Most of the trading and Web3 activity on Solana may depend on bots, because of the high speed of transactions. The expansion of meme tokens and decentralized trading unleashed Solana bots, which are also competing for profitability.
Bot activity is seen as both a positive and a negative, depending on the app. Games and GameFi usually aim to limit bot activity. For trading, there are no limitations, except for network fees to achieve transactions immediately.
Previous research by VISA and Artemis showed that for most blockchains, actual activity was probably much lower. Solana stood out specifically, with peak stablecoin trading in the past few days. Yet, all the activities for top Solana-based stablecoins involve MEV and Phoenix bots.
Real volumes for stablecoins are estimated at around $11B. The participation of bots gives the Solana network more exposure, while also drawing in buyers for bot services.
The usage of bots, however, has caused network overload, where some Solana transactions are not filled, or fail. The rapid transfers generated by bots can overwhelm Solana’s ability to reach consensus.
Solana Token Volumes Get Boosted with Bot Activity
One of the immediate bot effects is that all Solana tokens may have some fraction of their volumes that do not reflect real demand. Volume-boosting bots are created almost daily, promising to increase the visibility of tokens.
Volume-boosting bots have an advantage on Solana, due to the extremely low fees. Those bots can generate continuous volumes on various decentralized pairs. The goal is to create FOMO, with the potential to inflate token volumes by as much as $10M daily.
Solana decentralized trading has drawn in almost constant new token creation. Some of the new tokens have only 3-5 SOL in liquidity, and almost no prospect of attracting human traders.
DEX Trading Requires Bot Action
Solana is not the only chain to invite bots. The initial model of fast trading bots was tested on Ethereum, where the first bot wars played out. In May, the Banana Gun bot was among the leaders, and was also responsible for the significant Solana volumes.
Solana is quickly becoming the test stage for a new bot war. Some Ethereum bots are building a Solana version. Banana Gun has been live on Solana since January 15, and reached peak volumes in the middle of May.
Bots are not entirely harmless, and some projects are trying to ban their activity. Yet bots are also becoming smarter, rolling over funds to new wallets if the old addresses get blacklisted.
Decentralized exchanges on Solana are just starting to catch up with the inflow of bots. Print DEX is one of the first to unroll caps on max transactions and wallets, while also introducing anti-bot mechanisms.
In Q2, 2024, bot trading on Solana was only expanding, with significant repercussions if other DEX start banning bot sniping.
Solana Brings More Volume to Bot Projects
The bot trading narrative was strong in Q2. Solana also turned into one of the blockchains that gave the biggest boost to bot apps. The Solana blockchain carried the highest share of bot activity, both in term of volumes and user counts.
The effect of Solana displaced even Ethereum-based bot activity. In the past few months, Solana’s bot activity also caused turnover among top bots.
Toward the end of May, Bonk Bot was the top app entirely running on Solana. The bot reached $6.14B in lifetime volume. Bonk Bot displaced Maestro and Banana Gun, which are multi-chain trading bots.
Solana has two additional bots in the expansion phase. Trojan and Sol Trading Bot have been active for around six months, and are quickly gaining users.
The Solana bot activity may face different scenarios. On one side, mini-bots are constantly created, and some projects also offer user-generated trading scripts. The other possible scenario is that apps start tightening the anti-bot controls, while sacrificing some of their reported volumes.
Over the past month, the top 10 DEX and trading bots doubled their daily volumes, from around $90M to above $180M.
Cryptopolitan reporting by Hristina Vasileva
