Volume AMA: Winning with Palomabot.ai
Background
Following the success of the palomabot.ai’s launch to mainnet, this week’s AMA episode talks about the state of the PalomaBot since it has gone live and online. The host, Taariq Lewis @LewisTaariq, CEO of VolumeFi (volume.finance) joined by Vera Behr @v_behr, Head of Product at VolumeFi discuss what has happened since the launch last week, pumping more usage to drive revenue and the next steps for Paloma. The team gears towards building more bots with new functionalities while strengthening security guarantees. Building a free market for validators is on top of Paloma’s agenda to make it a more profitable and attractive business model for them.
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.
Bots - automated software tools designed to handle the buying and selling of cryptocurrencies based on predetermined parameters to generate profits.
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.
Green token - an eco-friendly utility token created to facilitate the development of a blockchain-based conservation and sustainability platform. Its purpose is to facilitate communication between organizations and individuals concerned about environmental and social issues on a global scale.
Native token - the foundational tokens of a cryptocurrency blockchain designed to function directly with the blockchain.
Gas - the fee required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform
Compass EVM - a smart contract written in Vyper that allows the user to run any other smart contract with arbitrary transaction data.
Kava - a fast and secure Layer-1 blockchain featuring a unique co-chain architecture that combines the speed and interoperability of the Cosmos SDK with the flexibility and developer support of the Ethereum Virtual Machine (EVM).
Optimistic Ethereum - or Optimism, an extension to Ethereum that enables users and developers to benefit from the latter's strong security guarantees while being cheaper and faster.
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.
CoinGecko - provides a fundamental analysis of the crypto market. In addition to tracking price, volume, and market capitalization, CoinGecko tracks community growth, open-source code development, major events, and on-chain metrics.
dApps – short for Decentralized Applications are digital applications that run on a blockchain network of computers instead of relying on a single computer. dApps are free from the control and interference of a single authority.
MEV - or Maximal Extractable Value refers to the maximum amount of value a blockchain miner or validator can make by including, excluding, or changing the order of transactions during the block production process.
Sniping - a trading strategy that involves buying a new cryptocurrency token as soon as it is launched, usually on a decentralized exchange (DEX) like PancakeSwap or Uniswap, and then selling it for a profit after the price pumps.
Base - an open-source optimistic roll-up built on the Ethereum blockchain. Rollups are L2 blockchains built to help layer one (L1) blockchains like Bitcoin and Ethereum scale. They bundle hundreds of transactions and submit them to L1 as a single transaction, which reduces gas fees for the end user.
Permissionless - open to anyone to use and typically transparent and decentralized. Bitcoin, Ethereum, and BNB Chain are all examples of permissionless blockchains.
Flash bots - a research and development organization aimed at making the Maximum Extractable Value (MEV) market more efficient, distributed, and democratic.
SUAVE - a codename for Single Unifying Auction for Value Expression, proposed by Flashbots. This new architecture is an EVM-compatible blockchain that will aim to serve as a common mempool and a block builder network for all blockchains.
Mempool - (a contraction of memory and pool) is a cryptocurrency node's mechanism for storing information on unconfirmed transactions. It acts as a sort of waiting room for transactions that have not yet been included in a block.
Intro
The host extends a warm welcome to Volume’s Twitter spaces and expresses his excitement over the launching of Paloma bots last week. He shares a brief about Volume Finance:
“The goal of Volume is private key security and private key management. Our goal is to help you get the most out of your private keys, and of course, to enable more control and features for your private keys.”
Taariq gives a big congrats to the entire Volume team, especially to Vera, the UI/UX, and the front-end teams for getting the Paloma bots live and online. He mentions that the bots are now active across three properties, namely, Volume, Paloma, and Curve.
Building a Fee Market for Validators
Taariq gives kudos to the entire Paloma validator set and acknowledges their work for hosting data centers that execute trades and for helping bring the Paloma bots online. He mentions that all Paloma validators are getting refunded for paying for gas. The goal is to support updates to the Paloma protocol where validators can begin asking for fee payments for routing messages.
“All bot execution is happening through the Paloma validator set. And that's also marvelous. We want our validators to get paid both in Green and Native tokens for being able to essentially manage cross-chain message execution.”
Taariq emphasizes that building a free market for validators is crucial to Volume and Paloma and to make it a profitable business for them.
He shared a hiccup that happened shortly post-launch.
“In our eagerness to deploy Compass EVM to KAVA and Optimistic Ethereum, we found that some pigeons were not supporting these chains during the time of the vote passing - and as a result, they got jailed and fell off the network. “
The matter has been resolved and validators’ cover wallets have been set up for them to come back on. New updates will be made available to avoid this from happening again in the future. Taariq shares an important learning from this incident:
“We're learning that essentially, the validators keep the network alive. And if validators fall off the network, then there is no network, and the entire project dies. I am super pumped about making this an attractive validator business model. We want to say thank you to all validators for holding on and staying with us in the bear market.”
