DamoTalks Issue 28: Conversation with Bonfida, the head builder of Solana Eco

Introduction：

DamoTalks Issue 28
Guest: Cyn, Commercial Manager of Bonfida
Host: Lufei — Co-founder of TokenDamo
Live Assistant: Lin Lin
Live time: September 23rd, 2021 15:30

How does Bonfida, Solana’s head ecology builder, create a “flagship front-end”? What will be the next plan? In this issue of Damo Talks we invited Ms. Cyn, the commercial manager of Bonfida, to share with us the latest progress of Bonfida and get a closer look at Bonfida.

The following is a recap compilation of this interview.

Luffy: Bonfida is the head builder in the Solana ecosystem. Please tell us about Bonfida, what kind of project is it?

Cyn: Bonfida is positioned as the head builder in the Solana ecosystem. The products and services currently offered are divided into five main sections.

1. perpetual contract agreement: Solana ecology in the first perpetual contract agreement,, based on VAMM (virtual market-making) mechanism.

2. Solana domain name service: Bonfida launched Solana domain name service aims to provide a decentralized and affordable way to connect domain names (.sol) and on-chain data. A clear advantage of the domain name service is that it can be mapped to SOL addresses, making it easy for people to read and use, and to make on-chain transfers and payments.

3. DeFi users can send on-chain trading signals to BonfidaBot using TradingView’s strategy indicators or via JavaScript commands, enabling fully automated on-chain trading. At the same time, the programmatic strategies created by the user can also choose to open to the public, and set their own subscription prices for the strategy.

4. Bonfida DEX: Serum DEX on the first embedded TradingView K-line chart design of the flagship front-end, Solana ecological users trading first choice.

Serum API: Provides unique data storage for all Serum trading data and is currently used by platforms such as Coingecko and Coinmarketcap, as well as many of the top market makers on decentralized exchanges.

Luffy: What does Bonfida’s economic model look like? How does the token FIDA perform value capture?

Cyn: Bonfida launched a native token FIDA, a total of 1 billion. 95% of the net fees on Bonfida will be used to buy back the destruction of FIDA tokens, FIDA in the ecological application scenarios include access to VIP API. At the same time, users holding FIDA can also enjoy the reduction of perpetual contract fees.

In addition, FIDA can be pledged on the Serum platform, and 10% of the monthly repurchase destruction will be used to reward FIDA pledged users.

FIDA’s allocation scheme is as follows: Locked seed round: 9% (linear unlocking begins after one year of purchase and is fully released in four years)

1. Liquidity provision: 2% (no lock-up)

2. Pre-sales: 0.6% (no lock-in)

3.10%: to be given to EcoSerum nodes as SRM proceeds (8% of which is locked, linearly unlocked starting after one year of purchase and fully released within four years)

4.10%: will be held by Bonfida contributors, staff as bonuses, allowances (locked position, linear unlocking will start after one year of purchase, fully released in four years)

5. The rest of the share will be jointly managed by Bonfida and FIDA Foundation, and the future Bonfida ecology.

The total circulation in the first year is 4.6% of the total number of tokens, which includes 2% for providing initial liquidity, 0.6% of the pre-sale portion of the unlocked position and 2% of the unlocked portion given to EcoSerum nodes as SRM proceeds.

Luffy: Can you briefly introduce the programmatic trading robot in Bonfida? Recently and 3commas also announced the official cooperation, to achieve the principle of programmatic trading and what is it?

Cyn: BonfidaBot can help DeFi users in the Solana ecosystem to build trading strategies on Serum with the native integration of TradingView.

When other users subscribe to the strategy, the strategy provider receives a subscription fee incentive. Based on the highly transparent and non-centralized hosting nature of Solana’s decentralized ecosystem, users have full access to the historical returns of all publicly available strategies.

Bonfida Bots V2 will integrate the perpetual contract protocol, allowing users to build more complex strategies, including the ability to add short positions and leverage.

Luffy: Audaces perpetual contracts is Bonfida’s recently launched product, can you give us a brief introduction to this product?

Cyn: Audaces perpetual contract protocol is the first contract protocol on the Solana chain, based on VAMM (Virtual Automated Market Maker).

The concept of a virtual automated market maker (vAMM) first appeared in the article “Perpetual Protocol” [3]. vAMM works like a traditional AMM with a constant product curve (e.g. x * y = k) [5], but as its name suggests, the liquidity in this AMM is virtual. AMM in which the liquidity is virtual. This liquidity is set at the time of market creation, and all trades take place in this vAMM. In the actual execution, the state of each market, i.e. vAMM, is stored in the data of a Solana account.

An interesting feature of vAMM is that any measured asset can be a future as long as the corresponding prediction machine exists. For example, in the BTC/USDC futures market, no actual BTC trades are generated, all trades are made in USDC. The market uses its own price discovery mechanism (i.e. vAMM) to perform conversions between virtual and quoted assets.

Currently supports three markets SOL/USDC, BTC/USDC, ETH/USDC.

Luffy: Similar to Perpetual Protocol, Audaces is also based on VAMM mechanism, what are the similarities and differences between Audaces and Perpetual protocol built on Ether?

Perpetual protocol as the first mechanism of VAMM, innovation is undoubtedly new, compared with the perpetual protocol built on Ethernet, thanks to the powerful underlying functions of Solana chain, Audaces improvement is mainly reflected in these places.

Perp Protocol V1 on XDAI, V2 version on Arbitrum, the combinability of this piece will be somewhat limited.

