From robots and terminals to LLM, the innovation and competition in encrypted user experience

Written by: Owen Fernau

Compiled by: BitpushNews Mary Liu

In 2023, trading bots have transformed from being obscure to becoming highly popular crypto applications.

Top trading bots like Maestro, Banana Gun, and Unibot have facilitated over $4 billion in trading volume in the past year and a half. In the last 30 days, the amount of Gas consumed by Maestro and Banagun has exceeded that of all projects in the Ethereum ecosystem except for Uniswap and USDT.

Major Gas Consumers on Ethereum

Compared to the features previously available to crypto traders, bots offer a key advantage—they use something called intent, meaning users indicate what they want and shift the "how to do it" questions to the bots.

For example, through a subset of Telegram bots called Snipers, users can paste the addresses of upcoming airdropped tokens and specify parameters such as the minimum amount to purchase, slippage amount, and whether to buy only in the first block after launch.

Banana Sniper Interface

This level of control has proven useful, especially earlier this year when meme coins (where early purchases of the right tokens could mean millions in profit) were all the rage.

Intensifying "Competition"

The success of these Telegram bots has spawned countless competitors, but when Stephane Gosselin, co-founder of Flashbots (the leading organization involved in Maximal Extractable Value (MEV)), launched a new Telegram bot called Alfred last week, it sent a message: the industry may continue to thrive.

At last week's Ethereum-themed Devconnect event, Gosselin found that developers are just beginning to understand why Telegram bots matter. He told The Defiant, "Most people think bots are a speculative behavior in a bear market, rather than a better interface for cryptocurrency and DeFi."

Gosselin believes his work at Flashbots is directly related to Alfred. "I didn't create Flashbots to solve MEV; I created Flashbots to improve the user experience on Ethereum."

MEV Running Chain

Alfred implements MEV protection based on Flashbots' work. This can protect users from complex bots that have built-in code to exploit opportunities generated by submitted but unprocessed transactions.

The work of Flashbots and mitigating the negative externalities of MEV essentially generates intent, which is realized by the "resolver" ecosystem.

Gosselin believes that the infrastructure and intent surrounding MEV (originating from the development of MEV research) have reached a new stage of maturity. He said, "Now is the time to actually show the benefits to end users at the interaction level."

Transaction Supply Network

From Bots to Terminals

Telegram is not the only hotspot for innovation in crypto user experience. The third-largest Telegram bot, Unibot, launched a web interactive interface last week.

According to its anonymous founder Just Another Guy, the second-largest company, BananaGun, is also developing a web product. These products, referred to as terminals, are gaining increasing attention as the "interaction layer" of the thriving crypto space.

Unibot Bot Terminal

Jackson, the founder of Thunder, is betting on this space; Thunder is another project incubated through the Alliance accelerator.

Jackson stated, "I think ultimately every DEX, whether it's Uniswap, dYdX, or Curve, should become these invisible settlement layers, and then the interaction layer needs to be built on top of them."

Jackson started creating a program that would immediately purchase exclusive sneakers online once they were available. The founder added that all engineers at Thunder also have backgrounds in "sneaker bots."

Advantages of Interaction Layers

Jackson believes that interfaces like Thunder have a natural advantage over interfaces like Uniswap Labs, which started charging last month. The idea is that an interface facilitating trades through only one protocol (like Labs) will not be able to provide better prices than an interface like Thunder, which sources liquidity from DeFi.

Gosselin believes that protocol-specific interactive interfaces will still retain users but believes that terminal and bot models can also find their place.

Just Another Guy stated that this space is not slowing down—BananaGun adds 300 to 600 new users daily.

Competition for interfaces may also come from aggregators, which, like Telegram bots and terminals, can simultaneously tap into many liquidity sources. However, the difference with aggregators is that users must use traditional crypto wallets to access them. Therefore, aggregators are generally safer but cannot provide the level of customization that bots can.

Looking ahead, Gosselin pointed out that large language models (LLMs) have propelled ChatGPT to become the fastest-growing consumer software product ever and will support customized interactive interfaces for each user.

Security Concerns

It is certain that, like all crypto technologies, the emerging interaction layer comes with risks. In this case, users will relinquish their private keys to use these solutions.

Kain Warwick, founder of the derivatives platform Synthetix, believes that the security assurances of many Telegram bots are worse than those of centralized exchanges, which, as seen with FTX, are not always effective.

On the other hand, Jackson believes that giving up private keys is a design trade-off worth making—Thunder uses a solution called Turnkey, developed by former Coinbase employees, to safeguard users' keys.

The founder acknowledged that the idea of controlling user private keys while providing an experience similar to centralized exchanges is "polarizing."

While Warwick is critical of Telegram bots, he also discussed his attempt to challenge centralized exchanges like Binance and Coinbase through his recently established company Infinex.

Both Jackson and Just Another Guy indicated that they are considering abstraction, a design paradigm that can simplify user experience while maintaining self-custody of assets.

Concerns about the security of Telegram bots are not unfounded—hackers profited $500,000 by exploiting Maestro (a popular Telegram bot with over $3 billion in trading volume) at the end of October. Less than a week later, attackers targeted Unibot.

Monetization

But for now, the interfaces emerging across the crypto space will change the business dynamics of the entire sector.

The monetization of interfaces runs counter to a well-known argument in the crypto space known as the "fat protocol theory"—in 2016, Joel Monegro, then an analyst at Union Square Ventures, speculated that the difference between the blockchain space and traditional web companies is that value will be generated at the protocol layer rather than at the interface layer.

Now, thanks to MEV, intent, and many other infrastructures, venture capital firms like Figmant Capital believe that crypto frontends will capture tremendous value.

As a large number of entrepreneurs explore different interface models, it is clear that some founders see significant potential in capturing value at the interaction layer.

As the crypto user experience continues to evolve, Gosselin, Jackson, Just Another Guy, and even Warwick all agree that now is a critical moment to improve the cryptocurrency user experience.