TL;DR

Telegram Bot Tokens (TBTs) are an emerging sector in the Web3 industry that enable users to execute various DeFi activities through a Telegram interface while incorporating tokens. Yet the line between innovation and illusion quickly grows thin. Upon scrutinizing 61 projects featured on CoinGecko’s Telegram Bot Token catalog, we found that nearly 40% of TBTs might be dormant, fraudulent, or unlikely to recover from substantial sell-offs. Despite their undeniably innovative trading mechanisms, many omit essential technical details about their operations and the handling of private keys for wallets within the interface. We strongly recommend users approach these platforms with caution, limiting their interactions and refraining from any form of long-term asset storage.

Understanding Telegram Bots and Their Tokens

Telegram bots are automated programs that run through the Telegram chat app. They are capable of conducting trades, feeding users market data, assessing sentiment on social media, and engaging with smart contracts with commands executed through the Telegram interface. These types of bots have existed for a number of years but have gained significant attention recently with the release of Telegram bot tokens (TBTs).

Telegram bot tokens are native tokens integrated into Telegram bots with a focus on various trading functions such as executing DEX trades, managing portfolios across wallets, yield farming, and feasibly any other DeFi related actions. These tokens essentially allow users to interface across the DeFi space while only interacting with the Telegram interface. Assuming these programs are secure and remain functional over the longer term, this will likely have significant knock on effects in terms of the overall accessibility of DeFi.

Post 20th July, these tokens witnessed a spike in popularity, with some recording gains exceeding 1000%. Such trends resonate with the typical rotational enthusiasm surges in Web3, driven by narrative resonances in the crypto community on platform X (formerly known as Twitter). And, as is customary with innovative protocols and new narratives, a plethora of TBTs have emerged in the wake of the original – Unibot's – prominence. As of 3rd August, 2023, CoinGecko's Telegram Bots section lists 61 such systems.

Navigating the Narrative Crossroads

TBTs carve out a distinctive niche in the Web3 domain. On X, crypto aficionados typically discuss them as utility tokens. Historically, the term "utility" in the crypto realm aligns with meta-narratives, often linking to specialized industry stories spanning AI, fintech, logistics, cross-border transactions, and more. TBTs were conceptualized with a utility narrative aimed at decentralizing and refining trading activities through innovative user interfaces. However, TBTs transcended a solitary meta-utility narrative, finding resonance in diverse meme and non-meme narratives.

Parallelly, as the TBT narrative gathered momentum, a rotational hype centered around mini-game meme tokens, specifically spotlighting a project dubbed "$HAMS". $HAMS, an ephemeral meme token, permitted users to place wagers on live-broadcast hamster races. However, $HAMS nosedived shortly after its launch when community members alleged the operators were reusing hamster video footage. This catalyzed the birth of various other gaming meme tokens—also tagged as TBTs. One such offering was "$TETRIS", where users could gamble and partake in player-versus-player Tetris challenges. A more detailed exploration of $TETRIS follows later in this piece. Connections between certain gaming meme tokens materialized through their collective mentions on X.

Another example of a TBT narrative crossover involves PAAL AI. While not a meme specifically, the project has produced a Telegram chat bot similar to ChatGPT. The token and project structures are also similar to other TBT structures like Unibot, which is expanded on later. Confusingly, this project does not seem to have a project produced Telegram chat bot, but rather a web interface similar to ChatGPT. However, the bot can be incorporated into users' own Telegram channels through an API.

CoinGecko’s TBT Classification

Shortly after Unibot's debut, Coin Gecko rolled out its comprehensive list of TBTs. Initially cataloged around 20 July, this list comprised around 30 tokens. Within just a couple of weeks, this figure has burgeoned to encompass 61 projects. We analyzed this list on 4 August. Using a mix of metrics: price momentum, liquidity dynamics, and transactional vibrancy, we categorized the projects according to whether they were likely dead or if trading was still active. The distribution is highlighted in the bar chart below:

Of the 61 projects analyzed, we classified 37 as still active and 24 as dead or likely dead. These dead projects were either down 85%+ with no or very little liquidity in their pools, no activity, or were likely exit scams. That means nearly 40% of projects in this category are dead or unlikely to recover.

How do the Tokens Work?

At a basic level, TBTs are just tokens issued on a network that can serve specific purposes in any given ecosystem whether that be governance or platform related fees. The most popular TBTs at the moment are all deployed on Ethereum with the most successful being Unibot. We can take a closer look at Unibot to better understand how these platforms works.

Unibot

Unibot is easily the most popular TBT recently released, in addition to having the largest market capitalization ($139 million as of 7 August). The Unibot token is deployed on Ethereum. Marketing bills it as the fastest way to trade on Uniswap. The bot launched on May 17, and since then the platform has seen almost $80 million in transaction volume, with almost $1.5 million in revenue share funds distributed. The platform can be accessed here.

When opened in Telegram the bot looks like this:

Once a user enables the bot is started they are presented with the above interface. This includes three wallets autogenerated by the bot that can be used to trade. The functions are described below:

• Buy Tokens - buy any token through Uniswap using several wallets with additional options
• Wallet selection - allows users to run transactions from multiple wallets
• Buy Amount - users set amount to spend
• Private Transaction: Settings to help traders avoid MEV sandwiches
• Select wallets - wallets to be used in the execution of transactions where multiple can be used at once
• Buy Amount - spending amount set by user
• Enter Token Address - User inputs token to be purchased

The Sell Tokens menu has similar functionalities:

Both of these features are also available for limit orders.

