Moderator: Alex Mint Ventures Research Partner
Guests: Louie, professional on-chain investor, Stakeholder, professional individual investor & on-chain studio manager, Lawrence Mint Ventures researcher
Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continue to ask questions and think deeply, clarify facts, explore reality, and find consensus in the WEB3 world. I am Alex, a research partner of Mint Ventures. Today we have specially invited three teachers to talk about how to deal with this round of meme cycle.
Disclaimer: The content discussed in this podcast does not represent the views of the institutions where the guests work, and the projects mentioned do not constitute any investment advice.
Alex: We have invited three senior investors to this podcast. They all have very long-term investment experience, especially in on-chain crypto asset investment. The first one is our Stakeholder, who is not only an investor, but also the head of an on-chain studio. The other one is Louie, who is a full-time on-chain investor. The two guests can say hello to everyone and briefly introduce themselves.
Stakeholder: Hello everyone, I am Stakeholder. I first met Alex in the Curve group, and I studied DeFi when I first entered the circle. Later, because DeFi mainly operates on the chain, I came to Web3 and went on the chain. Later, I studied some on-chain strategies. Last year, I started to make some memes and do some hair-raising. I helped one or two private equity institutions introduced by friends to develop on-chain income strategies.
Louie: Hello everyone, I’m Louie. I’m not an old player of web3. I joined this circle at the beginning of last year, starting with inscriptions, and then I’ve basically been all in on the meme track. Inscriptions at the beginning of last year, and I’ve been paying attention to the BTC ecosystem until now. After the meme on Sol became popular this year, most of my attention has shifted to the Sol chain. Basically, my main focus is now on the meme on Sol. After I learned about this circle and joined this circle, I basically played memes full-time. This is a rough summary of my personal experience.
Alex: Welcome, both of you. The third guest is our old friend, Lawrence, a researcher at Mint Ventures. He is also one of the people at Mint Ventures who plays with memes the most. Please let Lawrence introduce himself.
Lawrence: I am Lawrence from Mint Ventures. Like Mr. Stakeholder, I also entered the market through DeFi in the last cycle in 2020. Since I have always been interested in new things on the chain, I have been investing in memes since then.
Understanding and explaining meme
Alex: Let's get to the point. Today is the first time we have a formal podcast to talk about the topic of memes. We may have touched on it before, but not in depth. The three guests we selected today have been focusing on memes. They have been studying this track for half a year or even a year. But there may be many newcomers in the audience who don't know much about crypto, and may not know much about Web3, let alone memes. Suppose the three of you want to introduce what a meme is to a Web3 newbie, how would you explain this concept to him in plain language?
Louie: OK. I think I can explain it to you in one sentence. Meme is the realization of attention and hot spots on the blockchain. This is how I understand meme. For example, if there are some hot spots in our Web2 world, whether it is Musk or Trump, or the hippopotamus a while ago, or some other hot spots, they all generate a certain degree of discussion and attention in Web2, and then map to Web3, map to the blockchain, and then correspond to a token, which is a logic of realizing these attention and hot spots. This is how I understand these memes.
Stakeholder: Okay, if it is a newbie, then he is definitely not in the crypto. I often encounter such situations in real life. Of course, he does not know the word meme. Suppose someone suddenly asks what a meme is, first of all, we must make a transition. He said he has never traded in cryptocurrencies, so he must be interested in some stories of getting rich quickly. I remember one time offline, I was having a meal in Shijiazhuang, and I heard people at the next table talking about how much money Dogecoin made and how many times it increased. They were not in the circle at first, but the chat was still quite lively. So I think if you explain it to a newbie, first of all, he will actually understand that this is the essence of cryptocurrency trading. Participating in making money is inseparable from cryptocurrency trading. If you know nothing about the technology and background of the blockchain world, then the easiest way for you to get started is actually to buy and sell Bitcoin. Many people already know the existence of Bitcoin, and it is no longer a strange term. Another one is meme. In fact, it is a carrier of values and emotions. You use a coin to replace it, and you can advocate your values and express your emotions by buying, selling, and holding it. The more people spread it and the more people buy it, the more you can make money. In the process, you can find people with the same values and feel a sense of belonging. As for the token, it has no function and is easy to lose. Therefore, you must play with money you can afford to lose and think of it as buying lottery tickets.
Lawrence: If I were to talk to a complete newcomer, I would probably first ask him if he knows Doge. Because I feel that when explaining something to a newcomer that he doesn't know much about, it's best to find some of the most popular ones. If he knows Doge, I would tell him that Doge is a typical meme. A meme is a culture that has a certain degree of ridicule and popular elements, something that can be spread virally. It can be understood as being somewhat similar to our concept of "stalks", because many popular memes are actually some stalks or emoticons.
Observations on meme newcomers
Alex: I know that many of you may be in various groups, especially Mr. Louie, who is in various cryptocurrency trading groups and community groups. According to your observation, is the proportion of newcomers who come in to play memes high?
Louie: Let me answer this question first. Let me give you an example, a very intuitive data presentation, which is the transaction volume on the Solana chain. About one or two months ago, I don’t remember the exact time, but I remember that the 24-hour transaction volume on the chain was 60m, and the unit after 60 should be million, 60 million. Now let’s look at the 24-hour transaction volume on the Solana chain again, which is basically 4 times, 240 million. So I think a lot of new money has poured in during this period. Simply talking about the data on the chain, this is my intuitive experience. Of course, in terms of the target, when we buy meme coins, this feeling is also very obvious. In the past, there may be a hot spot, which will quickly suck blood from other targets, just like a seesaw, this target rises, and other targets fall. But recently, especially during this period, you can feel that there is more money on the chain. The seesaw effect is not so obvious. It will support several new targets of hundreds of millions on the chain at the same time, or even more new targets of tens of millions. This is an intuitive feeling, that’s all.