2. Clearing part: perp is designed to traverse all known accounts to find accounts to be cleared, and then clear all those positions individually in the same huge volume of transactions. In order to take full advantage of the high performance of the Solana blockchain, the ideal goal would be to perform clearing operations across the entire market with a single instruction. Audaces uses a number of technical operations to accomplish this goal, which can be described in detail in the white paper

3. Position transfer mechanism: If the current vAMM price is lower than the prediction machine price (but still higher than the initial price), the insurance fund must pay the capital rate (perp V1 operation). Since there are more longs than shorts, the agreement will have to inject funds from the insurance fund to pay for the funds due to the longs. And this problem will get worse during the life of the market, especially when the difference between the current price and the initial price increases. The transfer of positions is done by setting aside some funds so that vAMM can purchase its own fully collateralized positions at no capital charge. These positions will never be liquidated, so there is no need to track them exactly. If there are too many long positions, vAMM will buy out the long positions (or close its own short positions) when users try to close their long positions or open short positions, a bit like a robot in the order book market. This way, in practice, some operations will not change the market price as dramatically as expected, thus providing the possibility for arbitrageurs to profit from them, and so creating additional incentive to close positions when funds exist to do so.

Luffy: The latest installment of Serum’s story series mentioned that Bonfida is building agnostic order book, can you introduce the mechanism of this order book for everyone?

Cyn: As the DeFi ecosystem on the Solana chain continues to grow, many projects spend a lot of time designing their own market order execution strategies without making good use of Serum’s order book functionality. We think this is likely because Serum is too focused on SPL token assets at the expense of other types of assets. So it goes without saying that Serum’s next step is to “pan-assetize”.

Some assets cannot be tokenized but can still benefit from the order book functionality: executing a single perpetual contract transaction through Serum’s order book means tokenizing the position through ordinary casting in each pair market. However, this is impossible to accomplish because perpetual contract positions have multiple embedded elements: position size, bid price, margin, etc., which suggests that a position is not composed of multiple smaller position elements, which is the case with SPL token assets by comparison.

Due to Solana’s runtime constraints, Serum must queue events to create a buffer between the difficulty of price prediction, the lack of sequencing in the aggregation engine, and the re-writing of billing accounts. In a “pan-asset” order book, Serum’s event queue is the output, and programs built on Serum have dedicated access to the relevant market event queuing process, which means they can start themselves, read the event queue, eject processed elements from the queue, and then, based on aggregation information, create and enforce a queue between match information and then create and enforce various complex contracts between the matching parties.

This actually builds a new underlying technology for Serum: Serum Core.

Serum Core is the aforementioned “pan-asset” order book functionality that can be applied to any smart contract on the Solana chain that seeks to use the order book functionality, freeing it from the tedious steps of re-execution and the costly worries that come with redundant management.

In summary, it is providing an aggregation engine service for use by other protocols to order. With AOB functionality, Serum becomes a truly universal component that can be applied to any protocol, derivative, spot or other product, etc.; developers can match it anywhere — even to NFTs, any non-split product, domains, etc. One of the best use cases is perpetual contracts, and with the AOB feature, contract creators can no longer open multiple complex positions via SPL tokens.

Then Audaces V2 version will also be upgraded from VAMM to order book format, so stay tuned.

Luffy: Can you tell us about Bonfida’s newly launched Solana domain name service?

Cyn: The current maximum price of domain names is about $60,000.

Bonfida launched the Solana Domain Service to provide a decentralized and affordable way to connect domain names (.sol) to on-chain data. This on-chain data can be a SOL address, an IPFS content ID, an image, text, or anything else. A clear advantage of domain name services is that they can be mapped to SOL addresses for easy reading and use, and for on-chain transfers and payments.

Since most users are not very familiar with SOL on-chain addresses, the ease of payment is greatly optimized by the easy-to-read addresses created by the Solana Domain Name Service, which allow users to transfer and exchange assets simply by sharing a recognizable and simple domain name.

The current primary use is to simplify on-chain payments, while the team is also actively broadening the use of domain names scenarios.

Lufei: In what way does Bonfida hope to promote Solana domain name service in the future? What is the imagination of this product in the future?

Cyn: the future of the imagination of the main parts of these.

1. for simplified chain payment, such as Sollet, Phantom wallet can directly use the domain name for transfer, while the future also plans to cooperate with more wallets to promote this domain name simplified payment method, such as the recent slope finance web wallet also completed the domain name integration.

2. create a browser expansion kit to become a website that allows users to store content.

3. work with the GameFi project to allow characters to use the domain name directly as a user name, and to store game equipment, etc.

4. cooperate with NFT market, so that the domain name can replace a string of numerical addresses, so that users can get more information about the author and the work.

Luffy: Bonfida recently launched a community development for the Wolf Pack project, can you also introduce this community project?

Cyn: Bonfida Wolfpack is a program designed to reward the most loyal and contributing members of our community.

Each month, Bonfida community members compete to complete the monthly tasks. Tasks range from designing promotional content for Bonfida projects to completing the corresponding task of the month on the community bulletin board.

Each month, Bonfida assigns specific tasks and rewards the community member who earns the most points with a FIDA pass. Through the Wolfpack program, Bonfida hopes to build closer ties with community members and grow together with communities in different geographic areas.

Lufei: What are Bonfida’s plans for the near future?

In fact, the main is to complete the “pan-asset” order book building, Audaces perpetual contracts upgraded to order book form, Bonfida programmatic robot to complete the integration of the contract.

The end of December is the first anniversary of Bonfida, then there will be some activities to celebrate ~ and will complete the first year of pass unlocking.

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