Synapse Network — the next generation anti-bot solution
Synapse Network constantly provides a growing spectrum of services related to the cryptocurrency market. In this article, we will focus only on one of the services — the anti-bot solution.
We have already described the solution and its function in the example of the project in the article
Now we will present this new version on the example of behavior on the day of the SNP token listing and in the following days.
Listing and the beginning of the trade
Every project listed on DEX is at risk due to several types of bots such as sniper-bots and front-running bots. These types of bots can push the price of a token up to a very high level. Uninformed investors buying with high slippage or in unlimited orders buy tokens at an inflated price, which after a few seconds are sold by the bots at a high profit and a loss for the investors. Usually the project’s price never rebounds to the value raised by the bots, which means that the only thing left for investors who bought in the first few seconds is to sell at a loss.
This problem has been occurring for a long time, but recently the awareness of investors has been growing and more and more often we see questions among the community about which anti-bot will be used during the sale. And this increase in awareness is very pleasing to us, because it creates a kind of pressure on listed projects to introduce protection against price manipulation, bettering the market as a whole.
The graph below is a perfect example of bot-related manipulation. As you can see, there is a huge upward jump in price at first, followed by an equally sharp drop. It’s worth noting that the entire process happened in just one minute (it’s a minute chart). People who bought at that moment, hoping for an organic increase in the value of the token, remained at a loss. The price has not yet reached the value of the first few seconds.
And here is the hourly chart — as you can see even though the listing was in June, the price doesn’t even come close to the numbers achieved in the first minute of trading, even though the listing was quite a while ago.
The organic way of trading — Synapse Network token listing
Let’s look at the chart below. You can clearly see how the move displayed started very slowly and then accelerated. This is a minute chart, so you will notice how the green minute candles do not elevate the token price by more than 50%. It is worth noting that the bot did not block any sales in any way and the price increase is 100% organic.
With each listing, we analyze the behavior of the trading process very carefully. We performed the same analysis here. Analyzing the on-chain data from the first seconds, you can also see that all the purchase transactions were organic and did not cause drastic price spikes — again, the growth was natural and our anti-whale mechanism worked. You can also see the slight increase of price with every transaction in the highlighted column.
As you can see even before (at about 0.5$) reaching ATH price (0.847$) the trading process was natural and everyone could freely buy and sell. It is important to highlight that the Synapse.Network anti-bot solution does not block selling in the first minutes like some of the competitors.
Typical token after the listing
The awareness of crypto investors is growing every day and more and more investors are using tools like Dextools to analyze trends, movements or track specific wallets. Therefore, they increasingly pay attention to market pathologies and are often concerned about price manipulation. Let’s look at a typical example of such manipulation — using so-called front-running bots. Below is an example of a typical unprotected token viewed on the DexTools — which indicates such front-running bots and transactions.
Trades executed by the front-running bot are marked here with 1 and 2 and are wrapped out of the transaction from the investor. How does this happen? When a trader places an order on the DEX exchange it hangs in the mempool — a place where operations are stored and queued for execution. The bot can detect such situations and place a buy transaction in the same block (in the same second) just before the trader’s transaction (raising the price) and a sell transaction, right after the trader’s transaction (lowering the price). This behavior results in the bot earning a small percentage on each investment, but with the scale of this behavior it is millions of dollars. You can read more here https://www.investopedia.com/terms/f/frontrunning.asp about front-running bots.
Now let’s look at a single such manipulation below.
When we take a close look at a single trader’s transaction, we can see that it is surrounded by a buy transaction at 0.05601128$/token and a sell transaction at 0.05685817$/token. This means that the bot earned 0.007 Ethereum on this one transaction alone, which is 1.5% of the transaction volume. There are thousands of such transactions on tokens without bot protection and every day the creators of these bots are making millions of dollars at the expense of individual investors.
The safe way of trading — Synapse Network token
Now let’s look at the Synapse Network token after a few days of listing — even when the trading volume is low you can see that there is not a single front-running bot.
With the mechanism described above, investors are not at risk of losing hundreds of thousands of dollars and even if they realize a transaction with low gas price that will be pending for a while, they are assured that they won’t be exposed to a front-running bot.
The Final Solution
You may ask yourself — if there is such a good and proven anti-bot solution, why are there still so many listings that expose projects to automated pump & dump?
Surely this is due in large part to the unawareness of projects, which only through partnerships with Ecosystems such as the Synapse.Network acquire knowledge of the threats and possible solutions. Some projects also acquire alternative anti-bot solutions that unfortunately can’t do much even in the case of front-running bot security.
One should be aware here that in order for the anti-bot mechanism itself to be effective and not hinder trading for individual investors it requires a precise analysis of each project and adjusting many different parameters based on the platform itself and on the characteristics of its token.
About Synapse Network
Synapse Network is developing a cross-chain investment and start-up acceleration ecosystem based on blockchain technology, to give everybody an equal chance to contribute to great upcoming projects and to do so early on. We are bridging the gap between the traditional & crypto market. The idea of the Synapse Network technology goes beyond the standard offer of launchpads available on the market, becoming a true technological brand providing tech solutions.