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Labeled as the people’s dog coin by its creators, the Shiba Inu SHIB/USD inspired BONK BONK/USD token has been making waves ever since it got listed on Dec. 30 last year across a number of popular crypto exchanges.
Not only had it emerged as the top-performing cryptocurrency in the past week, recording a nearly 25-times jump in prices from its issue price, but it also continued to witness massive investor demand due to the tokenomics employed.
However, with a total token supply of 100 trillion BONK and having already airdropped over 50% of it to a number of early benefactors, this latest meme cryptocurrency seemed like another desperate attempt to bring back Solana’s lost luster.
What Happened: Known for its burgeoning decentralized finance (DeFi) ecosystem, the Solana SOL/USD blockchain has been undergoing major updates since severing ties with the Sam Bankman-Fried-promoted liquidity provider, Serum.
The blockchain has evolved Serum into OpenBook and had been taking an increasing number of measures to reassure investors, in a bid to bring back DeFi volumes to pre-FTX levels.
One such initiative is the launch of the BONK token, created to give Solana’s users more control and which strives to become the true community coin of the Solana blockchain.
Touting the BONK token as the leading enabler of Solana’s return to DeFi supremacy, the BONK whitepaper details very little of how it aims to achieve this.
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While 50% of BONK tokens have already been airdropped to OpenBook traders, artists, collectors, developers and a collection of 40 Solana NFT projects, another 20% have been allocated to 22 individuals who contributed to launching the meme token.
Of the remaining 30% of the total BONK tokens, 15% have been allocated to the BONK DAO that has been entrusted with furthering initiatives conceived by the BONK community, while 5% each has been set aside for marketing, providing initial liquidity and for future developments.
Why It Matters: Still, data from the decentralized protocol Orca indicates that liquidity providers were earning an hourly fee rate of 1% for providing liquidity through the BONK/SOL pair trade, totaling an astonishing 8,760% APR for those staking their BONK tokens.
While it remained to be seen whether such extraordinary returns can be maintained in the longer term, the token’s team was probably hoping that the current hype can channel increasing demand for the BONK token.
This is because, in the scenario where these yields are pared down to more realistic levels, it could compel BONK token holders to dump the tokens and pocket their profits.
The latter scenario is counterintuitive to BONK’s motive of providing liquidity to Solana’s flourishing DeFi ecosystem and would warrant the token’s creators to resort to other marketing tactics.
Either way, the BONK token has its work cut out and will have to amass a lot of investor interest in the near future to live up to its promises.
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Photo: BONK
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Image and article originally from www.benzinga.com. Read the original article here.