Banana Gun: Telegram Sniper Bot

Bringing MEV, Block 0, and token trading all in a single telegram user interface

Sep 19, 2023

Contributors: Special thanks to TomJ and GS, who provided valuable insights into the token sniping landscape. Additional contributions were also made by 0xMoe.

Intro

"Monkey see, monkey do" aptly characterizes the speculative Gamblefi underworld of crypto, where traders are driven by daily 100x gains, exit rugs, and liquidity pulls. Memecoins hold a unique allure in this realm, especially as traders follow both market pumps and influencers who shill (promote) these pumps on Twitter. Platforms like Banana Gun have emerged to equip users with the essential tools for high-speed trading.

Maestro led the field a few years ago, initially gaining traction under its original name, Catchy. Maestro was the go-to platform for snipers traders looking to capitalize on short-term market fluctuations. Then came Unibot, which improved the space by focusing less on snipers and more on the average users frustrated by Uniswap's less-than-user-friendly UI. They focused strategically on referral fees to drive rapid growth, a tactic similar to what we've seen with platforms like Rollbit and Stake.

Most recently, Banana has entered the scene, offering a competitive product to Maestro in sniping capabilities and more favorable in terms of fees. Banana seems poised to capture the hearts of the "degen" traders, those willing to take extreme risks for potentially enormous rewards.

This fluid landscape underscores the constant evolution of platforms and strategies in the Gamblefi underworld of crypto, each striving to meet its user base's ever-changing demands and risk appetites.

9-5 Speculation

Amidst the bear market and all-time low DEX volume since 2020, hundreds of ERC-20 tokens are deployed daily. For some traders, watching the memecoin market is a full-time job. All it takes is a 100x on a project to become highly profitable by purchasing among the first few and riding a token to a multi-million market cap. Traders can participate in multiple ways, including presales, sniping, and buying the token spot.

Presale: Allocating money ahead of the token launch.
Sniping: Automatically buying tokens using bots at the time of launch.
Spot: Tokens purchased outright on exchanges like Uniswap or Coinbase.

Traders tend to decide their strengths and choose a few categories to focus their energy. Within this process, we will focus mainly on the sniping phase; let's dive in further.

Token Snipers

Before the advent of Telegram snipers, the game was all about expertise. Top coin snipers and botters would meticulously analyze memecoin contracts to identify critical functions triggering a coin's launch, maximum transaction sizes, and any developer-implemented measures to deter early buyers. With the advent of Telegram bots like Banana Gun and Maestro, that granular approach has been largely replaced.

In a nutshell, token snipers are automated trading bots that enable users to execute swift buy and sell orders for newly launched tokens on decentralized exchanges (DEXs) like Uniswap. Many of these bots use Telegram as a platform. Developers prefer Telegram because it is where trade ideas thrive and it's also a crypto-native messaging app. The product-market fit for token snipers is clear, as users have adopted them at an increasing rate. Sniper bots can also purchase launched tokens with similar speed and efficiency, making up a majority of their trading volumes.

These premier sniping bots now simulate entire contract functionalities, allowing users to bypass the user interfaces of platforms like Uniswap and simply decide how much ETH they want to deploy. This shift has made the sniping landscape more user-friendly but also intensely competitive.

For example, in the case of Maestro, users still need to input maximum transaction sizes, and some familiarity with contract methods is necessary under the non-premium model. This is where Banana distinguishes itself—no such expertise is required, streamlining the process even further.

This evolution can be contrasted with platforms like Uniswap, which recently removed its expert mode. While this change may benefit retail traders by adding a layer of safety against high-impact trades, it complicates matters for advanced traders who are now forced to adjust their strategies manually. The removal of expert mode has impacted sophisticated traders to the point they built their own front ends to improve the experience. It underscores why Telegram sniping bots like Banana Gun, designed for a more sophisticated user base, are gaining traction in the fiercely competitive landscape of ERC-20 token trading. By using these bots, traders not only optimize their strategies but also avoid the limitations imposed by retail-focused decentralized exchange interfaces.

