u.today
Trading bots, i.e., software programs designed to automate the processes of placing and canceling orders on centralized and decentralized exchanges, have become increasingly popular. On some exchanges, they already eclipse human traders by trade count and aggregated trading volume.
Bots' dominance on Uniswap (UNI) reached 90%, data says
Two categories of bots, "regular" trading bots and programs for sandwich attacks, are responsible for over 90% of Uniswap (UNI) trading volume in 2023. Sandwich bots process 58-79% of daily trading volume, while arbitrage bots are in charge of 4%-30% of Uniswap (UNI) turnover.
Here it is! MEV bots 🤖 vs Humans🧑💻!
— Alice (@AliceKohn) August 2, 2023
Exciting to see our Bot-Filters finally in action!
This chart shows the Uniswap volume by trader type: Sandwich Bots🔴, Arbitrage Bots🔵 & humans🟢
🥪🥪🥪 dominating with making up for up to 80% of the volume! pic.twitter.com/hDDXMkZtff
Such calculations were published by Alice Kohn, an Ethereum (ETH) ecosystem analyst at leading on-chain research firm Glassnode. As per her estimations, human traders are only placing between 7% and 28% of Uniswap (UNI) orders.
This analysis was made via a brand-new bot filter instrument by Glassnode. Koch also stressed that some sandwich bot transactions might be counted twice:
Sandwich Bots f.e. execute at least two transactions, liekly accounting for twice as much volume in one trade as humans
Sandwich bots, or "MEV bots," are utilized to frontrun large trades by pushing attackers' transactions forward in the Ethereum (ETH) mempool. Thanks to higher fees, they are executed faster than those of the victim: an owner of an MEV bot benefits from the difference between prices.
As covered by U.Today previously, some MEV attackers manage to get whopping eight-digit rewards.
In early April 2023, some of them stole over $25 million from other frontrunners active on the Uniswap (UNI) exchange.
Here's how human traders and bots react to increased volatility
Besides data about trading volume, Koch tracked the behavior of arbitrage bots, sandwich bots and human traders during periods of market euphoria.
Bots 🤖 vs. Humans 🧑💻 on @Uniswap Part II
— Alice (@AliceKohn) August 3, 2023
This chart shows the Number of Transactions per Trader Type
Human traders get activated during major events f.e. the USDC depeg. Arbitrage and Sandwich 🤖 follow suit
With 🥪🤖 becoming up to three times as active during these events pic.twitter.com/pmDBsjrcka
Typically, three groups show signs of activity simultaneously. However, trading bots follow spikes of trading processes demonstrated by human traders.
The most impressive upsurge in trading bots' activity was registered during the March 2023 USD Coin (USDC) de-pegging. Amid rumours of the insolvency of U.S. banks associated with Circle, USDC owners started to exchange their stablecoins en masse.
As a result, the price of the second largest stablecoin dropped to $0.91 briefly.