Crypto Fintech & e-commerce

Cryptocurrency Trading Bot Platform Hummingbot Buzzes With $8M Series A

Hummingbot closed on $8 million in Series A funding to continue developing its open-source cryptocurrency trading bot platform.

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Initialized Capital led the round and was joined by Slow Ventures, Arrington XRP Capital, Borderless Capital, Defiance Capital, Terraform Labs (Luna), AscendEX (BitMax), Ava Labs, NEM Trading and Altonomy. Including the new round, Hummingbot has raised a total of $13 million, according to Crunchbase data.

The company, headquartered in Mountain View, California, got started in 2019 to democratize high-frequency trading for the cryptocurrency market by providing individuals with the same automated trading capabilities previously only available to Wall Street hedge funds, according to co-founder and CEO Michael Feng.

He and co-founder Carlo Las Marias come from financial backgrounds, and CTO Martin Kou was at Apple.

“Our original idea was market-making and liquidity, so we spent a month building integration into Coinbase and other exchanges before we could do the fun part, which was the trading,” Feng told Crunchbase News. “There were so many exchanges, and each one had its own API. Once we realized everyone had that problem, we thought we could solve it with open source.”

Feng went on to say that open source enables someone to do a low-level API integration into exchanges and then quickly build a trading strategy.

The company’s Hummingbot Miner launched in March 2020 for token issuers to provide low-cost, flexible market-making (market makers set the prices of assets by creating orders to buy and sell those assets), via an army of decentralized traders called “miners.”

Hummingbot client interface, courtesy of Hummingbot

It wasn’t easy, though. Feng admits that just prior to the release of Miner, the company was running out of money and had maybe one month of runway left. What ended up helping was the global pandemic and accelerated interest in cryptocurrency, he said.

As a result, Miner ended up taking hold. Fast-forward to today, and the company has now worked with 21 issuers to tap into 2,400 individual “miners” that has resulted in more than $1.7 billion of trading activity, Feng said

Hummingbot derives its revenue from three sources: By taking a share of the exchange trading fees; platform fees from token issuers managing and hosting liquidity mining campaigns; and custom exchange connectors, essentially integrations from Hummingbot to exchanges.

Although the company has its base in California, its current headcount of 50 employees is spread all over the world, Feng said.

He intends to use the new funding to expand Hummingbot’s platform to more exchanges, hire additional support, engineering and quality assurance talent, and develop additional user capabilities as it relates to trading strategies.

“We will expand the Miner product and launch a new line of businesses,” Feng added. “We also plan to develop functions so that users will be able to see how the API behaves before deploying it live.”

Brett Gibson, general partner at Initialized Capital who is joining Hummingbot’s board, said he had been hearing about Hummingbot for a long time and was following what it was doing.

He said via email that the company was introducing thousands of users to automated trading for crypto and giving them access to “Wall Street expertise” and capabilities typically reserved for more sophisticated funds.

“The rise of crypto is driving an explosion of new assets and trading venues, and the resulting increase in trading pairs is far larger because it is some multiple of the two,” Gibson said via email. “All these new trading pairs need liquidity for efficient price discovery and for market participants to see their orders matched. Hummingbot is directly solving this with its open-source trading bot and marketplace. I’m excited about what they’re building and excited to join their board.”

Illustration: Li-Anne Dias

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