Bonking Dragon employs a Bollinger Bands and Exponential Moving Average (EMA) crossover strategy on the Drift protocol, primarily focused on the 1MBONK perpetual swap. The strategy aims to identify potential entry and exit points based on the relationship between the price, Bollinger Bands, and EMA. It enters a long position when the price closes above the upper Bollinger Band or when the EMA crosses above the price. The strategy also incorporates a kill switch mechanism to close positions when the price falls below the EMA.

The strategy is built on the Drift protocol, which is a decentralized perpetual swap exchange on the Solana blockchain. Funds are stored in a non-custodial wallet, meaning they cannot be withdrawn by anyone but you.

Market Risk

Bonking Dragon is exposed to market risk as it takes directional positions based on technical indicators. If the market moves against the predicted direction, the strategy may incur losses. Sudden market shifts or unexpected events can invalidate the signals generated by the Bollinger Bands and EMA, leading to potential losses.

Liquidity Risk

The strategy relies on the liquidity available on the Drift protocol to execute its trades. If there is insufficient liquidity at the desired price levels, the strategy may face difficulties in entering or exiting positions, potentially impacting its profitability. Low liquidity can also result in slippage, where the actual execution price differs from the intended price.

Technical Risk

As the strategy is implemented using code and interacts with the Drift protocol, it is subject to technical risks such as software bugs, vulnerabilities, or failures in the underlying blockchain infrastructure. Any issues or disruptions in the code or the Drift protocol could lead to unexpected behavior or losses for the strategy.