The bot also allows users to set copy trades, snipe trades, query PNL analysis, and see token balances.

The settings tab allows users to replace wallets, import their own wallets, set passwords, link a MetaMask wallet, as well as access the private keys for the wallets provided by the bot.

The option to view the wallets' private keys produces the following menu:

Users are provided with private key strings which can be used to import these wallets into a user’s MetaMask or other self-custody wallet.

As of 9 August, Unibot announced an update to their private key storage mechanisms which are highlighted in the X post below:

It appears that Unibot previously stored private keys inside Telegram. We knew private keys were accessible through the interface but Unibot had not previously stated where else they were stored. The change appears to push user’s their private keys through a self-destructing message, rather than a message that stays inside the user’s Telegram interface. While this is certainly a step in the right direction, it is still unclear where else one’s private keys might be stored.

It is still important to note that the wallets provided when you register your Telegram bot account are autogenerated and the keys are provided after the fact. Unibot still does not make clear how or where these private keys are stored, whether that be locally or on their backend. This makes using a Telegram bot like this particularly high risk for both trading and holding funds. We strongly recommend not using this type of platform for cold storage and only for active trading.

What Does the Unibot Token Do?

There is no clear outline in the Unibot whitepaper for what the token does. This format is less of a whitepaper and more structured around video tutorials teaching users how to use various aspects of the platform. There is little to no technical information on the role the token is meant to play in the ecosystem. The Features in Development section of the whitepaper only links to the Unibot Telegram and does not yet include a road map.

The project website does reference a revenue share program for holders of the UNIBOT token. The description of the program is below:

“Rewards are proportional to the amount of tokens held. Holders receive 40% of transaction fees and 1% of total $UNIBOT traded volume. Rewards are calculated in 2-hour intervals and claimable after 24 hours. Transferring more than 200 tokens between every 2-hour interval will result in forfeit of your revenue share. Must hold 50 $UNIBOT tokens to be eligible.” - Unibot

The premise is simple, hold the tokens and be rewarded for fees generated by the trading bot.

Projects Without Telegram Integration

In the course of this research it became clear that some of the projects categorized as TBTs either had not integrated their tokens into their Telegram or did not have a Telegram trading bot but rather just the usual Telegram community channel. Some projects had external dApps that had many of the same features of Unibot, with some roadmaps also indicating that Telegram integration was coming in the future.

Other projects had none of these things, but their presence on this list is likely an indicator of the narrative crossover that we mentioned previously. It is likely that projects submitted requests to CoinGecko self-labeling themselves as TBT type projects with some indication of integration or the goal of future integration. We have seen how narrative hype leads to the expansion of tokens in a specific category, with some reaching the level of being “memed” into existence even if that project actually appears to have no practical relation to the category they are assigned. It is our assessment that this narrative hype was strong enough in the last two weeks to at least partially explain this discrepancy.

Scams and Hype Coins

As is often the case when new narratives take hold in the crypto community, many similar projects will continue to be released under the same narrative that are actually exit scams or other attempts to steal investor funds. TBTs are no different in this regard.

We have confirmed at least one Ethereum based TBT exit scam at the time of writing, resulting in the loss of approximately $210,000. There is another project with a similar name on Solana that is unrelated to this project. The project on Ethereum was launched around 24 June and the team conducted an exit scam on 26 June. The wallets involved in the mass sell off appear to be wallets that received initial distributions of the token from the deployer.

Another highly hyped Telegram Bot Token, $TETRIS, was launched 27 July. The project’s page is located here. The bot purportedly allows users to bet against each other in online games of Tetris. It is unclear how the game is integrated with a Telegram bot as it appears the game is actually hosted here. A quick search for “Telegram bot” and “bot” in the project’s Telegram channel produced no results indicating why this project should be considered a TBT, but many of the channel specific bot messages indicating new buys of the $TETRIS token all link to Unitbot. For reasons that remain unclear, parts of the crypto X community and Coin Gecko have categorized this bot as a TBT. At the time of writing, the TETRIS token has lost 96% of its value.

Conclusion

The development of Telegram Bot Tokens could be the beginning of an unique innovation in the DeFi community. While the utility of these tokens remains unclear, the release of Unibot and similar platforms is providing investors with new ways to aggregate and incorporate data into their trading strategies. That said, users of these platforms should exercise extreme caution as a number of these projects are likely to be little more than attempts to cash in on the hype. In the TBT arena, where projects are memed into existence and value can evaporate overnight, the need for vigilant and informed engagement becomes not merely a recommendation but an imperative. Many projects carry significant and unknowable risks by failing to provide users with clear documentation about where the keys to these wallets are stored or how they are generated. Users should consider only using these platforms with small amounts of money to be used for trading, not for storage. Users should also exercise caution in linking their external wallets to these platforms, or when interacting with the websites generated by these projects.

CertiK provides analyses of projects in Web3 industry in order to provide investors with context and security information to help keep community members safe. Remember to exercise caution when interacting with new or unfamiliar projects. Stay vigilant!