Stakeholder: I didn't join any new groups. All the people around me who should join the circle have joined. There are no new users around me now. I am still in some old communities. First of all, I feel that some people who work in the secondary market are now coming to speculate on memes, and some people who focus on exchanges have also begun to move to the chain. Some people have transferred this time. Another is my observation in the last round. At that time, I was a novice, and there were many newcomers around me at the same time. Some friends came in to do Shib and babydoge. I think memes are very friendly to new users. It is easy for people to accept and play. And it is cheap. It gives people the feeling that it is cheap, although it is not the case in mathematics. Everyone feels that they can play with 10 yuan, but Bitcoin costs tens of thousands of dollars. Everyone still thinks that they have to buy integers. They think they have to buy one, and buying 0.01 seems to be too little.
Alex: Lawrence actually entered the circle at an early stage of the last cycle. He has experienced a relatively complete cycle of value investment coins in the secondary market, including Defi, many layer 1 public chain coins, and some layer 2 second-layer coins. But he has actually been paying attention to memes before. What do you think is the difference between this round of memes and the previous round of memes?
Lawrence: The last round refers to the memes compared to the one in 2021?
Alex: Yes. In the last round, there were actually quite a lot of animal coins for pigs, dogs, cows, and sheep, but they were not as popular as this round.
Lawrence: First of all, my own feeling is that from the perspective of money, as Professor Louie just said, everyone’s enthusiasm for this matter is definitely higher than the last round. I can’t say that it has reached the peak now. I feel that overall, the enthusiasm of this round is higher than the last round. Because the last round is actually a stage in which meme is established as a subdivision, if it is considered a track. Because in the previous round, there was only Doge, and in the last round, there was Shib, and then there were more meme coins with relatively low market capitalization. In terms of differences, I think this round, from what I have observed in the Chinese community, or in other words, among the Chinese people who speculate on memes, they are basically old faces, some people who have been working on the chain for a long time. Like the transaction volume data just mentioned by Louie, including some memes represented by some portraits of the lower and middle classes in the West, from my observation, including the recent Moonshot explosion, I feel that especially in the United States, and not entirely in the West, including the Middle East and Europe, the penetration rate in these places is much higher. In fact, meme only had a very short period in the last cycle, which was in April and May of 2021, and then in November. Basically, only these two very short time points attracted more attention. The core reason is that the Stakeholder teacher just talked about the money-making effect. The money-making effect of Doge and Shiba Inu is too popular. At that time, it was relatively simple, and it was also a zoo, that is, Shib, Dogecoin, and then there were pigs, snakes, and various small currencies. Overall, it was still relatively simple. In this round, the entire meme track has actually developed quite well. With relatively complete infrastructure, such as various meme bots, and then including very good trading tools on the Web side, as well as on-chain tracking and analysis tools, and many countermeasures for on-chain address copying and anti-copying, I think they are all very mature. In the last cycle, everyone's gameplay was still relatively simple. They bought whichever one they liked, and their understanding of this thing was also similar. In this cycle, I think many people, including many institutions, have been deeply engaged in this matter and have produced many different things. For example, Murad, who was very popular some time ago, has a list that is more inclined to some memes with cultural attributes and cult attributes, which have not appeared in the previous cycle. So, I think this is also related to the background of the entire industry. I have talked with Teacher Alex many times before. There are too few new things in the entire market. There are no new things like Defi, NFT, and gamefi in the previous cycle. But there is a lot of hot money coming in, and everyone can only chase the direction with the most attention, and all the money flows to the direction with the most attention.
The opportunity to invest in memes
Alex: Got it. I feel that this round of meme targets, including players, tools and infrastructure, have indeed been greatly upgraded compared to the previous round. Many projects in this round are also rich in cultural connotations and are very close to hot events in the real world. I also think that the quality of players has improved a lot. As a person who does not play memes on a daily basis, I feel that there is a huge gap between memes and the skilled and professional players like Louie. In the last round, everyone might be a novice, relying entirely on luck and courage. In this round, I feel that the professionalism in the use of tools, project judgment, data analysis, and emotional grasp is much higher than in the last round. So what was the background of the three of you when you first came into contact with memes and began to try to invest in memes?
Louie: I think I was quite lucky last year. I chose two tracks at that time, one was GPT and the other was Web3. I started to get in touch with inscriptions when Web3 came in. At that time, the price of Ordi I came into contact with was still 70 US dollars per piece, and one piece was 1,000 pieces. 70 US dollars for 1,000 pieces was very cheap at that time. Under such circumstances, I got feedback from Web3 very quickly, and then I went all in on Web3. Around May, I quit my job in Web2 and worked on Web3 full-time. Then I got very good results in the inscription ecosystem. Sometimes it is really a novice's aura. When you come into contact with this thing for the first time, the quality is not bad, and it can be regarded as fine bran. At that time, this belief received positive feedback, which was a relatively lucky result. Then, relying on such a novice aura, coupled with the blessing of positive feedback, the belief in this ecosystem has been continuously magnified. When this belief is continuously magnified, you tend to be more able to hold on to some targets. Of course, I also experienced roller coasters, pullbacks, and sell-offs in the end, but overall I still accumulated my first pot of gold in this ecosystem. The background of my investment in meme is probably like this. The timing may be a little special, and there is a lot of luck involved.
Alex: Louie, you take a look. Actually, you started with inscriptions. In your opinion, inscriptions are actually similar to the meme coins on the Sol chain and the Base chain, right?
Louie: I think it is completely different. If I had come into contact with the Web3 ecosystem at this time this year, it might have been much more difficult, not as simple as inscriptions. Because sometimes the dividends of this ecosystem are still very huge. In the early days of the ecosystem, you can make money no matter what you buy, the only difference is how much you make. But on Solana, you can clearly feel that you need to accumulate some of your own transaction logic, including technical advantages, or your own information advantages, in order to obtain certain good returns. I think this is the difference.
