Try Quests to earn cryptoBot Activity On Osmosis
How prevalent are bots on the Osmosis chain, and the activities they're involved in?
Introduction
Everything nowadays can be automated and that includes activity on blockchain networks like Osmosis. Anyone with access to the Osmosis SDK or LCD client can monitor and execute transactions based on certain conditions. The ability to automate transactions is essential to the work of market makers, actors who provide liquidity by taking both sides of a trade, and arbitrageurs who trade price differences for profit.
Definitions
- Osmosis: A decentralized app chain built on the cosmos ecosystem.
- SDK: Also known as a standard development kit, a collection of tools to interface a network.
- Bot: A piece of software that monitors and performs transactions on behalf of a user.
- Externally-Owned Account (EOA): A normal wallet account controlled with private keys, and not contract wallets.
Method
The method is simple and straightforward, we'll identify bot wallets and look at the nature and frequency of bot activities.
But what kind of wallets qualify as bot wallets? A bot is any EOA that is able to perform more than 2 transactions in a single minute. This is set as the baseline because the regular user experience makes it difficult to perform many transactions manually unless aided.
By the definition above, we find that about 136 thousand unique EOA wallets meet the criteria. Comparing bots to regular wallets, bots account for 7.2% of the total population. The bar chart below will take us through bot transaction counts over time.
Since the beginning of block production on the Osmosis chain, transactions did not rise to prominence until September 2021 when transaction volume began to pick up. It continued to rise through the first half of 2022, and it dropped for a few months but reached peak numbers in August with almost half a million transactions in a single week.
Weekly active bots are the number of bot wallets that are observed to have made at least a transaction that meets the criteria of the bot definition above. Active bots grew slowly over time until January 2022 where the growth rate fastened to at least 10 thousand new bots being identified every week. Growth has since slowed down to less than 5 thousand bots in July 2022.
On Osmosis, there are 3 main types of transactions that can be performed. These are Swaps, Transfers, and Staking. Swaps are transactions that exchange tokens. Transfers are transactions that move an amount of a specific token between accounts, and Staking transaction delegate an amount of OSMO to a validator as security for the network.
A normalized of the share of the three main types of transactions is shown above, and we can see that Swaps are the most dominant type of transactions. Transfers sometimes spike and overtake Swaps in certain weeks, but Staking transactions general account for less than 20% of the total. Bots are presumed to engage in more swaps because of arbitrage opportunities due to on-chain price changes.
The top 5 pools for bot swaps by transaction count are pool 1 - ATOM/OSMO, pool 5 - DVPN/OSMO, pool 560 - USTC/OSMO, pool 6 - USDC/OSMO, and pool 608 - LUM/OSMO. The bar charts below also show the top origins and destinations of the funds that bots transfer.
When it comes to staking, these are the validators that bot wallets stake with the most (transaction count). 1) Cosmostation, 2) AutoStake, 3) Sentinel dVPN, 4) Frens, and 5) SG-1 Since our bots are defined by transactions per minute, we'd like to look at the most bot transactions per a single minute before we wrap up.
osmo15s259 holds the record for the most bot transactions in a single minute (9.5k). On 5 other instances osmos15s259 has made more than 4k transactions in a single minute. This wallet is believed to an airdrop wallet or a specialized type of automated wallet. Other high volume wallets include osmo17l4rs, osmo17pn3r, and osmo1xrzk0.
Conclusion
We have delved into, and demystified the mysterious underworld of bots within the Osmosis network. It was found that bot activities became precame prevalent in the early parts of 2022 due to an explosive growth in bot accounts. Bot transactions are largely token swaps (arbitrage), with some being transfers and staking. For swaps, bots have been very active in the ATOM/OSMO pool, DVPN/OSMO pool, and USTC/OSMO pools. Bots also receive funds to and from exchanges looking at how their transfer flow is normally distributed. When bots stake, they mostly go with Cosmostation, AutoStake, and Sentinel dVPN. osmo15s259 is the unruly king of all bots with a number of record breaking transactions per minute under its name.