Decentralized exchanges (DEXs) in the cryptocurrency space are faced with problems concerning increasing gas fees and low transaction throughput. This is common especially for platforms that are built on top of Bitcoin and Ethereum networks. To establish a platform that won’t suffer from those issues, the Bonfida Foundation decided to build on top of Serum Project, which runs on Solana.
As it turns out, Solana is one of the fastest blockchains in the space at present. With the capacity of processing over 50,000 tps, users can enjoy faster transaction settlements without having huge gas fees.
What is Bonfida?
Bonfida is a decentralized and non-custodial exchange on top of the Serum trading protocol on the Solana blockchain. It has a wide array of trading products powered by Solana’s on-chain order book. They facilitate faster transactions speed without the expensive gas fees experienced by users on other networks.
Bonfida can be a useful trading platform for both beginner and advanced users. It integrates various handy features, such as trading charts and TradingView data in its interface. This helps users gather important analytics information on the exchange’s activity, including data on Serum DEX and Swap’s volumes, spread percentage, and total value locked.
Bonfida is Project Serum’s flagship interface; currently, over 60% of the users that interact with Serum use Bonfida’s GUI. Serum was built to connect users within the Serum/Solana ecosystem and it is the first amongst exchanges to take advantage of Solana blockchain’s data to power its decentralized platform.
The Bonfida API has been used by a lot of market makers in the industry and the number of requests are increasing 25% week over week. During December 2020, before the launch, Bonfida has raised over $4.5 million. The seed round was led by CMS Holdings with the participation of big firms like Genesis Block Ventures, Sino Global, Spartan Group, and Three Arrows Capital.
Why build on Serum?
An order-book DEX has to be fast. To have a responsive platform, the underlying blockchain has to meet certain requirements. There are the reasons why the Bonfida team has chosen Solana and its DEX Serum as a foundation for their project.
- High transaction throughput – Solana has the ability to facilitate more than 50,000 transactions per second. This will increase further as the chain grows
- Lower gas costs – Gas costs on averages less than $0.001 per transaction
- Composability – Given that the Serum protocol is open-source, anyone in the community can work on developments that could add value to the ecosystem
- Decentralization – Transactions and storage of crypto holdings are entirely free from any third-party control
Users will have to set-up a compatible wallet to connect to the platform, which requires SPL (Solana Program Library) tokens. The three options are bonfida.com/wallet, solongwallet.com, sollet.io. Don’t forget to keep some spare $SOL tokens to pay for fees! You can follow this complete guide to set everything up.
Here you can find our interview with Sam Bankman-Fried, founder and CEO of FTX, which is behind the development of Project Serum.
The FIDA Token
$FIDA is Bonfida’s native utility token. It is mainly used to pay for gas fees on the platform but it can also be used for the following purposes.
- Access to VIP API
- Bot payments
- Consulting services (for people who want to get started on Serum)
The maximum supply is 1 billion and 95.4% of all tokens are locked for four years; the vesting will start 12 months after the launch. The team decided to keep the circulatin supply very low during the first year. In this way they also hope that the project and the community will grow in a healthy way, with no big holders ready to dump their bags.
$FIDA, when staked, will also enable more features for its holders like exclusive API endpoints, access to rare Solible (see after) markets and advanced analytics. In the future, the Bonfida’s Governance model will also require $FIDA tokens to grant its users voting abilities on certain protocol parameters.
For updated and full tokenomics please refer to the white-paper.
The team, with vast expertise in “creating seamless frontend experience combined with backend API’s and on-chain analytics”, has spotted an opportunity to be an early participant in the new Solana ecosystem. They evaluated the possible upside as huge, so they couldn’t pass up the chance. Among the platform’s features we find:
- Exclusive markets and listing
Bonfida has access to exclusive markets on Serum. $FIDA holders (more on $FIDA token later) can vote on which listings will be available on the platform. Market makers ensure liquidity through the help of partnerships with organizations like Alameda Research.
- On-chain advanced order types
Both Limit and Market orders are already available on Serum while others like take-profit and stop-loss are currently being developed on by Bonfida. However, advanced on/off chain order types will require users to keep their $FIDA staked.
- Order Placement through TradingView Charts
Bonfida is the first to have TradingView charts linked to on-chain data; users will be able to place orders through them.
- Advanced UI and Basic UI
To accommodate both basic and advanced traders, Bonfida will have two trading modes for Serum. The advanced mode will have features like ‘Bonfida Bots’ and the aforementioned advanced order types.
On top, Bonfida offers now leveraged tokens such as BULL/BEAR pairs like those you can find on FTX, an Ecosystem Pool with indexes and AMM swaps.
