Analysis of the Telegram Bot Track (Part 1): How On-Chain Brokers Drive Mass Adoption of Web3?

Author: @GryphsisAcademy, @ChingChaLong02

Mentors: @Zou_Block, @Erjiueth

Since the emergence of Telegram trading bots, the barriers to trading have significantly lowered, allowing for easy on-chain transactions via mobile devices. Telegram trading bots, akin to on-chain brokers, have driven the strong rise in token prices of multiple projects, leading to a wave of enthusiasm for Telegram bots. This series of articles will deeply analyze the Telegram Bot track, divided into two parts: the first part serves as an overview of the track, while the second part focuses on the analysis of specific targets.

1. Track Overview

Since the emergence of Telegram trading bots, we have witnessed a strong rise in the token prices of several projects. Notably, Unibot began to rapidly increase in price since July 2023. According to data from CoinGecko, the price of Unibot's token rose from a low of $3.13 in May to a high of $200.45 in August, marking an almost 100-fold increase and leading a wave of enthusiasm for Telegram bots. However, as the hype around Unibot gradually faded, Banana Gun emerged. After announcing an airdrop in September, its token price surged from around $9 to a peak of $18. Although its upward momentum is not as strong as Unibot's, Banana Gun has still maintained a certain level of excitement in the Telegram trading bot ecosystem.

An emerging force worth noting is BonkBot, based on the Solana chain, which once had daily active users as high as approximately 35,700, surpassing mature projects like Banana Gun and Maestro. In the competitive DEX space, BonkBot's average daily user count over seven days ranks second only to Sushiswap, ahead of veteran projects like Maverick Protocol and Trader Joe. This surge in popularity is undoubtedly attributed to the recent popularity of the Solana ecosystem, coupled with users' enthusiastic trading of meme coins on Solana, further boosting BonkBot's trading activity.

BTCBot.pro, as a Telegram Bot for the BTC ecosystem, has also been online for nearly a month. Due to the unique nature of the BTC ecosystem, BTCBot.pro offers users Telegram Bot functionalities that differ from those on the ETH and Solana chains, making it worthy of study.

Overall, the Telegram trading bot field is clearly not a fleeting phenomenon. However, the landscape of this field is constantly changing. This article aims to outline the current macro situation of Telegram trading bots and highlight some noteworthy projects.

According to data analysis, since the launch of BonkBot, it has already outperformed other trading bots in terms of trading frequency and user numbers. Particularly in terms of trading frequency, BonkBot's performance is significantly higher than that of Banana Gun and Maestro Bot, with a trading frequency approximately 10 times greater than theirs. This outstanding achievement is attributed to BonkBot's efficient design on the Solana chain, known for its high TPS, which supports more frequent transaction processing. Meanwhile, with the recent rise of meme coins in the Solana ecosystem, BonkBot has solidified its dominant position in the Telegram trading bot market.

Inspired by BonkBot's success, a similar clone, Sol Trading Bot, has also launched on Solana, catching up with projects like Banana Gun and Maestro Bot in terms of trading volume, and even surpassing both in trading frequency and daily users.

As for Unibot, existing data indicates that its market advantage has weakened. Nevertheless, it is noteworthy that the project has begun deploying on the Solana chain, slightly boosting its trading volume trend. Clearly, projects using Solana as infrastructure may be key to unlocking the next wave of Telegram trading bot enthusiasm.

Despite the outstanding performance of Solana Bots, Banana Gun's strong performance prior to the rise of Solana should not be overlooked, as it closely follows BonkBot in several key metrics.

2. Historical Evolution

With the booming development of the cryptocurrency industry, Telegram Bots have increasingly gained attention as intelligent trading tools within the cryptocurrency community. As early as 2017, Telegram Bots already had the capability to automatically reply to messages and execute user commands. With the rise of the cryptocurrency industry, Telegram became the most commonly used instant messaging tool among cryptocurrency enthusiasts. Against this backdrop, trading bots based on Telegram gradually emerged, capable of automating operations such as token swaps, copy trading, data analysis, automated airdrop trading, and cross-chain asset transfers.