Alex: We will discuss this in detail later. Stakeholder, how did you start playing with memes? After all, you, Lawrence, and I all started to enter this industry from Defi, starting from the fundamentals. How did you switch to saying that you are willing to play with memes and spend a lot of energy on playing with memes? What is your background?
Stakeholder: I was actually biased against memes at first, and I thought they were just empty talk. Before I entered the crypto, I worked in financial IT, so I had technical reserves in finance and IT, so I started to study Defi and got started quickly. A meme is just an avatar and a slogan, what is there to study? There is nothing to study. But during the last bull market, Dogecoin rose a lot, and I also speculated on it. But at that time, my understanding of memes was just that Musk led the order, which was influential. In addition, I also made up a story in my mind that Musk would colonize Mars, and then our interstellar base currency might have Dogecoin to take on this role, giving myself a reason to convince myself to invest, but I didn't agree with the others. So when I saw that Shib coin rose so much, I didn't feel moved, I just watched it perform. After the bear market ended, in 2022, I thought, what to do in a bear market, there must be a way to make money. I don't like simply speculating on the band, so I started to study, mainly doing Uni's V3 strategy. During this process, I found that Bone, the bone coin, is a sub-project of Shib. It is equivalent to saying that I want to build another public chain in the future. The transaction volume of Bone is very large, and the LP of Uni V3 has a good return, so I started to try this. Moreover, the price fluctuation may not be so large, so I think it is relatively safe, so I started to try it. Later, the LP returned very good returns. I did it for about 9 months, and finally calculated that the annualized return rate was more than 100%. From this process, I found that meme has the characteristics of large transaction volume, so I started to do short-term LP of these memes to earn handling fees, even if I came into contact with it. In the process of doing it, I found that I was actually biased against this. Moreover, although these memes have a large fluctuation, it is actually not as large as imagined. In fact, it is similar to some of our Altcoin. If you look at these Dogecoins and Shib now, their decline is actually similar to our current AAVE and UNI. These AAVE and UNI are already recognized as good Altcoin. They have absolutely leading products and fundamentals, which are similar to Shib. So memes that are deeply rooted in people's hearts have investment value. At that time, I started to try. The first one I hyped was called Harry Potter. Its ticker is Bitcoin, which now has a market value of more than 200 million. At that time, I rebuilt it to be an LP when its market value was 8 million. Later, the market value fell to 1 million and fell below. I thought it was over and it was going to return to zero, so I quickly cut it off. At that time, I cut it off and sold one ether. Now it has a market value of several million. There are also Pepe in the middle. I saw it on the day of its launch, but I didn’t grasp these fruits. I did LP for all of them, but I only earned a little bit of handling fees, which was a waste of opportunity. Why did I miss it? It’s still a problem of cognition. So later I wanted to polish my investment strategy in meme, a set of strategies that suit me, and then I participated in it one after another, but I haven’t said that there are any particularly big results. At the end of last year, there were a lot of Bonk, Wif coin, and Solana coins. Especially when Wif broke through the 1 billion market value, I was stimulated. Because Wif was also very low, I also played it when the market value was several million. When Wif broke through one dollar, I thought it was definitely a trend. Then I took a relatively large position at that time, and I also chased Pepe with a large position. Later, just like Louie said, I got the result and got the reward. Then I felt that this thing should be configured more, and I should spend more time to study it.
Lawrence: As I said before, I have been paying attention to new things on the chain since the second half of 2020. In the first half of 2021, because I was still playing with algorithmic stablecoins, I studied some addresses on the chain all day and analyzed the addresses on the chain. Then I found that some addresses bought a meme coin that you may not have heard of now, called Hoge, which is also a dog head coin. It is called Hoge.finance. At that time, many memes still had to be covered with the coat of finance, including Shib. At that time, out of curiosity about new things on the chain, I bought a little bit each. Later, from March to April to May, I found that this thing has risen a lot. The reason why I can continue to pay attention is also because of the positive feedback at the beginning. I started to think deeply about this matter because Shib was sold out very quickly at that time, and the multiples of selling were very high. It was very painful at the time. Then I started to think of ways to explain this matter, to see whether I was wrong or the market was wrong. So I read books like attention economy, including articles written by some investment institutions or some KOLs. After that, I may have kept paying attention to the memes on the chain, and I have also participated in some relatively new projects.
Alex: Speaking of this, I remember there was another thing that left a deep impression on me during the last cycle. At that time, you seemed to have received a domestic meme called loser coin for free, right? What was its Chinese name?
Lawrence: Yes, his name is Lowb.
Alex: I remember you received it for free and didn’t sell it at first. At that time, everyone thought it was a performance art, because at that time everyone still had a lot of prejudice against domestic memes, thinking that domestic projects, especially cultural projects, could not compare with Western ones. As a result, this project was distributed for free, and the operation method was also very strange and down-to-earth. Later, this coin rose from a zero-cost project to a market value of tens of thousands of U?
Lawrence: I don’t remember exactly, the highest seemed to be several hundred thousand U.
Alex: Yes, it seems that you held on to it at the beginning, and then sold part of it, and then the part you sold went up higher and higher. This is a very deep impression.
Essential qualities of a good meme player
Alex: We just talked about how this round of memes is quite different from the last round. This round, when we invest in memes, we often see a keyword called PVP, which is a term in computer games that refers to human-to-human battles, not human-to-computer battles. But here, PVP is mainly used to describe a zero-sum game situation where funds are very fierce, where either you cut me or I cut you. In order to win in this environment, in your opinion, what comprehensive qualities should a strong meme player who can win from it have?
