Hello my little Oasians. Sorry for being MIA for the past two weeks, did you miss me? I originally had a research piece planned for last week but it’s currently still in the works cause I’m waiting on some first hand updates from the project team. Also, I was on vacation. But I’m back now and probably won’t be going on vacation for awhile (lowkey crying), so we’re back to our weekly project deep dives!

If you’ve been active on Solana for awhile, you’ve probably heard of Bonfida. Regardless of whether you’ve used Bonfida or not, it’s hard to summarize what exactly Bonfida is in just one sentence. Technically, they describe themselves as a “product suite that bridges the gap between Serum, Solana, and users.” I know what you’re thinking, what the fuck does that even mean? If you wanna know what exactly Bonfida is and how you can utilize its features, just keep on reading! As usual, this is not financial advice but only educational content. Please don’t be dumb and always DYOR on any crypto projects.

Table of Contents
1. Summary
2. Overview of Bonfida
3. Technical Features
4. Tokenomics
5. Risks and Concerns
6. Concluding Thoughts

Part 1. Summary

Sometimes you only wanna read the TL;DR. I get it, I won’t take it personally.

• Bonfida specializes in app development for the Serum and Solana ecosystems
• Bonfida’s products include its own DEX with on-chain perpetual swap, a Solana name service, an encrypted messaging protocol, an NFT marketplace and on-chain trading bots.
• It raised $4.5M in its seed round.
• $FIDA is used for buyback and burn, transactional currency for its products, on-chain staking, and governance.
• Most complaints Bonfida has received is about how terrible the user experience is for its SNS.
• Notable recent accusation that Bonfida is the owner of all domains, they can do whatever they want with everyone’s domains and therefore any tokens transferred can end up in their pocket instead.
• This was a malicious attack from a user, Bonfida temporarily revoked their domains to stop them and establish contact.
• Bonfida is about showcasing the ability of the Solana blockchain
• As long as Bonfida continues to build towards decentralization, it will for sure remain a strong power player in the Solana ecosystem.

Part 2. Overview of Bonfida

Basically, Bonfida is a DEX built and maintained on Serum’s trading protocol and hosted on Solana’s mainnet. In case you don’t know what Serum is, Serum is a non-custodial spot and derivative exchange built on Solana that was created by FTX and Alameda Research.

Now back to Bonfida! It refers to itself as a product suite because it also offers a bunch of DeFi products. Things like an on-chain perpetual swap, a Solana name service, an encrypted messaging protocol, an NFT marketplace and on-chain trading bots. All of these products and their revenues accrue value to its native FIDA token. I know this all sounds like a lot of information but don’t worry, I’ll go over all these in a sec.

Bonfida started off as Serum GUI’s forerunning project, with over 60% of Serum’s users utilizing Bonfida’s GUI. GUI, or graphical user interface, is the common user interface like buttons, icons, and stuff. (Think Microsoft Operating Systems, or MAC OS if you’re cooler.) Currently, Bonfida API is used by some of the biggest market makers in the cryptocurrency market.

Bonfida was founded under the Bonfida Foundation in 2020 as a private company. The Bonfida foundation comprises a group of experts in cryptocurrencies, analytics, and engineering. However, the main goal of Bonfida lies in front, backend, and blockchain development.

It raised $4.5M in its seed round back in December 2020 through CMS Holdings, Sino Global, Three Arrows Capital, Spartan Group and Genesis Block Ventures, among others.

Part 3. Technical Features

If you’re still confused about what Bonfida is, think of it as a project that specializes in app development for the Serum and Solana ecosystems. Okay, now that we’ve got most of the basic stuff covered, let’s go through all the products Bonfida currently has one by one.

Bonfida DEX
First up we have Bonfida’s own DEX. Like I mentioned before, it utilizes the Serum DEX to facilitate trading and transactions. What’s cool about Bonfida DEX is that it implements new features like trading charts, TradingView data, and perpetual futures. These are unique features that Bonfida holds.