How does Sniping work?

Imagine a trader eyeing the launch of $TOKEN in a few days. They simply load up their Telegram application and drop the smart contract into a token sniper. After specifying the amount of ETH they're willing to risk, it's a waiting game. As soon as the token hits the DEX pool, the Telegram sniper triggers, executing the pre-defined trade parameters. If all goes as planned, the trader enters at a 10k MCAP (hypothetical example), which skyrockets to 200k MCAP in a matter of seconds—a tidy 20x profit. But it's not that simple anymore. The efficacy of these sniper bots has led to an influx of traders employing the same strategy, often using ten or more wallets to edge out the competition.

That's why just having a sniper bot isn't enough today; timing is crucial. Enter Banana Gun. Unlike other platforms that require manual inputs or specific monitoring, Banana Gun optimizes the process. Once the contract is added to the bot before the token's trading begins, Banana's snipers automatically look for smart contract triggers like the "EnableTrading" function, which will snipe/buy a token as soon as it launches.

Snipers can also monitor for “liquidity add” transactions, which is adding ETH to the token pool, which would enable trading now that there is liquidity.

Banana Gun

Banana Gun has fundamentally democratized the sniping landscape in the crypto space. Previously, sniping was an exclusive activity reserved for individuals with advanced technical skills who could read and configure smart contracts. Banana Gun has opened this door for everyone by automating much of the sniping experience. Their platform is designed with exceptional ease of use: You paste a contract and let the bot handle the complexities, such as determining the method ID, tax rate, and maximum transaction size. This feature sets them apart from competitors like Maestro, where users are required to read contract addresses and configure settings manually.

The cornerstone of Banana Gun's unique selling proposition lies in its user-centric focus on automation and protection against most rug pulls. Going beyond mere automation, each transaction on Banana Gun is executed privately and comes with an Ethereum bribe set by the user. This clever mechanism gives you an extra layer of safety. In an environment where someone tries to execute a rug pull (scam) with an exorbitant gas fee, Banana Gun enables you to front-run them cost-effectively. The private transaction feature also ensures you can never get sandwiched or front-run. A sandwich is when traders (bots) exploit transaction ordering by placing trades before and after a user's transaction. In fact, Banana Gun goes a step further by reverting your transaction if they detect a risk of it getting sandwiched—even though it's executed privately. This nuanced feature is something that even competitors like Maestro lack.

Speed kills, and Banana Gun is currently one of the fastest retail sniper bots on the market. It first launched in early June and has already amassed roughly 700 daily users, with over 12,000-lifetime users.

When users buy, the interface is moved to a sell channel, where users can focus on the mechanics of selling. Typically, other sniper bots buy and sell in a single interface.

Core Features

Block 0 Bribe Wars

Bribing is a cornerstone feature of Banana Gun, but it's worth noting that Maestro initially pioneered the concept of group bribing. Maestro's system made it extremely difficult for individual botters or snipers to outbribe a group of participants, effectively democratizing the process.

Banana Gun, however, brought a fresh angle to this approach. While Maestro may have introduced group bribing, Banana Gun perfected it by attracting a smaller but more sophisticated and experienced user base. These individuals are well-versed in the mechanics of sniping and understand how to outbribe even a collective group.

Banana Gun utilizes a custom RPC, a specialized node that communicates directly with the blockchain, allowing faster data transmission than standard providers like Infura or Alchemy. In this high-speed environment, pending transactions from Banana Gun's elite snipers are bundled together into a single transaction package. This bundle is then forwarded to the block builder, the Ethereum network validator responsible for grouping transactions.

The battle heats up when the bundle reaches the block builder. Banana Gun snipers engage in blind bribing, where each participant offers a hidden bribe, also known as a "tip," to secure faster transaction confirmation. Take User A, for example, who buys Token X for 0.20 ETH and includes a bribe of 0.10 ETH. This bribe directly incentivizes the block builder to confirm User A's transaction more quickly. Should the token involve a transaction tax, User A may find themselves down initially until the token gains in value.

