Bonk, a meme token modeled after Shiba Inu (SHIB) that launched on Dec. 25, 2022, and some traders believe the token’s trading volume is potentially driving Solana (SOL) price up. Over the past 48-hours, SOL price has gained to 34% and Bonk is up 117% in the past 24-hours according to data from CoinMarketCap. While the wider crypto market remains suppressed, traders are hoping that 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 airdropped to Solana users with a mission to remove toxic Alameda-styled token economics. The airdrop resulted in more than $20 million in trading volume according to the Solana decentralized exchange, Orca.
High yield returns
Liquidity providers (LPs) stand to benefit from interacting with Bonk, and on Jan. 4, LPs are earning over 999% APR, which is much higher than the popular SOL / USD Coin (USDC) pairing.
Liquidity provider returns on Orca. Source: OrcaWhile high yields do not always maintain such a high level, the current rates show a large market demand for Bonk. In addition to the increase in demand, Bonk also burned 1 billion of supply on Jan. 3.
Solana (SOL) bounces alongside Bonk
Blockchains like Solana benefit from increased usage. After the FTX collapse, Solana saw multiple projects leaving the ecosystem. On Jan. 4, Solana saw an 18.6% increase in 24-hour fees and a 15.8% increase in 24-hour daily active users.