• Exclusive Markets and Listing: List exclusive markets on Serum’s exchange. $FIDA holders have governance rights over the listings. Liquidity is provided by Bonfida partners like Alameda Research.
• Order Placement Through TradingView Charts: The first protocol to have the TradingView feature on Serum’s exchange. And it accomplishes this using on-chain data.
• The Audaces Protocol: The first perpetual futures protocol built on Solana and it’s also the first vAMM to be built on a layer 1.

Solana Name Service
Next up we have Solana Name Service or SNS for short, which is also a product under Bonfida. If you’re a defi degen you probably already know what this is or even own one yourself. (I do, lol)

This is basically the Solana version of DNS domains, you can create custom domains that end in .sol for user-readable Solana addresses. So, instead of a standard crypto address with very long random strings of numbers and letters, you can create a wallet address “notsatoshi.sol” or “probablysatoshi.sol”. You get it, you can be as creative as you want and can even use emojis.

You can collect many domains and sell them for a profit. For example, you can buy “theoasians.sol” and try to sell it to us at a higher price to earn additional profit. But this won’t actually work though, cause we already bought this domain.

Now, if you’ve bought an SNS before, you probably know how annoying the process was. First, you have to create a domain name that isn’t already owned by someone else. Then, you have to bid on the SNS through a 3-day auction process. If no one bids over you then you’ll be the rightful owner of that SNS after 72 hours. The whole process becomes super tedious and it strips away that superficial moment of joy you get from buying something and knowing that you own it.

To tackle this issue, Bonfida recently implemented a Direct Registration System, where users can immediately register and buy the domain name of their liking, without the 3 day auction process. It is a once-off payment system that guarantees users permanent possession of their .sol domains in the future. (I honestly have no idea why less characters cost more money.)

• 1 character .sol names: $750 USD worth of $FIDA
• 2 character .sol names: $700 USD worth of $FIDA
• 3 character .sol names: $640 USD worth of $FIDA
• 4 character .sol names: $160 USD worth of $FIDA
• 5+ character .sol names: $20 USD worth of $FIDA

Bonfida has recently integrated a secondary marketplace for SNS. It has partnered with DigitalEyes, an NFT marketplace on Solana. Users can now trade domains on DigitalEyes just like an NFT.

Another super cool new feature that just got implemented on SNS is on-chain encrypted messaging service. Users can send messages to any .sol domains including text, pics, audio, and videos. Obviously, since this is on-chain it does cost transaction fees to send out messages. Think of it like old-school mobile phone data plans that charge you based on how much you’re texting.

Approximate cost for messages. Source: Bonfida Medium

Jabber
This conveniently brings me to another on-chain messaging product under Bonfida. Jabber is a mobile messaging app that is available on iOS and Android.

You can personalize your Jabber profile by uploading a profile picture and writing a bio about yourself. It also allows monetization of DMs and groups by setting up a price per message (in SOL) that other users will have to pay to message you. From now on, my friends will have to pay me before they can text me.

But really, I see this being used in two main ways. The first is the equivalent of some private crypto trading group with exclusive alphas and insider tips. I can see people paying for this. The other way is kinda like OnlyFans where people can interact with their favourite “content creators”. (Note the air quotes and sarcasm lol) Tbh, I think it’ll probably go the second way. I can see IreneDAO simps spending big bucks to message Irene Zhao.

Jabber also has a tipping function that allows you to tip $FIDA to everyone from your friends to content creators, or influencers you follow. Again, this tipping function reminds me of some sorta OnlyFans situation.

Bonfida Bots
This is a feature of building and tracking on-chain trading bots on Serum. The Bonfida Bots feature allows users to automate investment strategies with integrated technical analysis indicators from TradingView, and perform copy trades on the Serum DEX.