3. Market Landscape

Telegram trading bots serve as automated systems within Telegram, assisting users in executing trades on decentralized exchanges. Users interact with these bots through the messaging interface of the application.

Different Telegram trading bots offer unique functionalities, but most share common trading features, including stop-loss and take-profit orders, copy trading, and multi-wallet support.

These bots replace the user interfaces (UI) and user experiences (UX) of Web3 wallets and DEXs, simplifying the originally complex process of decentralized cryptocurrency trading.

These bots utilize advanced algorithms and infrastructure to conduct rapid trades, often referred to as "Uniswap snipers." They meet users' demands for trading efficiency and convenience. While all these bots share the commonality of fast trading speeds, they differ in their specialized functionalities. For example, UniBot offers limit orders and mirror sniping, SwipeBot focuses on ease of use, and OxSniper features anti-MEV protection. The main uses of trading bots include:

• Buying and selling tokens: Trading bots integrated with the Telegram platform allow users to easily obtain tokens by copying and pasting contract addresses into the message box. Some bots provide real-time updates on profits and losses during trading and speed up token sales by enabling pre-approved transactions.
• Setting stop-loss and take-profit orders: Users can set stop-loss and take-profit orders using these Telegram trading bots, allowing trades to be executed automatically based on preset parameters. This feature is particularly useful for trading new tokens that have not yet been listed on CEXs, though trading such tokens carries higher risks.
• Rug pull and MEV monitoring: Some Telegram trading bots have rug pull and MEV protection features. If token developers plan to execute a rug pull, the rug pull protection can identify imminent mempool transactions and quickly execute a sell to prevent rug pull scams. The anti-MEV feature guides purchase transactions through private relays, ensuring purchases are not broadcasted in the mempool, thus preventing MEV or sandwich attacks. Additionally, trading bots can detect malicious transactions that developers are about to execute. If such transactions render the token unsellable, the token will be considered a rug pull. The bot will quickly close positions to avoid falling into scams.
• Copy trading: Users can automatically copy trades from specific wallet addresses through designated Telegram bots. These bots act as a bridge between the user's account and the chosen trader, executing trades based on the signals from the copy trader. However, it is important to note that copy trading carries liquidity risks, as insufficient market liquidity may lead to difficulties in executing trades, thereby increasing trading costs.
• Sniping: Some trading bots can perform liquidity sniping, method sniping, and multi-wallet sniping. Liquidity sniping is an automatic buy operation executed by the bot when it detects an increase in liquidity. Method sniping automatically executes buys based on the "method ID" of pending transactions from developers. Users can also use multiple wallets for sniping through Telegram trading bots.

Traders can create automated tasks through bots to achieve airdrop goals. Bots targeting airdrop mining typically operate across multiple chains, identifying promising airdrop opportunities. However, caution should be exercised when participating in unverified airdrops to prevent scams and fraudulent activities.

4. Technical Implementation Path

The functionality of Telegram bots has existed for several years, but recently there has been significant interest in integrating Telegram bots with Web3 technologies (such as blockchain and smart contracts). Unibot is one of the leading platforms for developing Web3 Telegram bots, providing a suite of tools and services to help developers create, manage, and organize bots that can interact with decentralized applications and blockchain networks.

With the rise of decentralized finance and non-fungible tokens, the Web3 Telegram bot ecosystem has become increasingly vibrant. These bots can be used for various purposes, such as automated trading, asset tracking and management, and social functions. By utilizing the Telegram Bot API and Web3 technologies, these bots can integrate with blockchain networks and other Web3 applications, providing users with more flexible and powerful functionalities.

The Telegram bot ecosystem is primarily built on the Telegram Bot API, a set of HTTP-based API endpoints that allow developers to interact programmatically with the Telegram system. The Telegram Bot API is language-agnostic, meaning it can be used with any programming language capable of making HTTP requests. Common languages for creating Telegram bots include Python, JavaScript (Node.js), and PHP.

Source: Medium @Srikari Rallabandi

Telegram bots are essentially programs that interact with the Telegram system using the Telegram Bot API. Bots can be programmed to respond to messages, commands, and inline requests. To create a bot, you need to register within the Telegram system, which will provide you with a unique token. This token is used to authenticate the bot's identity within the system and send requests to the bot API.

