New meme token draws attention to Solana

The Solana community is probably feeling the impact of the crypto winter more than anyone else. Over the year, the SOL token exchange rate fell by more than 94%. After the collapse of the FTX exchange in November, the capitalization of the asset decreased three times only from November 8th. The volume of locked value (Total Value Locked, TVL) in ecosystem projects is 70% lower than at the beginning of last year. The two largest NFT collections will move to other networks in early 2023.

However, the negative news, as well as the protracted period of record low volatility in the entire crypto market, did not prevent traders from discovering a new narrative, and surprisingly, the token on the Solana blockchain, born from a meme, launched on the eve of Catholic Christmas, became its epicenter, writes RBC Crypto.

Since the appearance of the price of the BONK token, inspired by another meme with a Shiba Inu dog breed, it has already increased by more than 30 times. Half of the existing coins were distributed for free by airdrop to the wallets of developers, as well as creators and owners of images from the sensational NFT collections on the Solana blockchain.

Around the distribution, a stir quickly arose. This led to an increase in trading volumes on the Raydium decentralized exchange, where the BONK/USDC trading pair was added for the first time. Soon, Huobi, MEXC, Gate and ByBit platforms launched trading in the new token. On Thursday, January 5, the latter announced BONK perpetual futures with 25x leverage.

Interest in BONK provoked an increase in demand for the Solana cryptocurrency after the collapse of its price below $10. Over the week, the price of SOL rose by almost 40%. At the time of writing, the coin is trading at $13.25, according to CoinMarketCap. At the same time, BONK continues to show rapid growth, adding 80% in just a day. The market capitalization of the meme token exceeds $213 million, and the number of transactions with it at the moment reached 88 thousand per hour.

Without “toxic” tokenomics

The developers of BONK position it as “the first dog coin of the Solana ecosystem”, obviously drawing parallels with the popular Dogecoin (DOGE) and Shiba Inu (SHIB). According to information on site, BONK is distinguished by the absence of “toxic Alameda tokenomics”. The portfolio of Alameda Research, which went bankrupt along with the FTX exchange, often included tokens on the Solana blockchain with low turnover, but high supply.

The Solana ecosystem was hit hard by the collapse of the collapsed crypto empire led by Sam Bankman-Freed. At the time of bankruptcy, FTX owned $982 million worth of SOL tokens. FTX and Alameda funded the development of the Serum decentralized exchange, which until November last year was the key liquidity provider for the largest DeFi projects on the Solana blockchain.

After the collapse of FTX, the creators of Solana and a group of stakeholders brought Serum back to life, promoting a fork of the exchange, which is a copy of the source code, free from any possible association with Bankman-Freed or FTX. In an interview with Fortune, Solana chief developer Raj Gokal toldthat community members have often criticized the Solana Foundation for FTX’s involvement in the ecosystem and its concentration of ownership.

Speaking to The Defiant, Austin Federa, head of communications at the Solana Foundation, named the appearance of BONK in that, at the right time, it “aroused the delight and support” of the Solana community.

“People are just having fun. In the last few months, the crypto space has been somehow not up to fun,” says Federa.

Quick earnings

After the sensational distribution and hype around BONK, the token attracted developers, who began to integrate it into their own applications on Solana. Some of them have launched a mechanism for “burning” tokens during transactions in order to reduce their existing supply. Thanks to this, about 1 billion BONK is withdrawn from circulation every day. The wave of discussions of the coin in chats and social networks also provokes even more interest and attention from traders, pushing its price even higher.

Not only traders, but also liquidity providers to the decentralized exchanges of the Solana ecosystem benefited from the rise in the rate of the meme token. By placing a staking crypto asset on the exchange, they receive income from its commissions for transactions in the corresponding tokens. Decentralized exchange liquidity pools accumulated tens of millions of dollars of assets to trade in pairs with BONK, thanks to which the commissions generated tangible income for participants.

The volume of trading in BONK/SOL and BONK/USDC pairs on the Orca exchange alone, cumulatively exceeded $20 million. The exchange paid out about 1% of the amount placed in the respective pools of tokens every hour, which gave liquidity providers about 24% of income per day. This has resulted in trading volumes in BONK on the platform exceeding those of Solana, which had previously consistently led the pair with USDC stablecoin.

Such high payments at the moment are provoked by the hype and demand for the token. When interest in BONK trading starts to subside, investors will obviously start taking profits, putting pressure on the price. Well-known crypto journalist Colin Wu on January 4 via his channels warned subscribers about the risk of a collapse in the token rate at any time, recalling that a significant part of the existing coins went to the owners for free, the largest amounts of BONK concentrated only 20 wallets, and 15% of the offer was originally left to the developers.

Stay in touch! Subscribe to CryptoNewsHerald.com at Telegram.

Comments (No)

Leave a Reply