How to use Bots to Market Make on Polkadex
I’ve outlined a step-by-step method to deploy your Hummingbot for Market Making on Polkadex. Given that this platform is newly released in Beta, anticipate a few challenges, which I’ll thoroughly explain at the end of this tutorial. The team is expected to resolve these issues in an upcoming backend revamp. Before we dive in, I’d like to emphasize that Market Making, with proper safety measures in place, is a relatively secure ‘buy low/sell high’ strategy. Depending on the volatility of the base asset you trade, you can potentially earn profits. Again, this is not financial advise!
To begin, you’ll need to install Hummingbot on a machine. While using your local machine is an option, I strongly recommend deploying it on a server that operates 24x7. In this tutorial, I’ll use an 8 GB Linode on Akamai’s infrastructure. Here are the steps to create a Compute Instance on the Linode Platform:
You can select the latest LTS version of Ubuntu, although it’s recommended to use 18.04 as specified below. Make sure you have at least 4 GB RAM. I opted for 8 GB because I prefer source compilation over working with Docker, allowing for easy updates when code changes occur.
For the installation of Hummingbot, follow the documentation provided on their website:
After setting up the Linode, log in to the server and start installing Hummingbot from the source using the documentation provided for Linux:
An important note: The Polkadex hummingbot connector is still under development. Recent changes require you to modify the command when downloading the source files from the GitHub repository. Instead of:
git clone https://github.com/hummingbot/hummingbot.gitUse the following:
git clone --branch development https://github.com/hummingbot/hummingbot.gitOnce installed and logged in, set a password and access the default shell on Hummingbot.
Type ‘Connect,’ and you’ll see Polkadex listed in the list of exchanges.
Use ‘connect polkadex,’ and you’ll be prompted to enter the seed phrase of the trading account keys generated during the registration of the funding account on the Polkadex exchange.
Please note that the ‘seed phrase’ required here pertains to the ‘Trading Account’ and not the ‘Funding Account.’ Under no circumstances should you share your Funding Account seed phrase.
Verify that the funds moved from the ‘Funding Account’ to the ‘Trading Account’ reflect in your account balances.
You can now start building your Market Making strategy. Type ‘create’ to initiate a new bot for your exchange.
I’ve used the most basic default values to create our initial bot strategy for Market Making on the PDEX/USDT pair on Polkadex.
Upon executing the start command, you’ll observe your first Market Making bot active on Polkadex!
All the existing issues with the connector are documented in the recently merged pull request:
Happy trading!
