Blockworks Research

On bot activity and zero sum games in crypto. Bot activity. It is incorrect to frame bot activity as illegitimate, or to discount the value of bot activity. - Bots account for 50% of internet traffic. - HFT & simple latency arb accounts for 50% of US equity trading volumes - At times a single HFT shop will account for over 20% of US equity volume. Obviously the usefulness of bot activity depends on the platform, but in finance and software, bots are often your highest paying *and* highest frequency users. Any chain that wants to maximize value will build for bots, in the same way exchanges, websites, and SaaS apps build for bots. Bots are your users. Zero sum games. It is incorrect to equate zero sum games with fraud, or to discount the value of zero sum activity. - HFT trading is by definition a zero sum game, but it has led to tremendous profits for both HFT firms and exchanges and lower trading costs for all traders via added liquidity and lower spreads. - Gambling is by definition a zero sum game, yet it is one of the fastest growing industries in the western world. It’s frankly not a problem that users got rugged on Dog or Celeb coins. It’s a fun game. We’re all trading silly things and laughing about it with our friends, in the same way we bet on the game, lose, and laugh about it with our friends. Given these realities, any crypto community that rejects this flavor of zero sum activity is plainly short sighted, explicitly ignoring consumer preference and second and third order benefits.

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