Louie: I have summarized four dimensions. First of all, I think the most important thing is also the premise. Before entering the market, you must choose a place with money to play. For example, at this stage, you must choose the Solana chain, right? You can't choose the Ethereum chain. Then like last year, you must choose the BTC ecosystem, you can't choose other ecosystems to play. Just like the logic of choosing Defi, everyone also wants to choose a rich ecosystem to get certain benefits in it. The logic of playing meme is the same. First, you must choose a place with money. The second is that you need to have enough time to play meme, and you can continue to accumulate experience in this process, because time is a hard condition. If you don't have time to pay attention to the information of the target and don't have time to understand the trend of market sentiment, I think there is no difference between simply buying meme coins and gambling. Then in this practice process, as you continue to invest and research, understand this information, and continue to feel the changes in the market, you will continue to accumulate experience. This is actually very important. Experience is something that no one can teach you. Only by feeling and settling by yourself can you experience your own things in this process. The third is a more pragmatic level - the continuous iteration of your tools and the continuous iteration of your trading logic. The market changes very, very quickly, and perhaps the only thing that remains unchanged is change. Maybe a strategy this month will not work next month. Many memes on the market now actually reflect this problem quite strongly. Maybe when people played memes before, they would pay more attention to the irony level of memes, its cultural attributes, and even some cultural points of foreigners. But now looking at these memes again, they are completely a microcosm of attention and hot spots. Where there is a hot spot, which topic is hot, then this coin will definitely go up. Whether it is the hippo in the zoo some time ago, or the change in the wind direction in the past two days, such as A16Z's exit, everyone feels that memes have begun to be combined with VC again. So the market changes very quickly, and your tool iteration and trading logic must keep pace with the times. The fourth dimension, I think, is that everyone has a different way of playing in this ecosystem to make money, and you have to find a comfort zone that suits your own money. For example, some people are born to be diamond hands, and they will not move a coin after buying it. Some people like to fluctuate after buying it due to their personality or other reasons. So no matter which method you use, you must find your own comfortable range. For a target, some people will eat the fish head, some will eat the fish body, and some will eat the fish tail. Your characteristics or resources can support you to get a better sense of making money in which range, then unswervingly find your own comfort zone, don't think about eating a target from beginning to end, I think this is unrealistic.
Lawrence: First of all, I personally feel that PVP is very difficult, because I did a lot of meme transactions on the chain from May to July when the market was not so good this year, and I felt it was very difficult at the time. Then I basically gave up this very frequent meme trading strategy. I still feel that we should find ways to find opportunities for PVE. Because PVP generally means that there is no incremental funds, that is, these few people in the market, from your pocket to my pocket, or from my pocket to your pocket. So I think for my recent feelings, I still have to find ways to find opportunities that are not PVP, but PVE opportunities, and find opportunities that are still incremental in the entire market. For example, AI a week ago, or A16Z's AI fund three days ago. I can only say that we should do better in timing, and find ways to judge whether this small trend can become a trend. So this is probably the most important quality in my opinion, that is, to judge whether new things can attract more people's attention in the future based on some comprehensive personal feelings. Then there are some cultural memes with cultural attributes. I feel that this may be easier recently. Because the problem with chasing hot spots is that hot spots will soon pass. Recently, I prefer things that have more Lindy effect. That is, if this thing survives for a longer time in the past, I think it will survive for a longer time in the future. Of course, this may be a difference in personal perception. So the qualities that a good meme player should have, in fact, Teacher Louie has already talked about it very comprehensively. I think it is very necessary to be familiar with and master the tools, as well as a lot of time. At the same time, on this basis, it may also be necessary to judge the culture or some popular small trends.
Stakeholder: Actually, after listening to what Professor Louie said, I felt that there are 10,000 ways to fail, but the ways to succeed are all similar. In fact, I found that the methods of those who are good at playing are similar, and our methodologies are also close. I think the quality here, first of all, must have a macro management, which is still at the cognitive level. There are actually two macro managements. One is the management of mentality. It is not uncomfortable to sell at a loss, and it is okay to cut losses. You can also go back after leaving. The other is fund management. It is also very important to make fixed investments, what kind of target, and how much money to invest. How big its capacity is and how big the pool is determine how much money you invest. Another point is that, in fact, if meme is subdivided, we can divide it into many types, some are early, some have grown up, and some are hot spots for a while. I think this is a kind of lottery. For example, if you like a concept and think it is good, and the narrative is good, then you will make a fixed investment, such as 0.1 Ethereum or a Solana, and then you can draw a lottery. Then I accept its reset, throw it in and forget about it, come back to check it after a month, or come back to check it after a certain period of time. Another thing you need is actually technical reserve, which is also mentioned by the two people above. You need tools, and there are many mature tools available now. Then you have to find these tools first and use them skillfully. There are many technical indicators or other tools in them. The key is to use them easily and they must be suitable for you. There is also a circle, which is actually your source of information. How many friends do you have who play dog games? Do you play alone in a room, or do you play with a group of people in a room together? I think the two must be combined. I can do it alone in the room, but I must be with a group of people regularly and communicate with them, so that I can hear other people's opinions from different angles and provide more perspectives. Another thing is time. This depends on quantity. You will have a feel for it if you watch more. This is a part of deliberate practice, which takes a lot of time. I remember a dog-beating master said this: "You don't have to say anything. If you watch 10,000 pools, you will be able to see it accurately." It's actually like this. A newcomer comes in and says he can catch the large MC memecoin. That is luck, but the probability of this luck can be improved through accumulation and summary. Of course, there are many changes in the middle, and we must constantly adapt to new changes.
