What is Bonfida?
Bonfida is the unsung hero of Serum, a popular DEX built on Solana. It is a product suite that makes the interaction with Serum easier for the users. As an infrastructure project, Bonfida is less known even to the experienced Solana fans. The project made a name for itself when Serum launched in September 2020, and they've continued to improve the user-experience on Solana ever since.
At its core, Bonfida is a team of crypto engineers with expertise in front, backend and blockchain development. They developed everything; from the interface, trading engine, to the orderbook and swaps you see on Serum. Since its beginnings, Bonfida has expanded its revenue stream to include services such as Solana Name Service (SNS) and a new messaging service.
Bonfida also has a governance token called FIDA. Token holders can vote on proposals to change the protocol's parameters, such as adding new assets or changing trading fees. This allows the community to have a say in the direction of the platform and ensure that it aligns with their needs and preferences. Moreover, anyone can hold FIDA and use its products without undergoing KYC.
Another key utility of the FIDA token is the ability to earn rewards through liquidity mining. Users who provide liquidity on Bonfida's DeFi platform are rewarded with FIDA tokens. This incentivizes users to provide liquidity, which helps to ensure that there is always sufficient liquidity for trading. Additionally, FIDA can be used for trading, staking, and borrowing on the platform, which makes it a versatile token.
Bonfida's smart contracts have never been hacked. As an infrastructure service, having their smart contracts hacked literally means ending the project.
How does Bonfida work?
At its core, Bonfida is an infrastructure service that serves Solana-based DeFi protocols.
The list of services includes: Solana Name Services, Token Swap, Token Vesting Contracts, On-chain Staking.
Bonfida Solana Name Service (SNS)
Solana Name Service (SNS) is a decentralized naming system built on the Solana blockchain. It allows users to register and manage human-readable names for their digital assets, such as wallet addresses, smart contract addresses, and other on-chain resources.
The SNS uses a domain name system (DNS) model, where users can register and manage names in a hierarchical structure. For example, a user can register a name like "myname.sol" and associate it with a Solana address, such as a wallet address or a smart contract address. Other users can then use the name "myname.sol" to easily interact with the associated address.
One of the key benefits of SNS is that it makes it easier for users to interact with digital assets on the Solana blockchain. Instead of having to remember long, complex addresses, users can simply use a human-readable name. This can make it easier for users to send transactions, interact with smart contracts, and access other on-chain resources.
Another benefit of SNS is that it can also be used for other purposes, such as creating a decentralized marketplace for digital assets, or as a building block for other decentralized applications. Since it is built on the Solana blockchain, SNS is also fast, secure, and scalable, making it a suitable solution for a wide range of use cases.
Currently, there are more than 220K .sol domain names registered, and the numbers keep going. Bonfida is working to make .sol domains cross-chain. In other words, users will be able to export their domains to an alternative chain.
Bonfida Token Vesting Contract
Token vesting contracts allow its creators to lock arbitrary tokens and release the locked tokens with a determined unlock schedule.
Bonfida Staking
The process of staking requires users to lock up their tokens for a fixed duration to support a blockchain network. Generally, the longer the staking duration, the higher the reward.
Bonfida offers staking infrastructure for projects on Solana. For example, a new project looking to implement staking to its services can use Bonfida's solution and add staking from day 1.
The protocol also has its own staking mechanism for FIDA tokens. By staking FIDA, users gain voting rights in the Bonfida DAO.
Stakers will receive gFIDA, a governance token, equivalent to the amount of FIDA staked times the duration multiplier if applicable, which permits voting/governance.
How to make money on Bonfida?
The ways to make money on Bonfida are fairly limited. One of the reasons is that Bonfida is manly used as an infrastructure service for projects building on Solana.
As a simple user, there are a couple ways to score some profits on Bonfida that have to do with swaps and staking.
Bonfida Swap
Swaps are a quick way to profit from an arbitrage opportunity on Solana. Bonfida's Swap is making use of the liquidity on Serum, one of the first DEXs built on Solana.
To swap on Bonfida, follow these steps:
1. Go to dex.bonfida.org
2. Select the assets you would like to swap
3. Select your slippage rate
4. Select "SWAP"
5. Approve the transaction to complete the swap
Bonfida Staking
Another popular way of making money on Bonfida is by staking FIDA tokens. Staking is an easy way to put your FIDA tokens at work. The staking contract calculates and distributes the rewards proportional the the number of stakers. Profits are generated from the daily network transaction fees that are generated from all the network protocols. Because Bonfida is highly used by Solana protocols, fees quickly add up. But there's a catch!
Staking FIDA requires a minimum commitment of 7 days up to 3 years. During this period, the FIDA tokens can't be unlocked – there is no special exit window or exceptions. To align stakers with the interests of the Bonfida protocol, long-term stakers receive a boost. Here is where the "duration multipliers" come into play!
A duration multiplier is a multiplier that will be added to the rewards of staked tokens that are vested for a 1 year or longer (1. x multiplier). So, if a staker decides to vest their tokens for 3 years, they will receive a 3x multiplier on their staked rewards.
The duration multiplier will also be applied to governance at Bonfida. Stakers will receive gFIDA, a governance token, equivalent to the amount of FIDA staked, which permits voting at Bonfida. This will be determined by the Bonfida DAO, enabling the community to vote with gFIDA.
In order to stake FIDA, follow these steps:
1. Go to staking.bonfida.org
2. Click on the "Stake" tab
3. Input the amount of $FIDA you want to stake and select a staking period
4. Click "Stake FIDA"
5. Profit
Essentially, staking benefits both the staker and the network. If you are looking for an easy way to earn passive income, then FIDA staking is the way to go.
Bonfida Solana Name Service (SNS)
Noticed a Twitter handle with ".sol" name? Solana Name Service is not only a slick way to share your wallet, but it's also showing one's affinity for the Solana ecosystem.
To register your .sol domain on Bonfida, follow these steps:
1. Go to naming.bonfida.org
2. Enter a domain name you'd like to search for in the search bar and hit enter
3. Add your domain to the cart
4. Go to checkout
Any sale or transfer of domain names will only be possible on Solana itself.
Price Prediction for Bonfida — Can it hit $100?
Buying and hodling FIDA — the native token of the Bonfida protocol — is one way of potentially making money on Bonfida.
FIDA is used for facilitating transactions within the network. Its price is strongly tied to the number of users buying its premium APIs and consultation services. The token also enable FIDA holders to adjust some of the protocol paramters.
By looking at its current price, it’s natural to think about the chance of FIDA hitting $100 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the FIDA token by analyzing its tokenomics. FIDA’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} FIDA tokens being in circulation today, that means a price of {PRICE} per FIDA.
How did we come to that calculation? It’s quite easy, the price of a FIDA token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each FIDA coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of FIDA at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for FIDA to hit that price.
At a price of $1 per token, that means the current market cap of FIDA would equal ${{CIRCULATING_SUPPLY} * 100}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $100.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. FIDA’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} FIDA which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of FIDA? Taking into account the current price of a FIDA token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. FIDA coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a FIDA token. Doing the same calculation but with a price of $100 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 100} for the FIDA protocol fully diluted market cap.
These are all crucial details to know when calculating if FIDA can reach the price of $1 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of FIDA depends solely on its growth as a network used by tens and hundreds of millions of users. Because Bonfida is an infrastructure project for Solana protocols, its growth relies on the number of Solana protocols using its services. If Solana manages to scale, then the value of FIDA can potentially reach $100 by 2030.
If you’re looking to add some FIDA to your portfolio, the most trusted places to get some are Binance and Coinbase.
