Volume AMA: Paloma MultiWAP Bots

Background

Vera Behr @v_behr, Head of Product at VolumeFi (volume.finance) is joined by DeFi Strategist Zhibai Zhang @FieldTheory in this week’s AMA episode. They talk about the newest addition to Paloma’s bot stack, the MultiWAP bot, and its functionalities. Also highlighted in this episode are the top three most popular Paloma bots, with the Curve TWAP bot still hugging the top rank at $14 million in transactions since its launch last August.

Taariq Lewis @LewisTaariq, CEO of VolumeFi joins in later to discuss software upgrades and the opening of more fee revenue opportunities for Paloma validators.

Definitions

AMA - Ask Me Anything
Private key - a cryptographic key that is used with an asymmetric (public key) cryptographic algorithm. Used to compute a digital signature that may be verified using the corresponding public key, it is uniquely associated with the owner and is not made public.
Validator – or Paloma Pigeon a participant on a Proof-of-Stake (PoS) blockchain whose job is to validate transactions on the network for rewards. They are responsible for network security, transaction validation, and consensus building.
Open-source - refers to any program whose source code is made available for use or modification as users or other developers see fit. Open source software is developed as a public, open collaboration and made freely available to the public.
Curve – or Curve Finance, is a decentralized liquidity pool for stablecoin trading. It uses an AMM (automated market maker) model to match liquidity ensuring maximum efficiency while incurring a minimum of slippage for traders.
TWAP - stands for time-weighted average price, a pricing algorithm used to calculate the average price of an asset over a set period.
Momentum - the rate of change in price movement over time to help investors determine the strength of a trend. Momentum is used by investors to trade in an uptrend by buying or selling in a downtrend.
Limit Order - a buy or sell order that executes at the minimum price you set or better.
Uniswap V2 - a decentralized exchange (DEX) and one of the core pillars of the DeFi ecosystem. V2 implements a new functionality that enables highly decentralized and manipulation-resistant on-chain price feeds.
PancakeSwap V2 – an updated and upgraded version of PancakeSwap V1, with new features and improved security, fees, and transaction speed. PancakeSwap is the biggest exchange of the BNB Chain ecosystem and one of the top DEXs by market share.
Gravity Bridge - a trustless, neutral bridge between the Ethereum and Cosmos ecosystems built by the Althea team. Built using the Cosmos SDK, it uses the validator set to sign transactions instead of a multi-sig or permissioned set of actors.
Compass EVM - a smart contract written in Vyper that allows the user to run any other smart contract with arbitrary transaction data.
CoinGecko - a cryptocurrency ranking website that provides a 360-degree overview of the standing of digital currencies.
Slippage – describes the difference between the expected price of an asset and its actual execution price. Though small differences in pricing can frequently occur while investing in cryptocurrencies, they can also have significant impacts if not appropriately monitored.
Price Oracle - a source of price data streamed onto the blockchain. Oracles bridge the off-chain world with the blockchain, by publishing off-chain price information on-chain.

Intro

Vera welcomes everyone to Volume’s Twitter spaces. She shares a brief about Volume Finance:

“Volume is all about private key security and private key management in a multichain world. If you want to get your keys anywhere in the multichain world, we can help you get those securely and fast.”

Paloma is open source and anybody can build on it, Vera adds, bringing more value to the ecosystem and the community of validators.

The Top Three Paloma Bots

Following the successful launch of Paloma bots, FieldTheory announces that the total volume in terms of transactions has climbed to an impressive US$14,561,000 since August.

The Curve TWAP bot dominates Paloma’s entire bot space garnering the highest volume at USD14 Million worth of transactions for the first month alone. The Momentum bot trails behind with USD5,000 and third, the Curve Limit Order bot with USD3,000 in transaction volume.

FieldTheory shares that the TWAP bot is the biggest winner because of its utility, experiencing a spike in demand from users swapping tokens who are concerned about execution price. The Momentum bot, ranked second, helps users to discover new trending tokens. As speculative tokens become more popular, he believes that Momentum bot users will grow in demand even more as the market goes up.

MultiWAP Bot

Vera shares that the MultiWAP bot was conceived out of feedback from users looking to do multiple swap transactions for multiple tokens over pre-defined time intervals. A variant of TWAP, the bot allows the user to break the trade of several tokens into smaller, periodic fixed amounts to decrease slippage and land better execution prices.

She cites an example where a user is looking to do multiple token swap transactions over time:

“Let's say you have six tokens that you want to get out of and you want to go back into Eth or USDC. You can select all of those that are in your wallet and at once, define the trading interval, the number of trades, the start time, and so on. Just go into the coin that you want to get into. We’re making it easy for you.”

MultiWAP bots are live on Curve and Ethereum. She mentions that the bots will soon be available in Uniswap V2 and PancakeSwap V2, ensuring wider availability across the ecosystem.