Alex: Yes. I have some observations about the professional investors who play memes and those who insist on not playing memes, as well as ordinary retail investors. I feel that their personality traits are quite different. Generally, people who are willing to play memes have a particularly big characteristic of being young. Being young represents many derivative factors, including that they are more energetic, have better physical strength and sharper thinking. In addition, their mentality is often more open, and they are very sensitive to some cutting-edge things, such as what everyone just mentioned is hot spots. Another thing is his attitude towards trading. Because some people like trading very much, they wish they could have 100 trading opportunities every day, and they can watch and track. Some people hate trading. They don’t like to look at more short-term information every day. They like to look at longer-term things, and they don’t like to look at K-line for technical analysis. It must be that these investors who are more enthusiastic about trading and can get more pure pleasure and fun from it are more suitable to participate in meme trading. These are some basic observations of the people around me.
Meme investment strategy
Alex: We just talked about what qualities you think a meme player should have. From the perspective of investment strategy, one point we just talked about is that the meme trend is constantly changing, and their target characteristics are also constantly changing. So since investing in memes, what changes may have occurred in your investment strategy? What are the content and background of these changes? And in the current market, what strategies do you use to participate in buying various memes?
Stakeholder: It is really changing. As Alex said, I am no longer a young person, which means that I will not have complete autonomy in terms of time. If I devote all my time to one thing, I will need to take care of many things. In terms of time management, I have time these days, so I can take it out specifically. In addition, on-chain meme also have seasons. Before the market starts, I think there will be a wave in front. At this time, I feel that it will come, so I have to take time out and set aside time to watch and participate. In addition, what should I do in the fragmented time in the middle? I will no longer participate in those particularly short-term hot spots, but will look for longer-term ones, and then find the so-called waves every time. Who is the leader of the wave, what position it has reached, and whether I can participate in it. For example, this hippopotamus, I think it has rolled up waves of marine animal crazes in front of it, so I want to wait for it. I also sold it at a high price in the front, and then I want to wait for it to fall to a certain position in the back, and then buy it back. I think it will definitely have a second wave. For this kind of thing, there is not so much time to participate in this way. In terms of dog-beating, Mr. Louie should be more professional. My strategy is mainly based on lottery. I was not very willing to go to Solana at the beginning. Until recently, I felt that Solana was completely ahead of Ethereum in these memes. So I gave up Ethereum. Before, I thought that Solana was a master of PVP, and I was a little bit overwhelmed. My own advantages would be weakened, so I returned to Ethereum. With this lottery idea, I buy a fixed amount, and I don’t have to stare at it every moment, and I can accept the return to zero calmly. Until recently, what prompted you to change was that you found that you were not making money, and the past methods were not making money. Then there might be something wrong with the method, and you have to change it. The flow of money is changing, and all the money has gone to Solana. Ethereum now feels like an empty city. The top memes have no trading volume at all. They are not as good as the new ones on Solana that have been open for 10 minutes. They may not even be the top three or top four. There are already many imitation platforms, and they can all have millions or tens of millions of trading volumes. It is normal to have millions to 10 or 20 million. On Ethereum, those very mature old memes, which are very popular and have a large market value, do not have such volume. It is a completely one-sided pattern. So I have to switch to Solana and adapt to the gameplay on Solana again. For these new ones, I mainly focus on these leading ones. In addition, there are some things. Since I am doing DeFi, I have advantages in this aspect. Many meme developers may not study things on DeFi and pay little attention to it. Now I also help one or two institutions to make hedging tools to earn some income. For example, Wif and PePe, do LP on the chain, and then add some hedging orders from exchanges to capture the income of its large trading volume characteristics, and find that it is not bad. Now it is mainly these. And I think meme doesn’t represent small capital. I think large capital can also participate. I think an amount of 10 million US dollars is completely fine.
Alex: When you said that big funds can participate, are you referring to the market-making strategy of meme’s LP that you mentioned at the end?
Stakeholder: Yes. Look at Wif, including PopCat, which have tens of millions of transactions every day, and the pools on the chain have tens of millions. So if you put 1 million US dollars in 10 such targets, each of them will not have much impact.
Alex: Can you tell us about the specific strategies of your market making LP? For example, how are the bilateral funds of market making allocated, and how are the intervals considered?
Stakeholder: Okay, this also took many attempts to stabilize. At first, I wanted to do fully automatic hedging, make it a tool, and let it automatically run quantitative strategies without people. Later, I found that it was not as good as manual management, and the interval should be slightly faster. At first, it was plus or minus 50%, which combined the past volatility of meme itself. The main thing was not to do non-stable currency, but to do USDC. The positive and negative intervals are generally 50%, 40%, and 35%. I will split one into three levels. The narrower interval can be rebalanced frequently, and the wider interval can be run for a long time. In terms of capital allocation, 2/3 is on the chain, and 1/3 of the funds are used to open short orders for hedging on the exchange. At the same time, it is not possible to do full hedging, because the full amount must be balanced at any time to keep the positions on both ends the same. Since we have invested in meme, we must be optimistic about its long-term rise. You know that if you are an LP, your risk mainly occurs if it keeps falling. If it rises, it is just a matter of making less money. So you need to hedge 70% or 80%, not the full amount. When it goes up, if you balance it, you will not easily cause extreme imbalance on both ends. That is to say, your net position is reduced, and you become a net short position, which is very dangerous. In fact, when we do this kind of LP, we are not afraid of it plummeting, but we are afraid of it soaring. I am more worried about this situation. Recently, I tried to do a meme such as PopCat vs. Wif, two non-stable coins with large trading volumes at the same time. If they do this kind of LP, first of all, the APR, that is, its rate of return will not be low, and it is easier to control. Why? Because they are relatively in the same frequency. When they rise, basically everyone rises at the same time, because they belong to the same sector. And when they fall, it is basically the same, just with different amplitudes, but relatively in the same frequency. In this way, opening a short position can actually improve the efficiency of your capital use. Because originally, there is USDC on one end, which is equivalent to a higher APR. I have been running for about three weeks recently, and now I think this strategy seems to be slightly higher. Moreover, we can build various new combination pools on Solana. You can create them yourself. For example, if a new one suddenly comes up today with a very large trading volume and is the leader, then you can quickly create another one for a familiar and confident variety, and then try it alone for a while.