Bonfida has built a backend infrastructure where all the on-chain transactions information can be stored for Serum. Through a “REST API”, other platforms like Coingecko can request data whenever they need it (more than 6 million requests per day as of now). Given that the official Serum GUI uses it to load historical trades, users who connect with the standard Serum code are using Bonfida’s data in the background. This is the reason why they can provide on-chain TradingView charts, a feature unique to Bonfida. This feature continue to be developed in order to deliver important information to users while improving the UX and UI of the platform.
To make it easier for traders to manage their positions on the platform, Bonfida is working on a ‘bot’ that users can customize accordingly to their targeted technical indicators. The customization can be referred to as ‘Rules,’ which a person can freely design on his own and use to earn $FIDA. There are three possibilities.
- People can pay to utilize existing trading rules. Using $FIDA, users can pay who owns the rules they utilize in the trading bots. The creator decides the costs.
- Pledge assets to other rule owners. Rules’ owners can determine how much they wish to charge, whether a share of the daily percentage fees or a portion of the profits.
- Tokenize rules. Owners can tokenize their strategy as a SPL token which can then be bought/burned.
Solible is an exchange for non-fungible tokens (NFT) featured on top of the Bonfida platform. It supports all the features that are usually available on most NFT exchanges, without the classic Ethereum network costs. The aim of the platform, which also serves as a bridge for connecting NFTs with other blockchains, is to establish an e-commerce store. People will purchase collectible items which can also be redeemed in real life.
First Serum ICO
Bonfida has been the first project built on Serum to have an initial coin offering (ICO). The initial offering was conducted in three parts for a total of 6 million $FIDA tokens on auction.
The two IEOs (Initial Exchange Offering) took place on FTX and Bitmax, while the third part was a ISO (Initial Serum Offering) on Serum. All of them had a maximum price offer of $0.1 per token and a max allocation of 4000 $FIDA per person. For the few lucky ones who managed to get in at this price, it resulted in an incredible 7x on listing day. The token is currently at $0.37.
Most DEXs find it difficult to meet the needs of their traders, both beginners and advanced alike. High-frequency traders are always on the lookout for platforms where it wouldn’t cost huge gas fees to have their transactions processed quickly. This is why it is ideal for developers to look for a network that enables such a feature if they wish to go above and beyond the existing DeFi-based exchanges out there.
Serum Project’s Bonfida was a successful venture into creating an exchange that is not only capable of fast transactions but also of fully-automated and decentralized trading. With Bonfida, users can customize their own trading strategies and set their goals with sophisticated trading indicators, all without the hassle of their transactions getting stuck in a congested blockchain.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. We also take a deep dive into popular DeFi topics such as Yearn.finance ($YFI), Balancer ($BAL) and ($COMP).
The DeFi series on this website also covers topics not explored in YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency
Learn about Yearn.finance ($YFI) and, its forks and ecosystem:
- Yearn.finance ($YFI) farming with yEarn Pool
- Yearn.Finance merging the DeFi Ecosystem
- Cover Protocol ($COVER): peer-to-peer insurance coverage market for DeFi
For in-depth information other specific DeFi projects, check out our DeFi token guides:
- AAVE ($LEND)
- Ampleforth ($AMPL) review: The essential guide to this DeFi protocol
- Balancer Finance Guide and Review ($BAL)
- ChainLink ($LINK) guide: A key link in the DeFi space
- Compound Finance ($COMP)? A guide to hacks and tips on the latest DeFi platform
- Cream Finance ($CREAM): What is it?
- Curve Finance ($CRV) guide
- DeFi Money Market and DMM Governance ($DMG) guide
- Fuse Network ($FUSE): What is it?
- Hedget ($HGET): Does it live up to the hype?
- Kusama ($KSM): How is it Polkadot’s wild cousin?
- Linear Finance ($LINA): The future of synthetic exchange platforms?
- Mantra DAO ($OM): The DeFi project that’s all about community
- OIN Finance ($OIN): DeFi’s first foray into Ontology
- Orion Protocol ($ORN) explained
- Polkadot ($DOT): Everything you need to know about the DeFi darling of China
- RAMP DeFi: How does it unlock the value of staked assets?
- Serum ($SRM): First look at FTX’s new DEX for the DeFi wave
- Solana ($SOL) explained
- Synthetix ($SNX): Everything you need to know about this top DeFi project
- The Graph ($GRT)- The next level of decentralized apps
- THORChain ($RUNE) information and guide
- Trustswap ($SWAP) explained- Next generation of DeFi transactions
- YF Link ($YFL): Combining the best of ChainLink ($LINK) and Yearn Finance ($YFI)?
- YFV Finance Yield Farming
Tutorials and guides for the ESSENTIAL DEFI TOOLS:
- MetaMask Guide: How to set up an account? PLUS tips and hacks for advanced users
- Uniswap review and tutorial: Beginners guide and advanced tips and tricks
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel and (for now) FREE weekly newsletter so you can be notified as soon as they come out!
The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.