Unibot

Introduction

One of the major complaints about crypto is that the user experience (UX) is unintuitive and clunky. Moving funds from bank accounts to non-custodial wallets is a cumbersome multi-step process. Once funds have arrived on-chain, trading on decentralized exchanges (DEX) has its issues with giving token approvals and manually trading tokens at the market price. On-chain limit orders or stop-losses have previously been nonexistent for DEX traders, making it difficult to trade profitably. Unibot (UNIBOT) is a new telegram-enabled app that helps alleviate these problems, improving the UX for crypto traders while bringing them functionality more in line with centralized exchange trading.

Investment Thesis:

The investment thesis for Unibot is predicated on three main points:

• Product-Market Fit
• Strong Tokenomics
• Valuation & Growth Potential

Product-Market Fit

Decentralized exchanges have lagged centralized exchanges in terms of functionality and user experience. Swapping tokens on Uniswap is a manual process with no ability to set limit orders or stop-losses. Users have to browse poor mobile user interfaces in their MetaMask wallets, and token launches frequently get bought up by trading bots.

Unibot’s product is alleviating the forementioned pain points of on-chain traders. Unibot’s trading bot is directly integrated with Telegram, giving users a familiar interface to conduct their trading. In addition to the convenience of trading via Telegram, Unibot has a suite of helpful tools that vastly improve the user experience such as:

• On-Chain Limit Orders – Fully automate trading strategies with limit buys/sells and stop-losses, eliminating the need for traders to watch price action non-stop.
• MEV Protection – Protection against being front-run or sandwich attacked, saving users from wasting gas fees.
• Copy Trading – Mirror “smart” wallets to automatically trade others’ strategies.
• Sniper Bot – Input a contract address to have Unibot immediately buy a new token seconds after it goes live.
• Unibot X – A full-suite trading terminal offering users a CEX-like trading experience, available on mobile or desktop.

The improved functionality and user experience have resulted in Unibot rapidly accumulating a sticky user base.

There has been a decline in Daily Active Users (DAUs) in the last few weeks as Banana Gun, a competing bot, has attracted attention due to its recent token launch, but data suggests that Unibot’s core user base is still returning to the app.

Although perpetual futures exchanges are not direct competitors to Unibot, it is important to draw attention to the number of DAUs Unibot has accumulated compared to well-established projects such as dYdX and GMX, displaying the clear product-market fit of telegram bots.

Looking at its closest competitors, Maestro is the clear winner if just looking at daily active users. We largely attribute this to the first-mover advantage and the fact that Maestro has had over a year to build a user base. Unibot’s product is slightly different from Maestro and Banana, as they both focus on token sniping features. With time, we expect Unibot’s user numbers to close the gap with Maestro and eventually surpass it, as the Unibot team continues to ship new features, including a recent release that directly competes with Maestro and Banana’s sniper features.

Although Unibot’s daily active users are approximately half of Maestro’s, Unibot is generating more revenue than Maestro on a trailing 30-day and annualized basis. It is important to caveat that Unibot is benefiting from tax fees related to the UNIBOT token, whereas Maestro revenues are fully contingent on bot fees. The full dynamics of the UNIBOT token will be discussed further in the tokenomics section below.

As awareness of Unibot continues to grow and their product continues to improve and innovate, we think that Unibot will win market share from Maestro.

Strong Tokenomics and Value Accrual

In addition to creating an innovative and useful product for crypto traders, it’s our view that Unibot has relatively strong tokenomics and offers a mechanism for value to directly accrue to its token holders (UNIBOT). Unibot conducted a “fair launch,” meaning that the total supply (1,000,000) of tokens is circulating with no presale or team allocations. The entire supply was added as liquidity on exchanges at launch. UNIBOT is currently trading at $54.79, giving it a fully diluted valuation (FDV) of $54.79 million.

UNIBOT is a “tax token”, meaning all buys and sells of the UNIBOT token have an automatic tax applied. Half of the token taxes go directly to holders, while 25% goes to the liquidity pool and 25% goes to the team. Additionally, Unibot takes a 1% default fee on all transactions completed through its bot, 40% of which is distributed to Unibot token holders. To receive the allocations of taxes and bot fees, users need to hold a minimum of 10 UNIBOT, at which point they are eligible to receive revenue in proportion to the number of tokens they hold.

The tax and fee structure of Unibot provides significant value accrual for token holders while creating a structure where the team and holders mutually benefit from growing the project. Furthermore, the lack of future issuance or unlocks adds to the attractiveness of this investment since the project will not have to compete against dilution in the future.

Valuation

The level of adoption and profitability Unibot has witnessed in just a few months is impressive considering DeFi is still plagued by reduced on-chain activity. Looking at Uniswap monthly trading volumes as a proxy, it’s evident how much on-chain interest has faded over the last two years.

With macro conditions potentially set to improve within the next 6-12 months, combined with crypto-specific catalysts such as prospective spot ETF approvals and the Bitcoin halving, we expect that general interest in crypto markets will increase and trading volumes should revert to higher levels. Examining 2021, Uniswap facilitated approximately $272 billion in trading volume. We believe that trading volumes can return to this level and we will use this figure as the first assumption in projecting Unibot’s revenues.

