The Rise of Crypto Telegram Bots
Fad or Future?
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A new sector is emerging, powered by one of the most popular social apps in the world. Telegram bots are redefining the way users interact with the blockchain.
These bots aren’t just your typical chat bots, they’re your personal assistant for blockchain trading, tracking, bridging, and even airdrop farming (among others) — an innovative amalgamation of blockchain and technology poised to disrupt crypto frontends as we know it. The thrill of token launches, the vigilance of monitoring wallets, the dance of crypto trading, all within your favorite messaging platform. Interacting with the blockchain is now as seamless as sending a text, marking a paradigm shift from the cumbersome interfaces and complex management of seed phrases that has characterized the crypto landscape. The power of the blockchain, once the privilege of the tech-savvy, is now democratically accessible.
This week, we dive into the world of Telegram bots, an emerging sector that has taken the space by storm. According to DefiLlama, a snapshot of fees from the last 30 days shows Maestro and Unibot as the 13th and 37th most profitable platforms respectively, surpassing entire protocols and blockchain ecosystems in terms of 30-day revenue.
Is this truly the future, or is there more than meets the eye?
What are Telegram Bots?
Telegram bots are micro applications that run entirely within the Telegram messaging platform. Users interact with bots through various ways, from simple chat commands and in-chat buttons, to full-on JavaScript Web Apps hosted within the bot itself — all without ever leaving the Telegram application.
In the same way that browser extensions have extended the functionality of web browsers, Telegram bots extend the functionality of Telegram beyond its original mandate of a messaging application.
Types of Bots
According to official documentation, bots on Telegram encompass a wide range of utility, including, but not limited to:
Replace entire websites – @durgerkingbot
Send and receive payments – @ShopBot
Create custom tools – @QuizBot
Integrate with other services – @GMailBot, @GitHubBot, @Bing, @YouTube, @wiki
If you’ve been in the crypto space long enough, you will have inevitably seen bots used in your group chats for checking token prices, charts, news, custom alerts, token-gating, and more. Users can also create custom alerts on data providers like Nansen and Arkham, who have integrated with Telegram to send notifications to your DMs or group chats.
While we will briefly explore various types of bots, for the purpose of this report, our primary focus will be on trading bots.
Airdrop Farming Bots
The profitable airdrops on Optimism and Arbitrum have sparked a frenzy in airdrop farming, and bot developers have begun to seize this opportunity. Telegram bots like LootBot and Farmer Friends have started to gain traction, enabling users to autonomously sybil airdrops with ease.
In the case of LootBot, users are provided with multiple self-custodial addresses generated in-app. Users choose which protocols the bot can interact with on their behalf on a weekly or monthly basis. LootBot also includes anti sybil-detection measures, such as routing transfers through Monero, a privacy coin, to conceal the connections between addresses.
Community Management Bots
Community management bots, especially those employed for token gating, have been a fixture in the crypto space for a while. Token gating leverages the unique properties of non-fungible tokens (NFTs) to provide benefits to their holders. Since each NFT is unique and can only be owned by a single address, it makes them a powerful tool for delivering holder benefits. These benefits can range from rewards and event passes to exclusive access to holder-only channels on social apps like Discord and Telegram — the latter being the most prevalent use case.
Collab.land has emerged as the most popular bot to date. The platform launched its token, COLLAB, in February 2023, distributing 25% of its 1 billion supply to users in Discord communities utilizing the bot, NFT holders, and verified community members. As of the time of writing, the COLLAB token functions as a governance and utility token, enabling holders to vote on feature requests and offer development bounties for the platform.
Trading Bots
Recently, a trend has emerged of bots enabling on-chain trading within the Telegram platform. Despite not being the first platform to launch in this sector nor the one with the most users, Unibot has distinguished itself as a notable player. This is largely due to its token , which has seen a meteoric rise — over 40 times its initial value since its launch in May 2023.
In the following section, we will delve deeper into Unibot's features and functions, providing a comparison to its market competitors.
Unibot
Unibot is a trading bot that allows users to trade on the Ethereum blockchain from entirely within Telegram. Users interact with the bot just like any other Telegram bot, via chat commands or buttons. As of the time of writing, Unibot has the following features:
Buy/Sell Tokens on Ethereum mainnet
Limit Orders
Private RPC to avoid MEV
Mirror Sniper (copytrade other traders)
Method Sniper with honeypot protection (snipe token launches)
Token transfers
Wallet Import/Export
Unibot currently supports trading on Ethereum mainnet. Other competitors like Maestro and Wagie support multiple EVM chains.
