Author: hyphin Source: onchaintimes Translated by: Shan Ouba, Jinse Finance
"This has never been a momentary craze, the MEME super cycle has arrived. We are being led to the promised land. In the new paradigm, there is no pullback."—Every person on Twitter posting MEMECOIN price predictions.
Introduction
Since our last discussion on MEMECOIN in March this year, the total market capitalization and market attention in this field have been steadily growing, without any obvious signs of stagnation. Undoubtedly, this makes MEMECOIN the fastest "racehorse" in the arena.
This phenomenon is mainly attributed to the inherent viral propagation characteristics of MEMECOIN (through social media), the extremely low participation threshold, and the continuous emergence of new narratives that sustain the enthusiasm of speculators. Although many projects are unable to attract attention in the long run, market participants have become accustomed to frequently switching short-term trends and profiting from them, while maintaining greater loyalty to investment targets with higher belief value. Even a fact that some are unwilling to admit, in the current market, the possibility of a verified MEME token going to zero is much lower than the expectation of an asset that is completely dependent on impression and has no substantive utility.
Although Solana is not the only driver of the growth in the total market capitalization of these tokens, the main activities of MEMECOIN do indeed take place in the "trenches" of its chain ecology. Therefore, this article will focus on the Solana chain, trying to observe the overall picture of its MEMECOIN ecology from a more macro perspective.
Respect the Trend
With the birth of the MEMECOIN incubation platform pump.fun native to Solana, the dynamics of the local market have undergone significant changes. Participating in speculative tokens has become simpler, cheaper, and safer (from a security perspective) than before. Through a user-friendly interface, the standardized token deployment simplifies the process, providing an opportunity for anyone to create new tokens without technical expertise, while eliminating potential vulnerabilities in malicious smart contracts.
Once a MEMECOIN is generated on the platform, it can be traded directly on the platform's internal market and automatically deployed to Raydium once it reaches a market capitalization of around $69,000. However, most tokens fail to reach this threshold and ultimately never see the light of day.
Out of about 100 tokens, only one is able to "graduate" from pump.fun's "university". Saturated markets and limited liquidity are some of the reasons for these failures (the specific reasons are not within the scope of this article).
Faced with such challenges, successful breakout projects must have eye-catching creativity or uniqueness to attract the speculators in the trenches. Nevertheless, the protocol has quickly established its position as the preferred platform for trading micro-cap tokens and launching new projects, far exceeding other similar platforms.
To date, its market share in the deployment market has reached as high as 71.9%, demonstrating the widespread popularity and far-reaching impact of this application. Recent developments have further driven its mainstream adoption, attracting a large number of new users from TikTok who harbor dreams of "getting rich overnight", adding more fuel to this "fire".
All Roads Lead to Raydium
Whether it's stealth issuance, pump.fun tokens, or pre-sale tokens, the vast majority of MEMECOIN liquidity pools are concentrated on Raydium. The influx of MEMECOIN not only expanded the market size, but also made this decentralized exchange one of the main drivers of the current on-chain trading volume on Solana.
In the gold rush, the people selling shovels are often the biggest winners. The same logic applies to the MEMECOIN ecosystem. Regardless of the performance of MEMECOIN, the platforms that support trading activities benefit from the surge in trading volume. Based on common sense and market observation, only a few MEMECOIN are truly able to stand out, while the majority are destined to be buried in the market. This view can be verified by observing the market capitalization distribution of all existing trading pairs.
Due to the lack of efficient labeling tools by data providers, in the analysis, we filtered out all tokens with non-zero liquidity in Raydium liquidity pools as of November 25, 2024, excluding the official token list and legitimate projects on CoinGecko. This resulted in 493,203 liquidity pools and 474,161 unique tokens, which will serve as the basis for the subsequent analysis.
Most of the active tokens are concentrated in the range of $100 to $10,000 in market capitalization, exhibiting a relatively obvious peak distribution. The chart shows a right-skewed distribution curve, with the tail gradually declining - there are fewer tokens with higher market capitalization, indicating that maintaining a moderate market capitalization is a challenge in an attention-driven environment.
Separating the tokens from pump.fun and those directly deployed to Raydium helps reveal patterns in the overall distribution and the unique performance of the two.
Pump dot Fun
It should be noted that tokens on the Pump dot Fun platform must meet a certain market capitalization threshold to obtain liquidity pool support. This means that they are often assigned higher valuations in the initial stage due to the higher liquidity supply, with market capitalization typically concentrated in the $5,000 to $15,000 range. However, most successful "graduates" struggle to maintain or exceed their previous valuations after migrating to Raydium. These tokens occupy a higher proportion in the medium market capitalization range (tens of millions to hundreds of millions in the early stage). This reflects that the platform's deployment process filters out MEME tokens that lack appeal to a certain extent, and the community can also use the token's accumulated visibility or momentum on the platform as a booster for further development.
Direct Deployment
In the low market capitalization range (hundreds to thousands of dollars), a clear dense distribution can still be observed, indicating that many small-scale, less popular tokens struggle to gain significant attention. This may be related to market saturation, the timing of these tokens' introduction to the market, or the lack of clear narratives, creativity, and promotion on Twitter. Although barely detectable in the data, there are also some super-high-value MEME that are listed on multiple centralized exchanges and predate the creation of the Pump dot Fun platform.
The persistent low clustering of token market values in the data set validates the point mentioned earlier. Although trend fatigue and the bursting of speculative bubbles are huge challenges facing each token, the misaligned incentive mechanisms have greatly accelerated the rapid collapse and death of many MEMECOIN. In this field, the pseudonymous scammers and malicious "developers" face almost no consequences, effectively making open fraud a norm, leading to the premature demise of many seemingly promising projects.
In-depth research has found that a considerable number of tokens are deliberately designed to fail, in order to extract the maximum value from unsuspecting speculators. This threat always exists, posing potential risks to investors who bravely participate in the market. In the past 30 days alone, nearly two-thirds of tokens were massively sold off within 24 hours of issuance, with over 90% of liquidity evaporating. For most tokens, it is almost impossible to recover after experiencing such a disastrous event during the formation period. However, occasionally there are some angry holders who try to regain the lost momentum through community takeovers, creating new social media accounts, driven by stubbornness or even retaliation, and starting anew. Although the results of such attempts are usually disappointing, if done properly, they may provide a decent exit opportunity for supporters.
Conclusion
The Solana memecoin ecosystem is dynamic and unpredictable, characterized by endless creativity, rampant speculation, and the ever-present risk of exploitation. Platforms like Pump dot Fun and Raydium have become the center of this thriving ecosystem, offering opportunities as well as challenges for participants. While the rapid rise of a few standout tokens has ignited dreams of "overnight wealth", the sober reality is that most memecoins struggle to maintain their initial momentum, ultimately leaving behind shattered hopes.
In this constantly evolving speculative frenzy, one thing is clear: diligent due diligence is crucial. In a world where viral propagation often trumps intrinsic value, whether as curious observers or active participants, surviving in this niche market requires keen trend insights and a steadfast skepticism towards promises of "easy riches".