The State of the Paloma Bot
Vera gives an update on the state of Paloma bots, Momentum, and GeckoBot Top 100 Gainers:
“We have two bots that are live and functioning on palomabot.AI that folks can check out now, the momentum bot and our Gecko Top Performer bot. Both of these are meant to seek out those bits of momentum that you can find even in a bear market. So it is really exciting, even in a bear market, there are still tokens that are going up and there's still money to be made. And we also actually have Telegram alerts for those. If you sign up, you can start your bot right from within Telegram and get alerts when something is hot.”
Taariq chimes in:
“Paloma bots are a dApp on top of the Paloma chain. The reason why we launched these bots was to demonstrate the power of the validator set to custody your funds. They want a business that's profitable. They want to be rewarded for hosting servers. Paloma is all about emissions and revenue, and we want Paloma to be the most attractive chain for any validator because this is the most profitable chain you can validate around the world. Paloma bot is meant to be a dApp to be a live demonstration of a real use case.”
A Closer Look at Momentum and Gecko Bots
Taariq explains that the Momentum and Gecko Bots are two out of a very large inventory of bots that have gone through battle-testing. The Momentum bot is being fed off from CoinGecko feeds for momentum. It employs a simple strategy using multiple measures of changes in returns on the price of tokens between 6, 12, 24 hours, and seven days.
The first CoinGecko bot, GeckoBot Top 100 Gainers, essentially pushes CoinGecko’s trending tokens. Using pre-defined parameters, the bot executes trades and exits automatically. He adds that there will be more Gecko bots coming soon.
Telegram alerts are available via the Telegram bot that notify traders when positions are closed, or when new positions open up. These bots are constantly finding opportunities to ride trends.
Pumping Usage and Winning with Palomabot.AI
Since the launch of the Paloma bot to mainnet a week ago, there has been strong interest from people who want to use the system or build bots. Taariq shares his excitement:
“The big takeaway here is if you are a validator on the Paloma network, we are having people come in that they want to be able to run this type of service and be able to pay for it. And what makes it really powerful is that people tell me that they want to work on this.”
Even while Paloma’s grain token is currently not trading, more new users are coming in every day. Taariq cites that there is way more interest in people looking to launch bots on Curve for example.
“We hope that this will be a self-fulfilling positive feedback loop in that as people see us launching more bots, they're going to launch bots and get over to it.”
Paloma is in mainnet and it is permissionless and anybody can build on it. Plans are afoot to deploy to more chains. Taariq shares:
“So every time we deploy to a new chain, we are telling people that Paloma is open for business. You can use it. That’s a big win! If you are a validator on Paloma, literally you're standing on a gold mine. The opportunity for us to service these folks is an opportunity for revenues to come from it. What I'm interested in pumping is usage. So that drives revenue because validators will get to charge a fee for relaying those messages.”
The Future for Paloma Bots
Riding on the overwhelmingly positive feedback since the launch, there will be more chains, Taariq assures. He says that people are asking to get bots on Base, Arbitrum, and other chains. The team is focused on bots and security.
Taariq reiterates that the goal is to get demand and get people to use Paloma so that validators will get rewarded. There is pressure to get the grain token listed as more people who use bots will want more security guarantees.
He shares the strategy:
“We're not trying to be the most complex project. This is very meat and potatoes, as we like to say, simple birdseed and routing messages fast.”
There are plans for the Paloma bot to do sniping in the mempool as Taariq admits that there is a need to create new functionality. Currently, the team is working on the Paloma chain to support MEV endpoints.
“So if you are a validator and you have an MEV endpoint partner, be it Flash bots, bloXroute, SUAVE, or whoever else you're working with, you will be able now to offer MEV execution or MEV message relaying of bundles into your MEV provider.”
He believes that this new functionality is going to differentiate Paloma from other cosmos and EVM chains.
“Paloma may be the only chain to do MEV cross-chain support by the validator set. So we're excited to bring that to life because then that means that Paloma can do sniping.”
New bots with new functionalities will be launched to make it attractive for block builders to come to Paloma.
“So it took us a year to get here. Paloma has been going through new releases every week and it has been on a tear. We will keep up this tempo as we bring on more bots and expect that the Paloma chain will be the bot chain the world wants, the world deserves, and the world will demand.”
Closing
Taariq thanks all the validators, Vera, and the bot team for the launch of the Paloma bot. He appreciates and acknowledges the support of the community of validators to help make Paloma a successful chain. He invites everyone to check out their website palomabot.ai.