Bot Setup
Recall the time you set up your first crypto wallet – what did you have to do? Regardless on when you ventured onto the blockchain, you likely found yourself navigating through a maze of complex interfaces, both hardware and software, struggling to comprehend the concept of seed phrases. You had to generate and securely store this long, random sequence of words 12 to 24 words – your key to accessing your digital assets. In retrospect, the process was intimidating and intricate, enough to deter even the most enthusiastic of crypto novices.
The setup on Unibot is, by comparison, much simpler. All one has to do is type /start and follow the instructions. Once a simple human verification process is passed (all without ever leaving the Telegram app) the user is greeted by a menu, as well as a list of automatically generated wallets and their addresses. These wallets were generated without needing the user to manage any seed phrases. The user can, however, choose to retrieve the private keys of each wallet in order to import them onto an external wallet like Metamask. While this simple setup greatly abstracts away the complexity of traditional wallet setups and seed phrase management, it does introduce some security risks, which we will discuss later in the report.
Trading Bots Feature Comparison
In terms of the competition, trading bots generally offer similar features. Of the five bots listed, Maestro seems to offer the most features. Bots with tokens may choose to share a portion of its revenue with holders, generating real yield for them.
Trading Bots Key Metrics
User Metrics
The DAU/MAU ratio is typically used to measure stickiness (user retention) of an app — the higher the better. For example, Telegram’s DAU and MAU were reported to be 196M and 700M in 2022. This results in a DAU/MAU ratio of 28%, meaning that 28% of monthly active users were active on the app daily in 2022.
Of the four trading bots compared, Banana Gun had the highest user retention of its monthly active users on a daily basis, at 18.78%, followed by Unibot (17.24%), Maestro (14.58%), and Wagie Bot (9.33%), resulting in a 15% DAU/MAU ratio on average.
For reference, onchain DEXs across multiple blockchains have DAU/MAU ratios ranging between 5-9%.
Financial Metrics
Unibot, leading its competitors in terms of revenue, draws a majority of its revenue, 67%, from a 5% tax imposed on both buy and sell transactions of its token, UNIBOT. Similarly, Wagie Bot generates 98% of its revenue from a 4% tax applied to both buy and sell transactions of its own token, WAGIEBOT. Maestro, which does not have a token, looks to be the most sustainable platform amongst its peers, generating an annualized revenue of $49.9M, completely from bot fees.
Excluding fees generated by tax puts UNIBOT and WAGIEBOT at 7.4x and 8.9x earnings respectively. Whilst WAGIEBOT does not share revenue with holders, UNIBOT shares 1% of tax fees, 40% of transaction fees, and 25% of referral fees with holders who hold a minimum of 50 UNIBOT. Adjusting for 1% of tax fees and 40% of transaction fees, UNIBOT has an adjusted PE of 9x.
Catalysts
Despite declining onchain trading volumes (Source: Artemis) since the run of the PEPE memecoin in May, trading bots have been seeing an impressive growth in users. This growth of users have also been extending into a growth in returning users — in the case of Unibot, returning users have grown by around 6 times since May 2023. This is perhaps partly due to the enhanced user experience (UX) that trading bot platforms have compared to trading directly on a DEX. Users do not have to worry about slippage, honeypot contracts, or being frontrun by onchain bots.
UNIBOT and WAGIE are two examples of trading bots with tokens. UNIBOT is by far the largest of the trading bot tokens in terms of market capitalization and onchain liquidity (adjusted PE of 9x) compared to DEXs like SUSHI (44x), CAKE (5.6x), and JOE(31.7x), GMX (22.3x) — source.
UNIBOT has achieved its impressive growth despite integrating with only Uniswap on Ethereum. With Unibot X and future integrations with other DEXs and dApps on the roadmap, this will only increase the reach of the platform and attractiveness to new users.
Risks
Contract & Platform Risk — Trading and airdrop farming bots, though simplifying the onboarding process compared to traditional crypto wallets, pose a significant risk. Users entrust their private keys to these platforms, which in case of a data breach or hack, could lead to substantial loss of funds. Furthermore, these Telegram bots are closed source, making it difficult to assess their security. Unibot recently launched Unibot Cloud, a feature that removes private keys completely from Telegram — which does not have end-to-end encryption — and allows users to view their private keys via self-destructing messages on the Unibot Cloud site. While still not ideal (keys are still custodied by the platform), this is a step towards safer measures.
Market Risk — While trading bots remain profitable and trade at attractive valuations, their reliance on market conditions raises questions about sustainability. The recent surge in memecoin trading volume has bolstered user numbers and fees generated by these bots and spurred speculative investment in their tokens. Furthermore, trading bots like Unibot and Wagie have their revenue heavily skewed towards token tax fees, accounting for 65-98% of total revenue. This reliance on volatile market trends and trading volume of the platform tokens brings the long-term sustainability of these platforms into question.
References
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