The operational purpose of Telegram trading bots is to serve as automated systems within the Telegram platform, enabling users to effectively carry out trade executions on decentralized exchanges (DEXs). The interaction between users and these bots occurs via the messaging interface provided by the application.
Various Telegram trading bots provide distinct functionalities, albeit many exhibit shared trading features such as stop-loss and take-profit orders, copy trading, and multi-wallet support.
Based on a comprehensive research study conducted by Binance, it has been determined that the cumulative lifetime volume of trades facilitated through Telegram bots has surpassed the significant milestone of US$283 million as of the 15th of August, 2023.
What Is the Inner Workings of a Telegram Trading Bot?
Telegram trading bots facilitate automating traders’ transactions by connecting with decentralized exchanges (DEXs) like Uniswap. These bots execute trades based on the user’s predetermined set of rules.
The bots above substitute the user interface (UI) and user experience (UX) within Web3 wallets and DEXs, thereby simplifying the intricate process of purchasing decentralized cryptocurrencies.
While the trading bots exhibit distinct interfaces, their fundamental objective is to function as a protocol for expeditiously executing token sniping or immediate token purchases. Sniping a token pertains to implementing a trading strategy wherein an individual expeditiously procures a recently introduced pass immediately upon its commencement for public accessibility.
The setup process typically entails straightforward procedures, including accessing the designated official website, initiating the trading bot within a Telegram chat, and executing the provided commands outlined in the instruction panel. It should be noted that every bot possesses a distinct layout and command menu.
When initiating a Telegram trading bot, users can either generate a new wallet address specifically for the bot or import an existing wallet address by utilizing private keys. It is advisable to consider the creation of a distinct wallet or to use a separate account designated explicitly to engage with Telegram trading bots, as opposed to importing one’s primary wallet.
To commence trading activities, users must allocate funds to their newly established wallet through the utilization of cryptocurrency, typically in the form of ether (ETH). The available course of action for users entails the selection of options to procure tokens by inputting the contract address associated with the desired ticket. The trading bot executes the transaction, considering the associated gas fees, and facilitates the acquisition of assets promptly.
In contrast, engaging in trading activities with a novel token through platforms such as Uniswap or MetaMask necessitates the execution of multiple cryptographic signatures and the establishment of transaction fees.
What Are Some Possible Uses for Telegram Trading Bots?
Telegram trading bots offer many standard features, with each bot boasting its distinct set of attributes. The following are several prevalent attributes that can be anticipated from Telegram trading bots.
Buy and sell tokens
The trading bots integrated within the Telegram messaging platform facilitate the acquisition of tokens through the straightforward process of copying and pasting the contract address into the designated message box. Specific automated systems incorporate a dynamic real-time refresh functionality, promptly appraising users of any changes in their trading positions, encompassing both gains and losses. Furthermore, these computerized systems expedite the process of token sales by facilitating pre-approved transactions.
Set take-profit and stop-loss orders
Telegram trading bots offer the functionality to establish stop-loss and take-profit orders, facilitating the bot’s independent execution of trades based on predetermined parameters. Traders can utilize these order types to engage in trading activities involving recently introduced tokens that may not be accessible on centralized exchanges (CEXs). However, it is imperative to exercise utmost caution, as these tokens typically entail elevated levels of risk.
Anti-rug and honeypot detection
Specific Telegram trading bots are designed to include features that protect rug pulls and MEV (Miner Extractable Value) exploits. When a token developer attempts to orchestrate a rug-pull, the anti-rug function detects imminent transactions within the mempool. It expeditiously initiates a sell transaction to preemptively thwart the rug-pull from manifesting.
The anti-MEV feature facilitates the routing of buy transactions via a private relay, guaranteeing non-disclosure of any purchase within the mempool. The strategy above safeguards against the risks associated with MEV (Miner Extractable Value) and sandwich bots.
The approach above often results in a deceleration of the operational tempo of these confidential transactions. It is essential to acknowledge that the functions above are currently in the experimental phase and may not consistently perform according to their intended functionality.
