Do Telegram trading bots deliver on their promises of convenience and profit?
Wondering about the trustworthiness of trading bots? Telegram bots are causing quite a stir lately, thanks to skyrocketing token prices and the media buzz surrounding them. These bots can manage wallets and execute trades directly from the messaging app Telegram and offer various tools that improve upon the standard decentralized exchange (DEX) trading experience.
In a nutshell, these bots automate your trades. They allow direct token buying and selling through Telegram. They can automatically seize tokens upon listing, a technique known as sniping. Copy trading is another feature, enabling them to mimic the actions of other traders. Moreover, they're equipped for airdrop farming, automating actions to increase the chances of obtaining airdrops. Additionally, these bots might offer extra functions like providing analytics or tracking wallet movements.
Above: All the features of a DeFi wallet, from the comfort of your favorite messaging app
But should you let a bot handle your trading strategy? Our internal team pondered this, but before we delve into that, let's talk about the big picture, what's driving this surge, and then our team’s perspective.
Rising but inorganically?
In a Binance research report titled "Telegram Bots: Exploring the Landscape," Jie Xuan Chua, CFA, noted that Telegram bots had facilitated over US$190M in lifetime trade volume, reaching a staggering US$10M daily volume on July 23, 2023.
He noted these bots generate revenue through transaction fees and even a "tax" for trades involving the bot's native token. So far, they've raked in over US$28.7M.
"Organic demand is hard to gauge at this point, as much of the activity stems from surging token prices. Nevertheless, expect ongoing developments as projects vie for market share," Chua however remarked.
Why the surge: Another DeFi summer
In a Telegram correspondence to Bloomberg, our VP of Ecosystems, Ben Yorke shed light on the recent interest in these bots. He said we’ve seen an explosion in products that automate trading on decentralized exchanges, which is not surprising considering the amount of infrastructure such as terminals, copy trading, and automated trading strategies active on centralized exchanges. These Telegram trading bots can also detect early token launches and help users get the best pricing on their trade.
Unlike Web2 giants who are slow to embrace digital assets, Telegram has been early to the space by launching its wallet functionality and digital token (TON), which is giving them a strong moat against other Web2 messaging apps. There are a few apps that are built on that native TON wallet and blockchain, which offer the advantages of a smoother interface and self-custody for users - meaning users hold their own private keys. This has been a key criticism of other Telegram bots like Unibot, where users trust the app to generate and store the keys.
Nevertheless, this influx of trading bots has been one of the strongest narratives we’ve seen since the end of the last cycle. “The growth in these trading tools [trading bots] is making advanced DEX trading much more accessible to retail crypto users, and shows some similarities with the growth that we saw in 2020, which is now known as “DeFi Summer”, Yorke said.
Unibot’s first mover advantage on display
CoinTelegraph pointed out that while Unibot's price might be stretching, its robust fundamentals are evident in its growing user base and tangible yields for token holders. Unibot's pioneering stance translated to a 400% surge in its token price, reaching an all-time high of $199.90 on July 28, outperforming the market's bearish trend even as Bitcoin slid by nearly 4%. Trading volume executed through the Telegram bot has also been on the upswing.
Above: Total volumes processed through Unibot are continuing to maintain higher levels, even as volumes drop on centralized venues.
While the token's value retreated 44% from its peak, raising doubts about the trend's sustainability, author Nivesh Rustgi emphasized the project's solid fundamentals.
“The Unibot price could be overextended, but notable user base growth and real yields paid to token holders are a reflection of the project’s strong fundamentals,” Rustgi noted.
Mizar's strategy: recognizing user types and building their preferred tools
We had a conversation with Mizar's team to discuss trading bots and gather insights into their strategy for outmaneuvering the competition, given Unibot's current lead. For those unfamiliar, Mizar is a copy-trading web app that recently launched a token sniffing telegram bot to let users quickly learn details about any token on Ethereum, including technical details that can help users avoid falling for honeypots or being scammed.
To start, Mizar acknowledges that Telegram bots are favored by casual traders due to the familiarity of the Telegram platform and its ease of use. Conversely, more advanced traders tend to prefer web apps. "TG bots are effective for quick actions and monitoring, but the true action takes place on web apps… Professionals and institutions still have a preference for web apps due to their customizable features, brand recognition, and ability to manage complex operations," explained Mizar.
Mizar considers their multi-channel approach to be the future of trading. “All in all we still believe that TG is just a new channel from where to trade. We have seen quite big improvement in TG functionalities over the last few years & we believe in the future TG will support much more advanced UI/UX. This could open more avenues. We also believe that other platforms such as Discord and Twitter might be the next bot trend.”
There’s no doubt that telegram bots are helping to remove a lot of complications and pitfalls from the DeFi trading user experience. "That's why we are developing the Mizar research dashboard… We do everything for [traders] in the backend, but [they] can still customize everything," they stated.
Long or short? Anticipating bot growth
Within our team, we acknowledge the imminent surge in bot activity, and like Mizar, see it as an additional channel from which to acquire users and trading volume. WOOFi Swap and Orderbook Dex are actually suited quite well for cases like these, an area we might see more development on in the future.
One important trend to watch is with Telegram’s native wallet, built on TON (Telegram Open Network). Already there are few apps that are built on that native wallet, which give users full control of their private keys (non-custodial) compared to apps like Unibot that generate and hold the keys for users.
In any event, this trend does appear to be heading in a sustainable direction. “The real added value is not TG per se but the services offered. User-friendly sniper bots are something new and fun to be used even in a bear market,” the Mizar team said.
Does that make it a good investment?
We asked WOOFi social media lead Satswassie whether he believed Telegram bots like Unibot could become a dominant trading platform of the future. He was short on words, just stating “I sold too early, I don’t want to talk about it”. Such is the way of the degen.
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