In terms of infrastructure, bots run on servers rather than on users' devices. This means they are always online and can respond to users' messages instantly. The servers can be cloud servers or local machines, depending on the developer's preference.

5. Growth Drivers

5.1 Popularization of Cryptocurrency Trading

Cryptocurrency trading is often perceived to have a common issue: the high barrier to entry in trading knowledge, making it difficult to achieve widespread adoption. Compared to stock trading, cryptocurrency trading requires more foundational setups, such as creating wallets and completing KYC procedures, which pose certain obstacles for the general public to invest in cryptocurrencies. Furthermore, even when using centralized exchanges, the user interface is relatively complex, appearing less straightforward compared to Telegram Bots.

Since the emergence of Unibot, the project aims to simplify the trading process, focusing on maximizing the simplification of trading operations, with all interactions completed through conversations with the bot, providing a fast Uniswap flash sniper for quick trades and precise sniping. The convenience of Unibot lies in the fact that users can trade anytime and anywhere via Telegram without relying on other trading platforms. This greatly benefits the long-term popularization of cryptocurrency trading.

Recently, the trading volume of Telegram bots has surged, validating the market's demand for such trading methods. This is particularly true for tokens with low liquidity or those not yet listed on exchanges, as Telegram bots significantly increase their exposure. At the same time, this also provides traders with more investment options, creating a win-win situation.

5.2 Telegram as a Medium

As one of the world's most popular social applications, Telegram boasts over 55 million daily active users, providing fertile ground for the development of Telegram Bots. Thanks to its widespread recognition and user base, Telegram is planning to transform into a super app similar to WeChat, supporting the operation of various mini-programs within its platform. This move not only enhances its functional diversity but also opens new avenues for decentralized payments.

To achieve this grand vision, Telegram is collaborating with leading technology and cryptocurrency companies, including the TON Foundation and Tencent Cloud, aiming to expand its global influence and accelerate the process of decentralization. This series of strategic actions highlights Telegram's potential as a key super application in the future Web3 landscape.

Built on such a powerful platform, Telegram Bots will undoubtedly be beneficiaries, likely converting Telegram's vast user base into a loyal user group for the bots, further strengthening their influence in digital trading and cryptocurrency integration.

6. Risks

6.1 Asset Security Risks

When using Telegram bots for cryptocurrency trading, users need to bear the risk of asset security. These bots typically require the creation of a dedicated wallet or connection to an existing wallet. In both cases, the bot may gain access to private keys, leading to security vulnerabilities.

Private Key Access Risks: These bots can access private keys, raising security concerns. Private keys are akin to the master key to a user's digital wealth, and their exposure can lead to severe consequences, including theft and unauthorized transactions. The bots' access to these keys significantly increases the risk of security vulnerabilities.

Self-Custody Challenges: By entrusting bots with wallet creation and private key management, the fundamental principle of self-custody in the cryptocurrency space is somewhat undermined. The shift from personal control to reliance on automated systems may create a false sense of security, making users vulnerable to mismanagement or even malicious activities.

Poor Asset Management and Unauthorized Access Risks: The design of Telegram bots often involves managing assets without direct user oversight, opening the door to potential mismanagement. Additionally, the lack of robust security protocols may lead to unauthorized access, whether through the bots' own security flaws or external threats.

To mitigate these risks, users are advised to exercise caution when using Telegram bots for cryptocurrency trading. This includes thoroughly researching the security features of the bots, avoiding storing large amounts of assets in wallets accessible by these bots, and regularly monitoring trading activities for any signs of unauthorized behavior. While Telegram bots offer convenience and efficiency in trading, they also pose substantial risks to asset security. Users must remain vigilant and take proactive measures to protect their digital assets in this evolving space.

6.2 Lack of Code Auditing Risks

For Telegram bots, the absence of comprehensive and regular security code audits may increase the risk of being exploited through vulnerabilities. This lack of auditing leads to a deficiency in transparency and oversight, putting users' assets at risk. For instance, both Unibot and Banana Gun have not undergone code audits by Certik, according to Certik's data, meaning users must bear the risks associated with smart contracts.