What’s innovative about Bonfida Bots is that it allows users to monetize their winning trading strategies by letting others use their bots. As a strategy provider you earn trading fees, there’s also an option to tokenize a strategy into an SPL token and trade on a secondary marketplace.

I’ve personally never used Bonfida Bots but I suspect it’s similar to Hummingbot, which I have used before. After a bit of lurking on CT and reddit forums, most users seem to have positive comments on Bonfida Bots. A lot of people really like the TradingView integration that sends trades via alerts. Within the first month of launching, Bonfida Bots saw over 240K+ trades executed and the TVL in the pools reached 80k USD.

Based on the success of the bots, Bonfida held a bot trading competition along with Serum back in May 2021. Total prizes given out were equivalent to 4000 $FIDA + $1200 SRM + a bunch of Solana Swags. I think this was a pretty smart way to get more users involved and also incentivize those who supported Bonfida Bots early on.

Solible
Now this name might ring a bell to the early SOL maxis out there. Solible is Solana’s first NFT marketplace that was launched in 2020. (I know this doesn’t sound like that long ago, but we’re in 2022 now btw) Solible is the OG of the Solana NFT scene, it came out waaay before the existence of current youngins like Solsea, Solanart or Magic Eden.

Despite being Solana’s pioneering NFT marketplace, Solible remains small. So small that it’s really sad. The home page currently lists only 50 NFTs. The UI and user experience is also horrible, in true Solana fashion might I add. Some of the NFTs’ images or videos display loading errors, multiple links are broken, everything is just bleh. The website honestly looks like it was made by an unpaid intern overnight.

Given the poor usability and lack of NFT projects, it’s obvious why Solible couldn’t compete with other NFT marketplaces in the space. This is undoubtedly one of the least successful products under Bonfida. Bonfida’s plans with Solible is also unclear, it kinda seems like they just gave up on Solible? The project hasn’t gotten any updates since it migrated to Serum back in March 2021.

Part 4. Tokenomics

Now that you have a better understanding of what Bonfida is and the suite of products it holds, let’s move on to the unit that ties everything together — $FIDA.

$FIDA has four main use cases and utilities: 
1. Buyback and burn in a FIDA/USDC Serum pool. 
2. Transactional currency for access to VIP APIs, Bonfida Bots, Bonfida DEX, and Solible listings with market making services. 
3. On-chain staking that earns holders advanced analytics, exclusive API endpoints, and access to rare Solible markets. 
4. Governance power through on-chain voting.

95.4% of all FIDA tokens are locked for four years, with no tokens beginning to unlock before 12 months from the FIDA IEO and IDO’s. (Which was December 15th, 2020)

Of the remaining 4.6%, 2% were sold to liquidity providers to maintain adequate liquidity across all exchanges. These tokens will only be used in a market making capacity to meet the demand of buyers. The next 0.6% is used for $FIDA’s IEO and IDO. The remaining 2% are used for $FIDA and $SRM rewards and incentives.

$FIDA’s IEOs and IDOs were priced at $0.1, trading commenced on December 22nd, 2020 at $0.629. It experienced an ATH of $10.894 on November 4th, 2021. $FIDA currently trades at $3.293 at the time of writing, over 5x growth since its initial trading price.

Governance
Let’s talk a little bit about the governance utility of $FIDA. While technically Bonfida is not a DAO-governed protocol yet, it grants holders voting/governance rights through on-chain staking. Stakers will receive gFIDA, a governance token, equivalent to the amount of FIDA staked, which permits voting/governance at Bonfida.

Remember the SNS product I mentioned earlier? And how they implemented a new Direct Registration System because the 3 day auction process sucked so much and everyone kept complaining? The implementation to adopt this new system was actually proposed, and passed through community voting via gFIDA.

Part 5. Risks and Concerns

The most popular product of Bonfida is arguably the Solana Name Service. I would say it’s the most defi newbie friendly product on Bonfida. With that said, the most complaints Bonfida has received is also about their SNS and how the domain acquisition process sucks.

