The Bonk Effect
Bonk has taken over everyone's timeline. This week we look at the memecoin's impact on the Solana ecosystem.
At the time of writing, the Solana market cap is $4.88 billion with a 24-hour volume of $517 million. The price of SOL is $13.26. The Total Crypto Market Cap is $822B, up 0.48%. The NFT transaction volume surpassed 3,840,000 SOL, closing in on $40.0M in the last seven days.
Summary
Introduction
What is BONK?
Active Addresses
Volume Surge
NFT Craze
BONK Statistics
Conclusion
Introduction
The last two months have been a rollercoaster of emotions, price action, and uncertainty for the Solana ecosystem.
Solana fell from $38 to $8 in less than two months, fuelling fear, uncertainty, and doubt over the network. However, price action is not fundamentals, and the last two weeks have confirmed this again.
On Christmas day, the announcement of the NFT collections DeGods and y00ts bridging to Ethereum and Polygon came when the sentiment was already negative. Contrary to the overall sentiment, the Solana NFT community responded to the fear by doubling down on their conviction. Famous Fox Federation, Taiyo Robotics, ABC, and more hit all-time highs in the following days as the community showed their support for the ecosystem.
Something else sparked a new sentiment: BONK.
Today we will cover the most up-to-date data on BONK and how it has contributed to an important sentiment shift in both the Solana Community and the outsider view.
BONK
BONK is a memecoin that launched on the Solana Network on Christmas Day (December 25th). It has since taken over the Twitter timeline and even mainstream media, with Forbes covering its explosive growth.
BONK’s tokenomics were designed to counter the Alameda-style tokenomics of certain Solana DeFi projects, where the Fully Diluted Market Cap would reach up to 20x the Circulating Supply. The BONK team selected a list of Solana NFT collections and airdropped their holders 50% of the token supply.
BONK Statistics
Roughly a week after BONK’s airdrop and a few days after its exponential price increase, centralized exchanges began listing the token. BONK is currently listed in 18 different centralized exchanges, including Gate.io, Huobi, and Bybit.
Data from Birdeye shows that BONK’s on-chain daily volume reached over $80M, and $100M considering CEX volume. The token hit its all-time high of $0.00000486 on January 5th.
At the time of writing, BONK has a $150 M Fully Diluted Market Capitalisation, down around 55% from its high of almost $450M FDMC.
The token distribution is not the best, given that the Top 10 holders hold 39% of the supply. However, even the biggest memecoins have somewhat centralized token distribution. BONK currently has ~110K holders, which shows how lively the Solana Network is.
The Bonk Effect
The recent run of BONK sparked a Solana memecoin mania. Samoyed Coin ($SAMO), WOOF, and other coins saw their token price increase as speculators placed bets to catch the next runners.
BONK has certainly launched in one of the most important periods in the Solana ecosystem. Although “just” a memecoin, BONK has contributed to a much-needed sentiment shift within the Solana ecosystem.
On-Chain data shows an increase in TVL, Active Addresses, DEX, and NFT volume.
Active Addresses
Solana has seen a notable increase in Daily Active Addresses during the first days of 2023, outperforming Ethereum and Polygon.
On the 5th of January, Solana reached 678K daily active addresses, the highest number since mid-October of 2022.
DeFi
Data shows the rise of BONK contributed to a revival of the Solana DeFi ecosystem. Many DeFi protocols rushed to integrate BONK trading/staking/LP farming, more users were able to add liquidity to DeFi.
Weekly DEX volume on Solana is up over 200% while overall DEX volume (all blockchains combined) is up less than 3%.
One added benefit of BONK is that it may have created a connection between Solana NFT and DeFi, as many NFT users have never used any Solana DeFi protocol in the past other than the basic token Swap feature.
NFT
The wave of liquidity sparked by BONK and the Solana revival has increased NFT volume. Given that 50% of the token supply was airdropped to NFT holders, it is possible to say that many users rotated their profits into NFT projects.
Famous Fox Federation, Taiyo Robotics, Liberty Square, ABC, and other NFT collections reached new all-time highs during this period.
The Official Solana NFT Index from SolanaFloor reached a new all-time high in SOL Terms. The index in USD reached a 2-month high.
Conclusion
Memecoin rallies may occur at market bottoms and tops, although the latter is more likely. Data and sentiment show that BONK acted as a proof of life for the Solana ecosystem. It is showing the crypto world that Solana is well and alive and that its price doesn’t represent its fundamentals. As an investor, it is important to understand the difference between the two.
Data shows an improvement in most on-chain metrics such as TVL, Active Addresses, and DeFi Volume.
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