Due to the projects not passing Certik's code audit and KYC review, their scores in terms of "code security" and "fundamental health" are relatively low.

Banana Gun also has a precedent; within less than 3 hours of the token's launch, its price experienced extreme volatility, plummeting from a peak of $8.7 to just $0.02, nearly approaching zero.

In response to this abnormal market performance, the Banana Gun team explained through an official announcement that a critical error existed in the token contract that the team failed to fix. They added that although the contract had undergone two audits, the error remained undetected. This incident further underscores the risks associated with the lack of code auditing.

Unibot chose a lesser-known third party for its code audit and did not undergo KYC review. This situation may affect the project's credibility and security, as less well-known auditing firms may not provide the same level of audit quality as more reputable ones. Additionally, the lack of KYC review increases the risk of transacting with anonymous or opaque entities.

6.3 Intense Competition

In the fiercely competitive Telegram Bot ecosystem, the barriers to market entry are relatively low, making it easy to imitate and replicate, leading to significant homogenization among projects. In such a competitive landscape, individual bots may face challenges in retaining users, making the establishment of strong competitive barriers a key factor. This means projects need to possess unique advantages to prevent market incursions by competitors.

For instance, Bonkbot's hot status in the Solana meme coin space is primarily due to its position as a market pioneer. However, user loyalty in this space is generally low, as users tend to choose services based on product performance and potential returns rather than brand loyalty. This means that once better trading conditions or more attractive opportunities arise, users will quickly shift to other platforms. This is a key reason why platforms like Unibot or Maestro Bot have failed to maintain their leading positions.

In summary, while the Telegram Bot field presents promising growth potential overall, it does not mean that every project will stand out in the competition. Therefore, investors need to recognize the potential investment risks of each project when entering this field, while also being aware of the unpredictability of this market.

7. Conclusion and Outlook

7.1 Intensifying Competition Among Telegram Bots in the Solana Ecosystem

Market Saturation and Emergence of Leaders: As competition among Telegram Bots in the Solana ecosystem intensifies, the participation of well-known projects like Unibot and Banana Gun makes the market more saturated. In such an environment, only a few projects can survive, requiring each project to develop a unique roadmap and value proposition.

Personalization and Innovation: Projects must differentiate themselves through personalized services, technological innovation, or better user experiences to attract and retain users.

7.2 Cryptocurrency Market Entering a Bull Market

Impact of Policies and Market Sentiment: Benefiting from positive policy news, the cryptocurrency market is gradually entering a bull market. This will attract more retail investors into the market, favoring the popularization of tools like Telegram Bots.

Market Positioning and Popularity: Given that Telegram Bots aim to simplify the cryptocurrency trading process, their appeal to ordinary Web 2 users will increase as retail investors enter the market.

7.3 Development of Bitcoin's Telegram Bots in the Ordinals Inscription Market

Positive Trends in the Bitcoin Market: The Ordinals inscription market is benefiting from positive trends and news surrounding Bitcoin, and it is expected to grow further.

Early Market and Opportunities: As the Bitcoin Telegram Bot market is still in its early stages, there is optimism for future development. This presents a significant opportunity, especially for projects that can quickly adapt to market demands and innovate their services.

Overall, while market competition is fierce, it also means there are abundant opportunities. For Telegram Bot projects, it is crucial to identify and leverage these trends while continuously innovating and improving to maintain their competitiveness and appeal in the market.

【Disclaimer】This report is an original work completed by students of @GryphsisAcademy, @ChingChaLong02, under the guidance of mentors @Zou_Block and @Erjiueth. The authors are solely responsible for all content, which does not necessarily reflect the views of Gryphsis Academy or the organization that commissioned the report. The editorial content and decisions are not influenced by readers. Please be aware that the authors may hold cryptocurrencies mentioned in this report. This document is for informational reference only and should not be considered as the basis for investment decisions. It is strongly recommended that you conduct your own research and consult neutral financial, tax, or legal advisors before making investment decisions. Please remember that past performance of any asset does not guarantee future returns.