The blind nature of these bribes adds a layer of strategy and unpredictability to the transaction process. Since you can't see others' bribes and they can't see yours, your experience and savvy become your greatest assets. This explains how Banana Gun consistently outperforms in the race to Block 0 despite having a smaller community. The amalgamation of a fast custom RPC, bundled transactions, and the art of blind bribing gives Banana Gun a distinctive, competitive edge, making it a powerhouse in the realm of token sniping. This unique trifecta streamlines the trading process and creates an environment where skill, strategy, and speed converge, setting Banana Gun apart from its competitors.

Max Spend

Banana Gun has made crucial updates to tackle one of its initial flaws: the absence of user control over sniping limits. In its early stages, the bot automatically buys whatever amount the user set. However, it left some traders susceptible to sandwich attacks. Early snipers could outmaneuver others by over bribing, essentially "trapping" latecomers in disadvantageous positions: a sandwich.

To solve this, Banana Gun added slippage controls and limit orders into its transaction bundles. Now, users can define a 'MAX SPEND' limit in ETH, which caps both the tokens and gas they're willing to expend. This is particularly beneficial when dealing with tokens that have a set maximum transaction amount, meaning the token contract code limits the maximum amount which can be purchased in a single transaction. If a user caps their spend at, say, '0.25 ETH,' the bot will keep the total expenditure—including gas—under this limit. If the maximum allowed transaction is reached, any leftover ETH is returned to the user.

An essential new feature, added based on user feedback, ensures that if the transaction can't meet the maximum allowable purchase, it will automatically be reversed. This protective measure is vital for preventing scenarios where a user gets a minuscule amount of tokens but pays a hefty price due to prior high bribes by others. This update adds a layer of risk mitigation, making the sniping game more strategic.

These enhancements level the playing field, allowing Banana Gun users to navigate both cutthroat and cooperative trading scenarios with more confidence.

Trading Revenue

Traders use the product, but you might still wonder if developing a trading infrastructure like Banana Gun is worth anyone's time. Ultimately, Banana Gun generates 10-25+ ETH per day in trading fees. This is with the absence of token revenues (as of September 15th), which for Unibot adds additional trading fees to their volumes.

Competitive Landscape

There are a few other bots that compete in the sniper space, including Maestro, and Unibot, which are the largest snipers. Maestro has had the largest user base overall. When looking at bot usage by day, Banana Gun recently flipped Maestro for a few days.

Market Structure

Currently, the total bot user base stands at over 100k, and the number of daily active users since August has consistently exceeded 4,000. Several leading products accounted for more than 90 percent of the users—specifically Maestro, Banana Gun, and Unibot.

Revenue and Fee Structure

As of September 15th, 2023, Banana Gun reported a transaction fee income of 756 ETH, over $1.2 million. Banana Gun adopts a low-fee model, charging only 0.5% on gross buys and sells, appealing to its smaller but more sophisticated user base.

It's essential to understand the fee structure to see why Banana Gun's average daily fee income is lower despite its transaction speed and strategy edge. In contrast, Maestro charges 1% on gross buys and sells and even offers a premium membership at $200 monthly for additional features. Unibot, another competitor, has a different model altogether—its revenue comes from tax volume as part of their fee structure.

The term "gross" is crucial here. If you make a 10 ETH trade and break even (Buy 10 ETH/Sell 10 ETH), you're still liable for fees based on the gross trade amount. With Maestro, you'd pay 0.1 ETH when you buy and another 0.1 ETH when you sell, totaling 0.2 ETH. In the case of Banana Gun, you'd pay 0.005 ETH each for buying and selling, summing up to just 0.01 ETH. This stark difference in fee structures partly explains Banana Gun's lower daily transaction fee income but also represents a competitive advantage for users who are sensitive to costs.

By breaking down the fee differences, one can see why Banana Gun, despite having fewer daily active users, provides an attractive alternative for experienced traders seeking to minimize costs while maximizing strategy.