Unibot trading is routed through Uniswap, so zooming in on both Unibot and Uniswap’s monthly trading volumes, we can see that Unibot is capturing anywhere from 1%-5% of Uniswap’s volume. This range will be the basis for evaluating different revenue scenarios.

Other assumptions to account for include Unibot’s fee structure, revenue breakdown, and assigning a market multiple to its revenues. Unibot’s default fee is 1% on all transactions, although that can be lowered via its loyalty/referral program. For simplicity in calculations, the default 1% will be used. Over the last 7 days, Unibot’s bot revenue has averaged 38% of its total revenue, which we will use in our projections to back into tax revenue. This figure has been on an uptrend since launching as Unibot continues to gain new users and grow its bot volume relative to UNIBOT trading, and likely continues increasing over the long-term. Lastly, Unibot currently trades at 1.4x its annualized revenue which will serve as the base case multiple.

Combining all our assumptions, this illustrative analysis results in significant revenue growth and price appreciation for Unibot. In the median scenario where Unibot’s percentage of Uniswap volume is kept at its four-month average of 3%, Unibot would 5x its current annualized revenue figure, and trade at approximately 5x-8x its current valuation ($54.79m), depending on the assigned price-to-sales multiple.

It is important to acknowledge that Unibot likely trades at a low price-to-sales multiple compared to other protocols due to a high percentage of its revenue coming from token taxes. As Unibot matures, we expect that the percentage of revenue coming from bot transaction fees will increase, potentially enabling multiple expansion. Despite applying a relatively low multiple, there is substantial potential for forward returns on UNIBOT if the illustrated scenarios come to fruition.

Growth Considerations

In the valuation scenario above, a large amount of growth was forecasted in the general assumption that Uniswap trading volumes revert to 2021 levels. With that said, there are other vectors of growth that should be mentioned.

Unibot is currently only integrated with Ethereum which may deter usage due to higher gas fees for smaller traders. By expanding to other cheaper chains, the universe of tradable tokens and traders expands rapidly. Similarly, the only DEX Unibot is integrated with is Uniswap. Not all tokens are traded on Uniswap, so expanding to other trading platforms could further grow revenues. This could also include creating a Telegram interface to trade on perpetual exchanges.

Additionally, Unibot can tap into the NFT market so users could utilize the bot’s functionality to trade NFTs or snipe new mints. Although NFT market volume has heavily diminished from its peaks, this will not always be the case. Unibot has already started to add this type of functionality with the ability to trade friend.tech keys. Friend.tech is a new Web3 social media platform that has been one of the hottest things in crypto. Ultimately, there are a lot of different areas across the crypto ecosystem that could utilize Unibot’s functionality.

Liquidity and Entry Suggestions

Unibot has fallen significantly from its all-time highs above $200 and is currently trading at $54.79. Given the total revenue Unibot has accumulated YTD and the prospects of significant growth, if Unibot declines any further into the $25-$45 range, we would view that as an excellent opportunity to accumulate tokens.

There is approximately $4.7 million in liquidity on a $55 million FDV coin, representing a ratio of about 8.5% which is a comparatively healthy ratio. Liquidity should continue growing as 1% of all Unibot trading volume goes to the liquidity pool. One consideration before entering a position is the 4% tax on all buys and sells, so flipping in and out of a position is not recommended given the cost to do so.

Risks & Security

One risk in using Unibot is that it creates a new access point for malicious actors. If someone can gain access to your Telegram, they will have the ability to access your wallet and funds. It is technically no different than using a hot wallet, but a non-crypto person would likely find it easier to steal funds via Telegram than MetaMask or other wallets.

With that said, Unibot takes a lot of security measures to ensure the safety of users’ funds. To start, wallet private keys are encrypted using industry standard encryption and they are not stored on any of Unibot’s servers or databases. This is an advantage compared to centralized exchanges which have access to private keys. Unibot private keys can be imported to MetaMask at any time for full control over funds. Users can set a password on their wallets to help prevent any unauthorized transfers or transactions and Unibot is planning to implement other security features such as whitelisting addresses for transfers, two-factor authentication, and auto-transfer of ETH when the wallet’s balance exceeds a set amount.

It is worth mentioning that there is a non-zero risk that the Unibot token could be targeted by the SEC for being a security given that the token’s main function is serving as a vehicle for receiving a dividend from Unibot taxes and fees. This is not a foregone conclusion, but it is important to acknowledge the potential risk. Lastly, as with all crypto protocols, users are subject to smart contract risk and there is always the possibility that there are bugs or vulnerabilities in the code that results in loss of funds.

Conclusion

Unibot’s telegram trading bot has found product-market fit, as it alleviates pain points for on-chain traders. In the four months since launching, Unibot already boasts over 1,000 daily active users and has generated approximately $14 million in total revenue, which is impressive given the overall lack of on-chain activity. Looking forward, with a potential better macroeconomic backdrop and increasing crypto adoption, we expect that on-chain trading activity will revert to 2021 levels, potentially fueling a 2x-9x increase in Unibot’s annualized revenue across varying scenarios. The prospects for significant revenue growth present a compelling investment opportunity if Unibot continues to be valued at its current price-to-sales multiple, with even higher upside if it benefits from any multiple expansion.