The majority of the complaints were about the 3 day auction process that you still have to go through if you don’t wanna pay the once-off fee for direct registration. The main argument of this is that no one else does this (namely ENS), and this type of price battles should only be seen on secondary marketplaces. Bonfida also recently switched the bidding currency from USDC to FIDA, which many users complained added an unnecessary step into the already pretty tedious process.

These are all pretty minuscule concerns compared to the most recent scandal Bonfida has managed to get itself tangled in. A user tweeted that someone got fucked over by Bonfida’s SNS and their .sol domains were all transferred to another address. The accusation is that Bonfida is the owner of all domains, they can do whatever they want with everyone’s domains and therefore any tokens transferred can end up in their pocket instead.

It took Bonfida two days to issue out an official statement to address this accusation. The details of this incident is kinda complicated and it took me awhile to get to the bottom of everything but I think I got all the parts down. Are you ready? Here goes.

One key aspect you should know first is that staking $FIDA and SNS are directly correlated as the staking and SNS business models are essentially built on top of one another. The majority of the proceeds obtained from domain names are allocated to $FIDA stakers.

Okay, now here’s what happened. Recently, Solana network experienced some degraded performance that affected Bonfida’s staking program. A single user spotted this vulnerability and used a bot to claim over 80K of underserving rewards, and went on to restake and dump the rewards. The same user then tried to leverage their stolen earnings to manipulate the DAO by attempting to mint a council token, allowing them to become a member of the DAO council. Bonfida saw this as a direct attack to its community and protocol, as this attack was performed exactly 3409 times. The malicious intent was obvious. Bonfida took action by prohibiting the user from further staking and temporarily revoking their domain names in order to force them into reaching out. This is basically the whole story.

Bonfida Team Statement
Bonfida has recently been confronted with a situation that is provoking a lot of anxiety amongst our users. We hope to…bonfida.medium.com

Now I think there are two main points worth discussing from this incident. The first, is the centralized power that Bonfida evidently holds. While personally, I think the actions they took were fitting considering the blatant malicious attack this user was causing. This does bring up the question of how much power Bonfida really holds over all users? Bonfida stated that never before have domain names been taken from anyone and never will they be. Can we expect Bonfida to always act on our best interests and for the good of the community?

The second, is if this happens again in the future, how can Bonfida deal with this in a more decentralized nature? The very essence of their vision is decentralization. It’s evident that Bonfida needs to implement a way to safeguard its community assets without pulling such drastically centralized actions.

Part 6. Concluding Thoughts

We’re near the end of this week’s deep dive, folks. The Bonfida protocol is about showcasing the ability of the Solana blockchain to the crypto world as a viable alternative to the predominant Ethereum and Bitcoin blockchain. With the wide array of products and services that Bonfida has to offer, it looks like it is well set to achieve its aim.

Obviously not all of Bonfida’s products are huge successes, some received criticism and need improvements (SNS), and some are just down right failures. (Solible, lol) However, this still doesn’t take away the work that Bonfida is putting into to help Solana’s ecosystem grow even bigger. So, creds to them!

Generally, Bonfida is pretty quick on developing new features or improving/updating their existing features. One thing I was impressed with is how keen they are on improving their product UIs, something that many Solana projects could all learn from. Bonfida is often times seen asking the community for input and suggestions across their social media platforms, and most user suggestions are met with positive responses from the team. As long as Bonfida continues to build towards decentralization, it will for sure remain a strong power player in the Solana ecosystem.

And there we have it! I hope this week’s content was enlightening to y’all. Once again, this is not financial advice but merely my own opinion. I’m not a financial expert so always DYOR on any crypto projects.

See you next week! 
-SixOhFour

Sources:
https://bonfida.org/static/media/bonfida-white-paper.360be8c4.pdf
https://bonfida.medium.com/