inventory risk?)
Let's take a look at some comparisons in the sample calculation spreadsheet:
- Miner 1 and Miner 2 have the same order sizes, but Miner 1's spread is smaller. Miner 1 earns a bigger allocation of the total reward for the period than Miner 2
- Miner 2 and Miner 3 have the same spreads, but Miner 3's order amount is larger. Miner 3 earns a bigger allocation of the total reward for the period than Miner 2
The screenshot below shows how the rewards are allocated for each miner.