SOL Soars 36% As Bonk Memecoin Becomes First Hit of 2023

Days after dipping below $10 for the first time in almost two years, the Solana blockchain’s SOL token jumped over 18% on Jan. 3.

The move came after the token underperformed competing Layer 1s like ETH, BNB, and others earlier in the week — SOL is now up 36.5% on the week, according to The Defiant Terminal.

BONK Token

A surge of interest in BONK, a new meme coin, has coincided with SOL’s upward trajectory. BONK is a meme token that was airdropped to participants in the Solana ecosystem on Dec. 24, which has quickly ascended to a $100M-plus market capitalization.

“I think the launch of something like BONK has really just been something that the community is excited about and getting behind,” Austin Federa, head of strategy and communications at the Solana Foundation, told The Defiant. Federa added that people were simply having fun with BONK. “There hasn’t been a lot of fun in crypto in the last few months,” he said.

Transactions featuring BONK have spiked from nearly non-existent to an hourly high of over 88,400 on Jan. 3, according to a Dune Analytics query.

BONK Transactions

The team behind BONK is positioning the token as the “first dog coin for the Solana ecosystem.” Despite their typically ambiguous utility, canine coins have been surprisingly successful — the most recognizable in the category is Dogecoin, which commands a market cap of nearly $10B.

BONK’s website also differentiates the token from what it calls “toxic ‘Alameda’ tokenomics.” The now-bankrupt Alameda Research, the sister hedge fund to FTX, was infamous for investing in Solana tokens with low circulating, but high total supplies. Colloquially, these tokens were known as “low float high FDV (fully diluted value)” tokens, or simply “Sam Coins.”

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The Defiant

This dynamic made it relatively easy to move prices higher because of the low liquidity. Firms like Alameda, which received illiquid tokens as part of venture rounds, could then sell the inflated assets to retail investors as they unlocked in line with the tokens’ vesting schedule.

That BONK has emerged in opposition to the low-float, high-FDV design shows a definitive thrust by the Solana community to move beyond its association with Alameda Research and FTX.

There’s a long way to go. The total value locked in Solana’s DeFi ecosystem dropped 70% in just 10 days after FTX collapsed.

Still, the fact that the blockchain ecosystem isn’t simply rolling over and dying is surely a welcome sign to those who remain wholly committed to Solana.

Alameda Holdings

Federa added that many of the Solana-related holdings of Alameda and FTX are going to be tied up in the firms’ Chapter 11 bankruptcy procedure, meaning that they aren’t in imminent danger of being sold on the open market.

Solana has also picked up a show of support from Vitalik Buterin, Ethereum’s co-founder.

Solana NFT Volumes Surge

Magic Eden, the largest NFT marketplace on Solana, has also been gaining momentum. Jack Lu, the CEO and co-founder of Magic Eden, told The Defiant that the marketplace generated record sales volumes of over 8M SOL in December. He cited launches by major brands like Toys’R’Us and Aston Martin as catalysts for the increased volume.

30-day Volume on Magic Eden in SOL. Source. Dune

“The fact that we were able to achieve record trading volumes in spite of market conditions signals that the market shares our belief that Solana is still strong,” Lu said.

BONK may also be feeding into the excitement around Solana’s NFT ecosystem — the project airdropped 20% of its supply to holders of Solana NFTs.

DeGods Migration

The airdrop may have softened the blow from two major Solana NFT projects, DeGods and y00ts, announcing that they would move to Ethereum and Polygon blockchains, respectively. In apparent retaliation, the BONKS team burned the tokens previously allocated to DeGods’ holders.

Looking forward, Federa is excited about a new implementation of a Solana validator called Firedancer, which The Defiant reported on in August. He added that while people understand that Firedancer is a new client built with a different programming language, C++, they don’t understand the advantages of building something a second time.

Firedancer

“It’s like every time you build a piece of software, or you remodel a house, you finish the thing, and you’re like, damn, if we knew where we were going at the start, we probably could have done X or Y or Z differently,” Federa said. “So what they’re doing is actually a rebuild of the codebase based on the current state of the Solana network.”

He listed increased performance in terms of speed as well the security stemming from the redundancy of a second validator implementation as the two high-level advantages of Firedancer.

Federa went on to say that the Solana Foundation remains fully committed to the project’s vision. “The core fundamental thesis of the network remains the same, which is [that] if you build the fastest, most performant infrastructure in one global state, developers can build all sorts of applications they can’t build anywhere else on Solana.”