A new meme token, ‘BONK’ has burst onto the crypto scene, with a number of big names in cryptoland already giving it some serious airtime. Since its launch on December 29 — just 5 days ago — the price of Bonk coin has grown a whopping 1,300%, seemingly unprecedented for a time when most crypto assets are struggling not to lose value.
The surprise pump has left the crypto community scratching their heads, with the questions on everyone’s lips being: where did the Bonk coin come from and what are the reasons behind its meteoric growth?
What is Bonk?
BONK is the newest dog-themed token on the crypto market and is built on the Solana (SOL) blockchain. The token’s official Twitter page markets itself as “the first Solana Dog Coin for the people and by the people”.
It’s a token with an incredibly large maximum supply (100 trillion tokens) and as such, it’s currently changing hands for US$0.00000120 per token, up 67% in the last 24 hours according to data from CoinGecko.
Following its official launch on December 25, the developers of BONK ‘airdropped’ 50% of the initial token supply to Solana NFT collectors, traders, artists, and developers, according to Bonk’s whitepaper, humorously dubbed ‘Bonkpaper’
“The Bonk contributors were tired of toxic “Alameda” tokenomics and wanted to make a fun memecoin where everyone gets a fair shot,” reads the official website.
While BONK was first launched on December 25, it first started leaking hints about the token via Twitter as early as December 9. It has since received shoutouts from some of the most prominent personalities in the Solana NFT ecosystem. This is one of the major driving forces behind its sudden and rapid growth.
Why has Bonk gone up in price?
In a very ‘promo-esque’ Tweet that he swears wasn’t a paid partnership, ‘Frank’ the creator of Solana’s largest NFT projects DeGods and Y00ts said that while he haid said “negative things” about the project in the past, he’s willing to walk back some of those prior claims.
The leading Solana-based NFT marketplace Magic Eden also threw their hat in the ring, teasing a potential integration of BONK with their platform.
Owing to the wide-scale publicity that BONK has received, a number of projects have begun including the token as payment for NFTs on their platforms. Numerous other crypto ecosystems on Solana have created ‘burn’ mechanisms for NFT-related events. Theoretically, when tokens are ‘burned’ — removed from circulation and decreasing the total supply — this makes the token more scarce and drives up the price.
Most notably, the Seychelles-based crypto exchange Huobi Global recently made BONK available for purchase on the exchange, opening up the market to a much wider pool of investors.
Also, the inclusion of a ‘BONK Sam Bankman-Fried’ mini-game, where investors pay a small amount of the token to smack the failed FTX founder on the head has surely driven some additional interest into the new dog coin.
When we combine all of these factors, we can see how they have created a virtuous, self-feeding cycle for BONK to receive a swift and substantial gain in price, although it remains extremely unclear as to whether the price of BONK can remain stable in the long-term.
Bonk saves Solana
Solana, the blockchain network that BONK is built on, has been having a rough year.
Former world-leading crypto exchange FTX and its hedge fund Alameda Research were massive investors in the Solana ecosystem, so when both of these firms went down in flames, so too did the price of Solana’s native token SOL.
Before the viral interest in BONK sent the price of SOL on a 17% rally, SOL was down an eye-watering 96% from its all time high in November 2021.
At the time of writing the market cap of BONK stands at US$66 million, nearly six times larger than the original Solana meme token SamoyedCoin (SAMO) which currently holds a total value of US$11 million.
Is bonk a good investment?
Right now the price of BONK has been gathering some serious traction. However, like all meme tokens, these significant moves in price are notoriously fragile, and often come crashing down in an instant after the initial hype dries up.
It seems most likely that BONK will have a similar fate to many of the other meme and dog-focused crypto tokens that often see a pump, followed by a steep and sudden drop with an extremely uncertain future in regards to recovery. It’s best to imagine ‘investing’ in meme tokens as something more akin to gambling, as the value is based purely on the heat of the moment hype in the crypto market.