Louie: I am also very interested in the LP that the teacher just talked about, but I haven't mastered the skills in this area very well. Anyway, I think that for a first-level player, this LP is also an indispensable skill. My own trading strategy is like this, and it has also undergone some stage changes. At the beginning, it was definitely pure faith, faith in players. Because I was playing inscriptions at the time, I had a very, very grand faith. At that time, many people thought that Ordi could reach 10 billion. Bitcoin is a BTC, and Ordi is a small pie. The market value of 10 billion must be within reach. But later, the market poured cold water on us and told us that hot spots are constantly migrating and changing. From such a stage of faith, it gradually transitioned to pvp, that is, changing with the hot spots. Where is the hot spot in the market, there is a rough prediction of its market value, and then you may get a profit that you expect, and then you will get it all and leave, and switch to the next battlefield. Up to this stage, my current strategy is roughly like this. First of all, I think the benefits that meme brings to ordinary people, I have always believed that it is a track that can transition from 10,000 to 100 million. Meme is a track that can support you from A3 to A9 players. But the meme ecosystem may be a market that is more exaggerated than the 80/20 rule. It may not be 20% to 80%, but 1% to 99%. It is often that 1% of opportunity that really makes your assets achieve significant progress. But how do you seize this 1% opportunity? This requires you to spend 99% of your time on some tokens that don't look so sexy and whose market value expectations are not so strong. It requires you to keep a daily focus on this market and this chain. This is my current state, which I call the state of playing in the wild. What is playing in the wild? It means that I require myself to pay attention to this market on a daily basis, and then maintain my state and feel on a daily basis, and make some small transactions. But I will not go all - in if I don't find a particularly good opportunity. Through this small transaction, through daily playing in the wild, I can maintain my feel and state. When you find a good opportunity, when you find an opportunity worth a heavy position, you require yourself to look for it and place a heavy bet. For example, Neiro, Hippo, and Goat, all have a relatively long window period, can accommodate a large amount of funds, and have very good returns. This is the current rhythm and status.
Lawrence: At the beginning, until about the end of 2023, that is, before the beginning of this year, there were not many memes on the market. If you want to find new memes every day, you can scan the chain to see new things, which actually doesn't take too long. So before, my strategy was to basically scan the new things on the chain at least every two or three days, and take a look at each one. But since the emergence of pumpfun, this meme coin has started to explode, and this strategy can no longer be supported. Including more and more family matters, as I just mentioned, in April and May, after losing some money on the chain, the strategy basically turned to the current state. This is also related to personal circumstances. You may not have so much time to chase every hot spot, so you can only say that you pay more attention to opportunities that are not hot spots. From the perspective of investment strategy, I will look for memes with relatively good fundamentals. If I believe it will not die, then I will do some low-absorption and buy at some low positions. After it has risen a lot, if it can fall again, then I will buy some at a relatively low position. Because I think it will not die. For example, like Bitcoin mentioned by the Stakeholder just now, I think a meme like this will never die. It may not be a hot spot in the current market, but its characteristic is that because it is not a hot spot, it will not die. For example, after I lost a lot of money on the chain in April and May, I simply bought Mog on the base chain and bought all PopCat on Solana. In fact, looking back, this strategy is much better than my previous strategy. So my strategy at this stage is more about some memes with relatively large market capitalization, at least some projects that will not die within the scope of this cycle, and some projects that may have a market capitalization of at least tens of millions to bet on.
Long-term and short-term allocation
Alex: The question Lawrence just mentioned is related to our previous question. When we talk about the conditions for a good meme trader, everyone mentioned time. For various reasons, including personal, family, professional reasons, or when you are older and you feel that you don’t have so much energy and a strong desire to trade, we will consider switching from short-term to long-term. So Lawrence just mentioned that he might now allocate some memes that he thinks are good for a long term and make a cyclical investment. So when you choose this kind of meme token for long-term allocation, what is your logic and thinking behind it, or what is your standard for screening them? Just now you mentioned the market value, for example, the market value may be tens of millions. Of course, in fact, we now find that memes with a market value of more than 10 million, 20 to 30 million, or even 40 to 50 million appear frequently on the chain in one day. How do you identify it? What conditions does it meet that you think can be included in your long-term asset allocation choices. How do you think about this issue?
Lawrence: I just mentioned one is market value, and the other is time. For example, if it can maintain a market value of more than 50 million for more than a month, I will think that this thing will not die at this stage. For example, this round of AI craze, of course, from the concept I just mentioned, it is definitely not particularly suitable to buy, because it is still relatively short, and at this stage, there are still good and bad projects, and the quality of many projects may not be very good. But I am personally looking for, for example, in another 10 days, for example, if the market does not rebound significantly, and the entire market does not experience a very strong surge, in this case, if some AI tokens can be at a relatively good market value level, and its holders have good data in all aspects, I may invest in some. The long-term configuration of meme still depends more on the logic of trading. I have a certain proportion of positions in Doge since February and March this year. Although the returns are not particularly good, compared with other memes, my entire trading logic still believes that if you choose a coin to represent meme, it is still Doge. Then of course there is another logic recently, because people will bite Musk through Doge, and then bite Trump. This kind of logic has a time cycle. I think it is possible that, for example, if Trump comes to power and Musk really works as the Department of Government Efficiency, in the long run, from the perspective of narrative and promotion, it is also good for some Doge on the chain, but the capital capacity is larger and it is easier, which is definitely more beneficial to Doge. And for example, I just mentioned the logic of Mog and PopCat. I prefer the logic that can be explained clearly within 10 seconds. For example, Mog and PopCat, if dogs can do it, why can't cats? I think if I tell anyone this logic, I can tell him clearly why I want to buy this thing in one or two sentences. So there are probably several logics like this. The first is market value, the second is time, and the third is whether there is any special, long-term logic driven by time behind it. I actually have quite a few political meme tokens, including Harris, Vance, and Tim Walz, the vice president of the Democratic Party. My logic at the time was that this concept might be hyped up before the election. It has been almost half a year now, and I have been holding on to it.
