Since Monday, Solana saw a 33% increase in valuation, pulling itself out of the single-digit range. The culprit for the sudden SOL resurgence appears to be Solana’s take on dog coins – the BONK token. What is it, and how does Solana benefit from it?
Solana Reprieved from Record Bottom
Last Thursday, Solana saw its worst devaluation day in a long time. The blockchain’s native SOL cryptocurrency hit $8.1, the lowest since February 2021 and -95% from its ATH of $160 in November of the same year. However, Solana was only temporarily kicked out of the top 20 cryptocurrencies.
Seeing SOL’s record low valuation, Vitalik Buterin, the co-founder of Ethereum, saw fit to tweet a morale booster for the Solana community. Struggling to get out of the single-digit range, it then took BONK’s large airdrop to follow through on Buterin’s support, as the dog coin began trading on December 29.
As we covered recently in greater detail, Solana’s ecosystem collapsed due to ties with Sam Bankman-Fried’s FTX/Alameda. Specifically due to now-bankrupt Alameda’s hefty portfolio of SOL and Serum (SRM) tokens. Serum is a decentralized exchange, as Solana’s equivalent to Ethereum’s Uniswap.
Having depreciated by 95% on a yearly basis, together with SOL at 92%, Solana’s liquidity has been severely drained, triggering even more investors to flee the network, once dubbed as the “Ethereum Killer.” The timing of the BONK token airdrop hit the right spot before SOL entrenched itself into the single-digit price range.
What is the BONK Token?
Just like Serum is Solana’s version of Ethereum’s Uniswap, Bonk (BONK) is Solana’s take on meme coins. More precisely, BONK is the first Solana meme coin belonging to the dog coin family.
BONK is a community-driven coin, birthed from a decentralized autonomous organization hosted on Solana, BonkDAO. Members of this DAO treasury decided to airdrop 50% of its token supply, which is quite substantial – 100 trillion BONKs.
The BonkDAO project openly states that the goal is to invigorate Solana’s decentralized exchanges (DEXes) by hyping interest and increasing liquidity. After all, DeFi cannot happen without users themselves supplying liquidity into various liquidity pools across dozens of dApps. BonkDAO aims to incentivize Solana’s OpenBook DEX trading, which is a community fork from the SBF-tainted Serum.
“Bonk will not sit in the hands of VCs, instead, it will be held by those that form the social layer of this formidable network [Solana].”
Bonk coin whitepaper
The 50 trillion BONK airdrop essentially goes to Solana NFT collections (20%), while 15% is reserved for OpenBook’s traders. The rest of the airdrop is distributed to Solana NFT artists, collectors, and developers. At press time, Bonk (BONK) is available on less-known crypto exchanges, such as DigiFinex, Bybit, BingX, BitMart and Huobi.
As a brand-new dog coin, BONK experienced explosive growth despite its enormous supply. During the last day, BONK’s value increased by over 2,400%, pulling over $7.4 million in trading volume.
What Is the Purpose of BONK and Meme Coins at Large?
Although other animals are represented in this meme crypto niche, dog-themed cryptocurrencies dominate it. In total, meme coins have attracted $14.5 billion in market capitalization. However, there are only four top dogs worth of note:
- Dogecoin (DOGE): $9.6 billion
- Shiba Inu (SHIB): $4.5$ billion
- Dogelone Mars (ELON): $154.2 million
- Baby Doge Coin (BabyDoge): $112.3 million
It is safe to say that Elon Musk brought new life into meme coins after his lavish DOGE tweeting and even integrating the dog coin in Tesla’s merch shop. You may have also noticed they all have giant supplies, which typically makes each token worth a fraction of a penny.
This is by design, as meme coins are a lighthearted take on digital assets. Therefore, parents often use them to teach their kids about online trading. In this light, a cheap price for large quantities makes meme coins more suited than other digital assets.
Likewise, meme coins are inherently speculative, as they thrive on social media hype and integrations into other projects, all primarily driven by notable influencers. In turn, this high volatility creates profit-making opportunities, which some traders take more seriously than others. At present $105 million market cap, BONK is already chasing the tail of the fourth largest meme coin, BabyDoge.
However, after BONK serves its purpose of popularizing Solana’s dApps and exchanges, its value will likely decline rapidly, just as it saw explosive growth. For the time being, BONK has already accomplished the important psychological task of pulling SOL out of the downward trajectory into a low single-digit price range.
This article originally appeared on The Tokenist
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