In addition, it should be noted that Telegram trading bots can identify and discern potentially harmful transactions that a token developer instigates. If said transactions make the token unmarketable, it is classified as a honeypot. The automated system will promptly execute the closure of any position to prevent potential involvement in a honeypot scam.
Through the utilization of select Telegram bots, individuals can input designated wallet addresses with the intention of duplicating said wallets. This functionality enables the automated replication of trades executed within the identified wallets. The trading bot functions as an intermediary connecting the user’s account with the selected trader, carrying out works on behalf of the user by the signals provided by the following trader.
It is imperative to bear in mind that the historical performance of fellow traders does not guarantee future profitability. It is advised that individuals exercise prudence when choosing traders to emulate and configure their trading bots.
One must consider liquidity risk as an additional concern in copy trading. This particular risk materializes when the market lacks adequate liquidity to facilitate trade execution, thereby potentially resulting in slippage, challenges in closing positions, and escalated transaction expenses.
Specific Telegram trading bots can execute liquidity sniping, method sniping, and multi-wallet sniping. Liquidity sniping refers to an automated sniping technique wherein a bot promptly executes a purchase order upon detecting the addition of liquidity.
The bots are frequently programmed to complete purchase transactions utilizing identical gas settings as those employed by the developer’s transactions. This strategy aims to enhance liquidity by ensuring that the buy transaction takes place in immediate succession to the developer’s marketing within the same block. The optimization of token acquisition is maximized when a sniper engages with a fresh token.
The utilization of method sniping arises when tokens persistently remain untraded despite the introduction of liquidity. The option to enable automatic dispatching of buy transactions is available to users, wherein the dispatching is triggered by the “Method ID” associated with a developer’s pending transaction.
The Method ID elucidates how the developer’s marketing interfaces with the token’s smart contract, thereby potentially enabling trading on a novel pass and authorizing the execution of the sniper’s purchase transaction at the earliest feasible moment.
Telegram trading bots facilitate the execution of snipes by enabling users to employ multiple wallets concurrently. When a trader snipes a token with various wallets in the given scenario, the bot duly executes the same trade across all said wallets.
The Potential Risks
Despite the convenience and specialized functionalities offered by Telegram trading bots, it is imperative to acknowledge the risks associated with engaging in trading activities such bots facilitate.
1. The safeguarding and protection of assets
The process of connecting an existing wallet or creating a new one within the bot necessitates providing access to your private keys. It is imperative to establish a connection with a distinct wallet and refrain from connecting to one’s primary wallet.
Moreover, it is essential to consider the custodial risks associated with these bots, as the Telegram trading bot facilitates the generation of private keys, potentially granting them access to your private keys.
2. Smart contract risks
Integrating Telegram trading bots with intelligent contracts is imperative for seamless interaction and enhanced functionality. When engaging in transactions involving unaudited smart contracts, Telegram trading bots may encounter vulnerabilities within the smart contract code.
3. Technical complexity
Configuring Telegram trading bots may present a technical intricacy that individuals new to the field may encounter challenges navigating. It is imperative to thoroughly review all documentation furnished by the Telegram bot and commence trading with modest quantities of cryptocurrency that one is prepared to relinquish.
The emergence of Telegram trading bots has provided crypto traders with alternative tools that offer enhanced convenience, accelerated processing, and specialized functionality within their trading activities. The trading process is streamlined and made more accessible by providing various features such as copy trading, liquidity sniping, and MEV protection.
While these automated systems demonstrate considerable potential within the cryptocurrency domain, users must exercise caution and acknowledge the inherent risks accompanying their utilization. These risks primarily encompass the security of funds and the vulnerabilities associated with smart contracts.
It is imperative for both novice and experienced traders to diligently conduct comprehensive research before engaging with Telegram trading bots. This entails thoroughly understanding the bot’s functionality, the underlying intelligent contracts it operates on, and any potential risks associated with its usage.