FieldTheory chimes in on the creation and uses of MultiWAP bots:

“This bot came from user demand and more specifically those who were using the Curve TWAP bot. The Curve TWAP bot does a TWAP trade from token one to token two. There is now a demand for trading multiple tokens all at once.”

While the Curve TWAP bot serves to break down larger trades into smaller trades, it can become tedious when trading multiple tokens. Inferring from user demand he states:

“Some tokens would have a relatively low market cap and as a result, their liquidity pools are not that deep. Swapping these tokens even at not a very high amount would impact the pool and create high slippage. You swap and then you get much less than you expect. So it makes a lot of sense to break that trade into multiple smaller trades, which is what TWAP does.”

He assures that trades are done in a secure way supported by Paloma’s blockchain technology with automated scheduling and remote control functionality.

Who Can Benefit from MultiWAP Bots?

FieldTheory shares his view on the possible target users of MultiWAP bots.

Successful liquidity farmers who may have a difficult time keeping track of dozens of multiple tokens they have collected will find the MultiWAP bot useful. Some of these tokens have low liquidity pools and a small market cap. He shares an example:

“If you have dozens of low liquidity tokens, it is kind of hard to track. At some point, you might want to swap 30 different tokens for Eth. And also during a bear market, it is a safe way to keep value.”

Users who seek and identify opportunities with high-yield liquidity pools can also benefit from the MultiWAP bot.

“So they do look through their wallet and swap every single token into this specific token so they can join the higher yield liquidity pool or whatever the opportunity is. For this type of user, they can use the MultiWAP bot and swap everything into this one token.”

MultiWAP bots guarantee better execution prices than swapping every token all at once. He invites everyone to check them out at palomabot.ai.

Software Upgrades

Vera announces that the Gravity Bridge is underway, an important milestone in Paloma. The Bridge is a prerequisite for getting Paloma grains listed on other pools and being able to trade them. It will set the road for adding the fee market and gas management so that validators can be reimbursed for logic calls.

Pigeon improvements are continuously being made to help with issues regarding jailing and health checks.

Taariq joins in the conversation and announces that several upgrades are happening on Compass EVM and the testing of Gravity Bridge functionality. He stresses the importance of continuing to troubleshoot the deployment of Compass to introduce new features. This will allow anyone to deploy smart contracts to any target chain from within Paloma. He expounds:

“The Compass exercise workout and issues help us now get to the point where the Pigeons can deploy contracts through the Paloma network. Let the Paloma network run those contracts for you so you can have a full life cycle of contract deployment, and contract management via the Pigeon network.”

More Fee Revenue Opportunities for Validators

Taariq shares his excitement as more fee revenue opportunities open up for validators from submitting logic calls to deploying contracts. He encourages validators to check the form under the R&D section on palomachain.com. Two R&D epics are set up to help validators manage recurring transactions following the newly launched MultiWAP bot which will require validators to run repeated messages.

“For example, this MultiWAP feature will require this. You'll have multiple tokens and they have to have multiple swap transactions done over a period. If you have 10 tokens, each has to be swapped in small amounts per day. You can lower slippage and you're going to have that repeated.”

Validators will be able to get more business from these recurring transactions.

“If you're a validator on the network, that's the business you want. You want to be able to say, Hey listen, send me this thing 10 times and I'll do it for you. And so we are working that as that's in our R&D epic.”

Taariq also announced that validators will be enabled to become Oracle providers using Paloma’s Oracle data in addition to CoinGecko. With the new additional resource, validators can check prices from external price sources such as Oracle, CoinGecko, Chainlink, and many others.

Users will have the option to use the Price Oracle where validators can charge for a query to get the data and make it a part of the contract. This means that validators can be compensated for doing more compute work.

Upgrade to Mainnet

Taariq announces that Paloma will be upgrading to mainnet on release 1.72.160. He gives a heads-up to Paloma validators on the mainnet as they restart the network at chain halt and get moving forward. Tests are being run to ensure that the new Compass EVM is deployed as well.

“We think Paloma will be the chain that these things become very easy to build and easy to execute.”

The goal is for validators to be able to create their own fees, generate their own revenue, and profit for supporting the network.

Closing

Taariq congratulates the Paloma and Volume team, and the community of validators for pushing through US14 million in volume transactions on Paloma bots. He thanks all the listeners and wraps up the episode:

“This is the next phase of chains and we want you to definitely be a part of this experience.”

Stay tuned for the next AMA!

To find out more about Volume, check out Volume Finance (https://volume.finance/), join the Discord (https://discord.com/invite/Ebh6YjMShu), and follow us on Twitter (@Volumefi). Check out Paloma Chain on palomachain.com (https://www.palomachain.com/), follow them on Twitter (@palomachain), and join the flock on Discord (https://discord.com/invite/tNqkNHvVNc). Coo!