Alex: According to the logic you just mentioned, it is a long-term narrative. This narrative is likely to appear repeatedly in the public eye and be talked about repeatedly, like the Mars city mentioned by Musk, which was also very popular for a while. Does the meme of this track also belong to this concept, is it this category?
Lawrence: Yes, but this is specific to Mars City. Mars City was quite popular some time ago because of the capitalization issue. Another problem is that the market value of Mars City on Solana is not very high. The two on the Ethereum chain are still fighting fiercely.
Alex: I would like to add a piece of information here, because some listeners may not know much about the US election, including the relationship between Musk and Trump, and the connection between the two of them and doge. Let me briefly talk about it. Because I just mentioned that doge is a relatively long-lived coin that is closely related to the current political hot spots and the political hot figure Musk. Doge, whose Chinese name is Dogcoin, is related to this election. The first is of course Musk's frequent shill. The other part is Trump's political platform, which means that he wants to cut the government budget and improve the efficiency of the entire federal government. He also mentioned two days ago that he wanted to cut the federal budget of about two trillion US dollars. The organization department to cut the budget and improve efficiency is the Efficiency Committee, and he hopes that Musk will lead the Efficiency Committee. Musk also readily accepted it. So if Trump comes to power, Musk is likely to be a member of Trump's cabinet. Then he will lead the government's reform and reduce costs and increase efficiency. This is bound to be a long-term job. He told Musk that the word "doge" is the abbreviation of the Department of Government Efficiency. So from this narrative, he seems to be a narrative that will be repeatedly mentioned for a long time and has vitality. Here is some relevant information for everyone.
Louie: I don’t really believe in memes. I may only often hold Bitcoin, and other memes like Ethereum and Sol, I will only keep a new position. This is how I configure my positions, because I prefer the first level, and the teacher just now may be better at a meme configuration of level 1.5. I am used to buying 1% of a token in the early stage. As it rises, I will pay some costs and profits, and then keep 0.2%, which is a position of 1,200. I call it a "dream position". When the target rises to 500 million, 0.2% of the chips are worth 1 million U. Of course, you have to watch the changes in the target, whether it is a market sentiment or a change in its fundamentals, you may sell it, but even if you sell it, it is a profit beyond your cognition, and you can't earn it. Through such a configuration, I can meet my needs for short-term profits and my need to get long-term profits by earning some targets. But I won’t have a very long-term expectation for some meme tokens, maybe a few months. Because judging by the market’s reaction during this period, a narrative like the zoo or the AI narrative has a survival period of about 10 days in the market, such as this S-level, very high-quality narrative. After 10 days, it will basically switch to the next narrative. So I prefer such a configuration, and I will not hold a very heavy position in some meme tokens.
Stakeholder: I am long-term allocation, mainly because I think meme is a separate sector. If Web3 is regarded as a large investment ecosystem, it has a very important function in it, which is to attract traffic. In the total market value of the entire Crypto, it has a certain proportion. For example, Murad, which has been very popular in recent days, has a large room for growth in the future, because those VC coins are still relatively watery. In general, from an investment perspective, since it is a sector, we also have this "28". Because in the past few years, it may have accounted for a certain share of the market value of the entire sector. From this perspective, it is actually calculable, so we can reversely infer how much market value it can have, how much it occupied in the past few years, how much it is now, and how much potential income is, so I will allocate it. If I allocate it, my strategy is not to hold it and wait for it to rise, but I still want to do those things on the chain that can generate income. For long-term investment, I will throw it into the V2 pool to ensure that you will not collect more goods when it falls, and you can continue to increase your holdings in the currency standard. In addition, I think there are so-called newcomers or upstarts in every bull market. Just find them and hold them for a long time. For example, at the end of last year, I bought Wif and PopCat. They were very conspicuous at that time. If you had such a cognition at that time, looking back, if you had allocated a part of it for a long time, it would be very good today. Since we are using this time machine rule, we are talking about small cycles today. I think there is a small cycle every year, that is, the market conditions in the first and second quarters are different from those in the third and fourth quarters, or there are markets in the first and fourth quarters, but not in the second and third quarters. At the end of a year, these upstarts are easy to appear. If the large MC memecoin falls to a very low point, you can get a basket. Why do I get so many? Because I don’t know which one will come out. My best way is to buy a little bit of them all after I have screened them, throw them there, and wait for miracles to happen. The main reason behind this is to do it based on such a thinking. This is pure alpha income, like Bitcoin, Solana, or now I think that including Ethereum, Beta income is more certain. For example, Ethereum and Solana, there is not much worry about losing money in the future if you buy now, or being trapped forever and unable to get out. I don’t worry about this problem because we are optimistic about this industry as a whole. However, these memes may increase their value by dozens of times, and it is obvious that the ones mentioned above do not have such potential returns.
Alex: Just now you mentioned that you might buy the selected targets. What are your screening criteria? After all, there are so many in the market now, and there may be dozens of stocks with similar market capitalizations, with a market value of less than tens of millions. What are your criteria?
