Bonk token goes bonkers as traders chase after high yields in the Solana ecosystem
Bonk, a meme token modeled after the Shiba Inu (SHIB) that launched on December 25th, is skyrocketing and some traders believe the token’s trading volume is potentially driving up the price of Solana (SOL). Over the past 48 hours, the SOL price has increased by 34%, and in the past 24 hours, Bonk has increased by 117%, according to data from CoinMarketCap. While the broader crypto market remains depressed, traders hope Bonk could present new opportunities during the downturn.
According to the project’s website, Bonk is the first dog token on the Solana blockchain. Initially, 50% of the token supply was sent to Solana users with a mission to remove the toxic Alameda-style token economy. The filing resulted in more than $20 million in trading volume according to Solana Orca’s decentralized exchange.
Liquidity Providers (LPs) will benefit from the interaction with Bonk and on January 4th, LPs are earning over 999% APR, which is much higher than the popular SOL/USD Coin (USDC) pairing.
The liquidity provider returns to Orca. Source: Orca
While high yields don’t always stay high, current rates indicate strong market demand for Bonk. In addition to the increase in demand, Bonk also burned through 1 billion in supply on January 3rd.
WE BURN 1 BILLION BONK TOTAL TODAY pic.twitter.com/XDHP2YzXzu
— degen poet (@degenpoet) January 4, 2023 Solana (SOL) dances alongside Bonk
Blockchains like Solana benefit from increased usage. After the collapse of FTX, Solana saw many projects leave the ecosystem. On January 4, Solana saw an 18.6% increase in 24-hour charges and a 15.8% increase in 24-hour daily active users.
Solana rates and daily active users. Source: TokenTerminal
In addition to fees and daily increases of active users, the price of SOL rose above $14 on January 4th for the first time since December 14th. Some crypto market participants are attributing Bonk’s rise to Solana’s price action.
Solana is up 33% in two days as newly launched dog coin BONK gains buzz in the community pic.twitter.com/XusvGHg24X
— Joe Weisenthal (@TheStalwart) January 3, 2023
While Bonk is just a meme token, the growing demand is a positive sign for the Solana blockchain. This is a sign that Vitalik Buterin may get his wish for Solana to have a “chance to flourish”.
The views, opinions and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.