Looking forward: Intent Based Swaps

At Shoal, we forecast Telegram bots tools trending towards "intent-based trading," essentially acting as automated executors for a user's specific trading desires—be it swap x, do y, or z.

Intents are signatures that execute transactions based on defined criteria rather than a single transaction (TXN) or path to the same result. By using intents, users get more flexibility on the outcomes of their transactions.

If a transaction says "do A then B, pay exactly C to get X back", an intent says "I want X and I'm willing to pay up to C". - Paradigm

Since BananaGun doesn't route swaps to a third party for execution, it typically won't be considered intent-based swaps. However, we may see tools like Banana Gun auction or fulfill swap orders on behalf of the users or use the request for quote (RFQ) model, which allows users to submit an order for fulfillment off-chain. Banana Gun currently facilitates interaction with blockbuilders, allowing transactions to be processed faster, achieving launch snipes. Down the line, snipers might move to off-chain solutions to fulfill swaps for early snipes or general swaps. In theory, a user could sign a transaction confirming they would like to spend X, and Banana Gun processes the transaction on behalf of the user or send it to a sophisticated actor for an additional fee.

Risks

Like most protocols, Banana Gun is not without risks. Risks are usually uniform among defi protocols, including economic exploits or smart contract risk. Economic exploits are when the monetary system within the protocol mechanics are exploited, whereas smart contract exploits can be found with unaudited code. Both risks potentially exist in sniper bots.

Security Risks

Security risks extend beyond smart contract vulnerabilities when it comes to Banana Gun. The bot has access to users' private keys, which means that the bot project team technically has control over the users' funds. To mitigate this risk, most traders only keep sufficient funds in the Telegram wallet to execute trades, transferring the rest to a more secure wallet.

There's always the risk that a mishap could expose the private key data. However, it's worth mentioning that both Banana Gun and Maestro delete your private key within the telegram UI as soon as it is provided by the user or generated within the app. In the case of Banana Gun, if you forget or misplace your private key, the platform can't retrieve it for you. The keys are stored on a separate encrypted server, accessible only to the bot, and undergo multiple layers of security, including marshaling, hashing, and conversion. Marshaling packages data for secure storage, hashing converts this data into a one-way, non-reversible string, and conversion further scrambles the data into an unreadable format, collectively ensuring the highest level of private key protection.

Bribe Fees

Being the fastest comes with a cost. Like a cheetah that can run extremely fast, the downside is the time they need to rest. With Banana Gun, users can end up over bribing for tokens based on pure hype and speculation, eating into profits. If “sniper A” bribes 0.1 ETH but a competitor, “sniper B” bribes 0.2 ETH, “sniper A” can buy at a higher market cap than the other sniper. In some cases, irrational bribes are added, leading to losses for many parties involved. Bribes are not refundable and are fully sent to the block builder.

Conclusion

Banana Gun stands out as one of the fastest, cheapest, and most robust sniper bots, primarily focusing on execution timing. By allowing snipers to win Block 0 wars, many trader successes can be attributed to banana guns efficiently and transaction bundling architecture.

Banana Guns' consistent growth at the depth of the bear market is a testament to the utility and demand for the product. Although sniping is mildly complex, Banana Gun's user base remains strong, with over 700 users per day in just a few months while taking in over 10 ETH per day in recent weeks.

The token sniper user base is relentless and draws no loyalties to branding, so the Banana Gun team must continue to iterate and ensure they have a competitive product.

Sources

Investment Disclosure. Disclosure: Members of Shoal Research hold material positions in the assets discussed in this article. The content presented is for informational purposes only and should not be construed as financial or investment advice. Please perform your own due diligence before making any investment decisions.

Not financial or tax advice. The purpose of this newsletter is purely educational and should not be considered as investment advice, legal advice, a request to buy or sell any assets, or a suggestion to make any financial decisions. It is not a substitute for tax advice. Please consult with your accountant and conduct your own research.

Disclosure. All of my posts are the authors own, not the views of their employer.