Stakeholder: We need to make some classifications. For example, memes should also be divided into sectors, such as animal sectors, AI sectors, and narratives, such as the space sector mentioned recently, such as Mars City, which is also a sector. Local promotion plates should also be configured. I think we need to find them out, and we also need to add other dimensions to screen. Market value is one aspect. Market value of more than 5 million is fine, and between 5 million and 200 million is fine. It is suitable for small funds to make big profits. Also, we need to see how long it will survive. We need to look online for the trading volume and pool ratio. If some trading volumes are not continuous, then it is definitely not good. In addition, although it is an attention economy, we also need to look at the so-called "long-term builder", which is actually a small group of people. Let's not talk about faith. Maybe he likes it more, or his interests are at stake, so he will do a lot of things to develop it. These people may suddenly have a point that explodes one day because of their interests, and their attention will be turned to this. This token will rise a lot, and in this case, they will spend some time to look at it. I will also look at secondary creations. I think good things are all about empathy. You can tell whether some of his secondary creations are shoddy or exquisite, whether they have viewing value, and whether they can make people understand and smile knowingly. I think this is very important. If there is such a mass base, I will definitely match it, and I will make comprehensive considerations to match it. I will also distinguish between large and small quantities. Maybe I can invest 100 yuan in this one and 200 yuan in that one.
Meme Player's Daily Life
Alex: As a veteran meme player, how do you spend your day? If you want to let newcomers who may want to play memes or want to try to trade memes more, how do you spend your day?
Louie: I don’t actually spend that much time on it, because now basically 95% of my positions are in the BTC, and my main income comes from the changes in the market. But the overall rhythm is still very boring, because the market is relatively good now, I will not stay up late to watch the market, and basically turn off the computer at 11 o'clock in the evening. Because I go to bed around 1 o'clock, I can't fall asleep too early, and it's not good to go to bed too late. If I turn off the computer at 12 o'clock, I can't fall asleep until at least 2 o'clock, because the brain still needs a buffer and distraction process. So I usually turn off the computer before 11 o'clock, and there will be a certain amount of exercise time in the afternoon. I have a treadmill at home, and I have a fixed exercise time of half an hour to an hour every day. It's about this rhythm, and the rest of the time is basically watching the chain.
Alex: Does your specific job of monitoring the chain mean constantly scanning activities on the chain, or communicating with other friends in the community? What kind of things might that include?
Louie: There are many things to look at. First of all, you need to watch the real deals on the chain. Then, there are probably two major communities with heavy participation. One is a 24-hour conference room where everyone can talk about their views on memes or new hot topics. The other one may be more focused on data and cognitive discussions. Everyone may conduct an in-depth analysis of some targets. There is also some monitoring of Twitter and KOLs on the chain, and the information also needs to be filtered and absorbed. It is probably these three parts: the chain, the deeply involved groups, and the information sources that you monitor yourself.
Alex: Do you have regular meal and wake-up times?
Louie: Regular. Because I have never been regular, I need to be regular. I think playing memes is essentially anti-human and very boring. All you have to deal with are K-lines and letters. There is no communication. Otherwise, how can you say it is boring? Without communication with the outside world, it is not a normal human life. Normal human life is to eat, drink, have fun, and chat. Although the income is considerable, when the market is good, even if you are not a top first-level player, you can still earn tens of thousands of RMB a day. But sometimes you may just want to watch TV or play games, and don’t want to go back to watch the market. It is a very anti-human work process.
Lawrence: This question actually bothered me a lot some time ago. When I spent a lot of time on the chain in April and May, I had to spend some time with my family, especially with my daughter. However, her bedtime is usually during the trading hours in the United States. In fact, it is the time period when the most new projects appear and the fluctuations are relatively large on the meme. Since then, I have done some reflections. If I have time, I will check more new projects on the Solana chain before going to bed, which may be around 11pm, 12pm or 1am, because the Ethereum chain is indeed not active enough. Then I will check some addresses I follow, including some new projects promoted by KOLs. For those very new projects that may have just been launched within a day, I will scan them. In my spare time when I don’t have work tasks, I will check some memes that I have put in the observation cabin before. For example, whether its holder data has changed, try to analyze the reasons behind the change. It seems that these are the times for trading memes alone. Other things are like what Louie just mentioned, to pay attention to the information flow of various Twitter, the channels that TG follows, and the news of WeChat channels.
Stakeholder: I am at home about half of the time and not at home half of the time. When I am at home, because I have to pick up my child every day, he has to get up at 7 o'clock in the morning, so I get up at about 6:30. I have to go through all the lists to cultivate my sensitivity to data. At the same time, if there are some news that come out and the trading volume is large, I will add it to my watch list. As for the groups that mainly hype memes, I will quickly go through them, which basically takes 20 to 30 minutes. If I have a little time, I will check Twitter. As for trading, since I don’t have the opportunity to participate in those short-term and very early ones now, I will go with the flow. If I happen to have free time these days, I will focus on it. As for rest, I must be regular at home, and normally I go to bed at 12 o'clock. If I'm not at home, for example, Lawrence talked about the time in the United States, then I think it's probably between 4 and 7 in the morning, which is the time when I'm very sleepy. Sometimes I'll play cards with people all night, and in the second half of the night I'll look at the chain to see if there's a chance to encounter a large MC memecoin today. Maybe I'll do it this way, and I won't deliberately spend a lot of energy. One day I also felt guilty, thinking that a good time was wasted on doing this kind of thing. Life will become meaningless. Our original purpose is to make money. To put it more directly, it's a speculative behavior, which itself has little meaning. If that's the case, why don't I make it more fun and casual. For example, if I accidentally encounter a large MC memecoin today, I'm very happy to make money, and I can share it with my friends and my wife. That's about it.
Alex: It seems that after playing memes for a long time, most people will still look for a rhythm of life that is more balanced with their lives and more conducive to their physical and mental health. In this way, they can also invest in a longer-term and healthier way. Thank you three guests, and I hope there will be more opportunities to communicate with you in the future.
