The emergence of decentralized exchanges (DEXs) in the cryptocurrency space has revolutionized the way people trade digital assets. However, the listing process on such exchanges can be a nightmare for token issuers due to the presence of sniping bots. In this article, we will explore the issue of sniping bots during listings on popular DEXs such as PancakeSwap, Uniswap, and others, describing the impact they have on crypto projects and investors. We will also look at the solution offered by Peanut Trade, which helps protect projects from the harmful effects of sniping bots.
What is a sniping bot and How Does it Work?
Sniping bot is an automated tool designed to buy tokens on DEX platforms as soon as they are listed. The principle of the sniping bot's work is based on speed and automation. It quickly detects the new token's listing and instantly buys it, making it difficult for other buyers to compete.
The sniping bot constantly monitors the mempool for any new transactions involving the addition of liquidity to a new pair or the victim's token contract.
When you send liquidity to your pair, the bot immediately jumps on it and secures the transaction in the first available block, sometimes even before it's mined and visible to others. As a result, it's able to front-run all potential purchases.
The majority of the first users buy the token at an excessive price, add liquidity, and generate profits for the bot.
The bot quickly sells all of its tokens, causing the price to plummet, and steals all of the project's revenue from customer purchases.
This not only frustrates the community but also irreparably damages the trading schedule, making it difficult for the project to regain the trust of users.
In short, the bot's actions have serious consequences for the project and its users, leading to significant financial losses and long-term harm to the project's reputation.
The bot's objective is to snipe as much of the new token as possible in the first milliseconds of listing, which makes the token's price instantly increase multiple times. This allows the bot's operator to make a significant profit by selling the tokens for a higher price. However, this practice can cause problems for the token issuer and other investors who are unable to buy the token at a fair price due to the bot's actions.
Token Launch sniping Bot’s Impact on the Crypto Market
According to a recent report by the cybersecurity firm, PeckShield, sniping bots can cause a significant impact on the listing process of new tokens on DEXs. The report states that up to 95% of tokens listed on DEXs are impacted by sniping bots during the first few minutes of their listing. While it's difficult to quantify the exact financial impact of sniping bots on token issuers, it's estimated that the average loss can be as high as 10% of the total token supply, which for many projects can be around $500,000 or more. Thus, sniping bots can cause significant problems for token issuers, as they can disrupt the market price of a token and lead to a decrease in investor confidence.
Sniping bots have become increasingly sophisticated in recent years, using advanced algorithms to predict the listing time of new tokens and execute trades at lightning speed. Some sniping bots are even equipped with machine learning capabilities, allowing them to adapt to changing market conditions and improve their performance over time.
One of the most popular crypto snipers is Pancakeswap sniping bot which is designed to operate on PancakeSwap exchange after its growing popularity during last years. It is also known as BSC sniping bot or BSC token sniping. It places buy orders for a newly listed token on PancakeSwap within seconds of its launch, allowing the bot owner to purchase the token at a lower price before others have a chance to do so. However, Pancakeswap sniping bot is just one example of the many sniping bots that are being used to manipulate the market on DEXs. Another popular bot is Uniswap sniping bot which is developed to snipe crypto in ETH network during listing on Uniswap Exchange.
Sniping bots have also been responsible for creating price volatility, making it difficult for traders to predict the direction of the market. Therefore, token issuers and managers of Decentralized exchanges are actively looking for Anti-Snipe solutions.
Anti sniping Bot Solutions
One of the most popular solutions in the market is the anti sniping bot algorithm that can be integrated into a token's smart contract. This algorithm is designed to detect and neutralize sniping bot activity during the token listing process, ensuring a fair and transparent distribution of tokens.
However, integration of such an algorithm requires making changes to the smart contract of the token. As with any security measure, there is always a tradeoff to consider. The degree of protection against bots must be balanced against the potential harm to ordinary users. If the protection measures are too stringent, it could increase the likelihood of failed transactions and lead to lost gas fees for users.
Therefore, finding the optimal balance between protecting against bots and ensuring a seamless user experience is critical. By working with experts in the field, it's possible to integrate the anti sniping bot algorithm in a way that maximizes security while minimizing impact on users.
Another solution that has gained popularity is the use of a lottery-based system for token allocation. This system involves randomly selecting token buyers from a pool of participants, making it more difficult for sniping bots to gain an advantage. Still, such a solution doesn't guarantee 100% protection.
How Peanut Trade Fights Against sniping Bots
One of the most effective solutions available on the market was developed by Peanut Trade team of DeFi developers and DEX market makers. Peanut Trade offers a comprehensive anti-sniping bot solution called Fair Launch that shouldn’t be integrated into a token's smart contract.
Our solution is designed as a custom-developed sniping bot that works during token listings, ensuring a fair and transparent distribution of tokens. With Peanut Trade's anti-sniping bot solution, token issuers can rest assured that their token listing will be free from the disruptive influence of sniping bots.
At the core of our bot's functionality lies a simple yet powerful principle:
- Using the UI service, the client forms a transaction for adding liquidity.
- Our platform carries out rigorous checks and simulations to ensure successful launch.
- At launch time, our transactions are sent directly to miners through the shortest available path bypassing the public mempool bundled with own sniping transactions that optionally can provide additional profits.
- Sniping bots detect that the price of the token has already changed and their internal logic prevents them from participating in the launch due to higher risks.
- The tokens obtained by the white-hat bot can be used for market-making activities, which generates additional profit without damaging the token's value. In fact, this protection mechanism more than pays for itself.
In addition to providing cutting-edge white hat snipe protection for our clients' token transactions, our company offers a range of consulting and development services tailored to our clients' needs. We understand that every token has unique security requirements and business logic, which is why we take a personalized approach to consulting and contract development. Whether you need assistance with contract development, security consulting, or anything in between, our team is here to help.
Sniping bots have become a significant problem in the crypto market, affecting the fairness and efficiency of the market. However, there are solutions like the one offered by Peanut Trade that provide hope for projects looking to launch on DEXs.
By implementing an anti-bot mechanism, projects can ensure a fair market for all investors, boosting confidence and liquidity in the market. As the crypto market continues to evolve, it is essential to have solutions that address emerging issues like sniping bots.
By using Peanut Trade's solution, token issuers can ensure a successful launch on DEXs and overcome the challenges posed by sniping bots.