Millions by correspondence. What is the popularity of cryptocurrency trading bots in Telegram?

With the help of new bots in Telegram, cryptocurrency traders have made transactions of almost $200 million

In less than three months, cryptocurrency traders have made almost $200 million worth of transactions through the Telegram bot Unibot and its analogs. We tell you about the new trend in the crypto market and the associated risks

Trading bots in Telegram messenger quickly gained popularity among cryptocurrency traders who prefer to trade assets on decentralized exchanges (DEX). They are easier to use for quick and more precise transactions, bypassing the less convenient interface of blockchain-based trading platforms, but the convenience of bots comes at the cost of trusting such bots with access to wallets.

When first launched, the bot creates a wallet for the user, providing access keys, after which funds must be deposited into that wallet to begin trading.

Bots also provide a set of useful tools, such as limit orders, copy-trading (automatic copying of trades of specified addresses), and so-called token sniping - tracking the appearance of new tokens on the Ethereum blockchain with automatic purchase. The bots have their own tokens, and rising prices create a speculative frenzy around them.

Thousands of transactions

Unibot, launched in May this year, is considered the obvious leader in terms of the number of users and trading turnover. Its own token UNIBOT has increased in price by more than 50% over the past week, and since its launch, it has grown in value more than 10 times. Demand for the token is supported by the fact that it must be held to pay trading commissions, but 40% of these commissions are returned to users and distributed proportionally to the number of tokens held by all holders.

The daily trading volume of the UNIBOT token exceeds $14.6 million at the time of publication, according to data from the aggregator CoinGecko. The site has a separate section for tokens of Telegram bots, and their list already numbers in the dozens - the developers are obviously trying to repeat the success of the pioneer and capitalize on the new market narrative.

Other popular bots include Swipe, WagieBot, Bolt, and others. According to Dune Analytics, since May, more than 63,000 users have made transactions totaling about $193.7 million using bots. Unibot accounts for the vast majority of transactions, with more than $1 million in commission refunds distributed to bot token holders.

When making transactions on decentralized exchanges, users have to constantly log into their wallet, check the correctness of information about tokens and face high commissions. At the same time, they still have full control over their own assets and do not need to entrust their wallet keys to a third party.

The appeal of trading bots is most likely due to their ease of use compared to smart contract platforms. That said, users are forced to trust the wallets that are created within the bots, with the condition that the bots have full access to them.

Security and risks

Despite the surge in popularity of trading bots, security experts are critical of their approach to user assets.

In a comment to The Block, former security chief at Microsoft Christian Seifert calls the emergence of trading bots in Telegram a "scary development," citing their closed source code and the need to share wallet keys with them. In his opinion, this could be more dangerous than transferring funds to dubious crypto exchanges or to addresses of unverified smart contracts. "In the second case, at least you can limit the level of access to funds. In the case of bots, you essentially just trust them with your funds and hope they don't misappropriate them," the expert cautions.

Yajin Zhou, co-founder of BlockSec, a blockchain security company, similarly expressed concern about the growing trend of bots in Telegram in a comment to reporters. He also talks about the possible risks associated with transferring tokens to third-party wallets created by apps.

The high speed and convenience of using bots often comes at the cost of reduced security. When such services automatically create a wallet for the user, there is a risk associated with permanently storing private keys inside the bot, Zhou explained. If a data breach or hack were to occur, it could "turn into a disaster for bot users." Eventually, the bot developers themselves, often anonymous, could misappropriate user funds, Zhou conceded.

When a bot creates a wallet, it essentially creates a cryptographic key pair. The public key represents the address for incoming funds. The private key gives access to those funds. This is potentially the main target of attackers who can easily withdraw assets from the wallet if it is compromised. On the other hand, if a user loses the private key without a backup, they will lose access to their assets.

Zhou clarified that since private keys for wallets are not generated by users themselves, their security is not always guaranteed, and this opens the door to abuse. He confidently says that in the future, unscrupulous bot developers will steal users' funds.

Drawing parallels with past periods of excitement around memcoins or DeFi tokens promising quick profits, Zhou recalled that most of them turned out to be outright fraudulent projects, which affected "countless investors".