Author: hyphin, On Chain Times
Translator: Jinse Finance xiaozou
1. Preface
Since our last article on MEME coins (in March this year), the total market size and market share of the industry have continued to grow, without any obvious signs of stagnation. Undoubtedly, it is the fastest horse on the track.
This phenomenon can be attributed to the viral spread of social media (its inherent characteristics), the extremely low entry threshold, and the constant emergence of new narratives, which attract speculators, although many (if not the majority) are unable to maintain meaningful attention in the long run. Nevertheless, market participants have become accustomed to this, frequently entering and exiting profitable short-term trends, leveraging momentum to generate returns, while maintaining loyalty to high-conviction bets and making them more durable. Although some may be reluctant to admit it, in the current market environment, MEME coins that have been thoroughly tested by the market and have long-term existence are less likely to perish than assets that are driven solely by impressions and do not provide any substantive value (limited to capital transfer).
While Solana may not be the sole contributor to these massive token market capitalizations, much of the activity in this field is indeed taking place within its on-chain ecosystem trenches. For this reason, this article will continue to focus on this chain, attempting to provide a holistic picture.
2. Hail to the Pump
With the birth of pump.fun (a Solana native token incubation platform), a significant shift has occurred in the local market dynamics. Interacting with speculative tokens has become simpler, cheaper, and more secure (from a security perspective). Through a user-friendly interface, standardized token deployment in a controlled environment, anyone can create new tokens based on a common configuration, eliminating the risk of abuse by potential malicious actors hidden in smart contracts. This effectively only requires the deployer to provide some creative input, without any technical knowledge. Abstracting away all the complexity, the focus is on what truly matters - large-scale speculation.
Once a tokenized meme is created, it can be traded directly on the in-platform market, and once the market capitalization reaches around $69,000, it will be automatically deployed to Raydium. However, most creations fail to reach this threshold and are never brought to market.
Approximately one out of every 100 tokens "graduates" from pump.fun, due to the massive saturation and limited liquidity, as well as other reasons beyond the scope of this article. Those who step into the arena must showcase something interesting, shocking, and unique to catch the attention of the trench warriors. Despite these challenges, the protocol has quickly established itself as the de facto gateway for trading micro-cap tokens and launching new ones, rapidly surpassing all other competitors in the field.
So far, its deployment dominance advantage over other alternatives has reached an astonishing 71.9%, demonstrating the widespread adoption and far-reaching impact of this application. The recent momentum has propelled it into the mainstream, with many new users from TikTok joining in, ambitiously seeking to grow it and keep the fire burning.
3. All Roads Lead to Raydium
Whether it's a stealth launch, a pump.fun release, or a pre-sale token, the vast majority of MEME coin liquidity pools come from Raydium. The influx of MEME into the market has increased its market share, with the decentralized exchange accounting for a significant portion of the current on-chain trading volume on Solana.
In a gold rush, those who sell shovels to the speculators often reap the most rewards. This analogy also applies to the current situation. Regardless of how well MEME coins perform, the platforms that facilitate trading activity will greatly benefit from the increasing trading volume generated by the growing speculative activities. Much evidence and common sense suggest that only a few tokens will garner attention, while the rest are destined to gradually fade from view. This perspective can be corroborated or refuted by simply observing the market capitalization distribution of all existing trading pairs.
Due to the lack of effective labeling methods by data providers, it is quite challenging to distinguish memes from non-memes on a larger scale. After careful consideration, the method used to curate the comprehensive dataset is to collect information on all non-zero liquidity Raydium liquidity pools (as of November 25, 2024), excluding official token listings and legitimate projects on CoinGecko. The remaining 493,203 pools contain 474,161 unique address tokens, which will serve as the basis for the analysis in this section.
Most tokens tend to fall within the $100,000 to $10,000 range at any point during their lifetime, even with minimal activity, forming distinct peaks in the early and middle stages. Clearly, the chart exhibits a gradually smoothing tail - highlighting the few tokens with high valuations, which is to be expected, as maintaining a moderate market capitalization in such an attention-driven environment is challenging. While this example includes the entire dataset, it is also worth exploring the potential structural distribution differences between tokens originating from pump.fun and those directly deployed to Raydium.
Examining them separately can provide important insights into the overall distribution patterns and their respective performances, revealing unique characteristics.
pump.fun
Note that pump.fun tokens require a market value threshold to obtain a liquidity pool, and since they provide more liquidity upon issuance, their values are typically higher, often in the $5,000 to $15,000 range. This suggests that most launched tokens are unable to maintain or exceed the market value prior to migration to Raydium. These tokens also have a significant density in the mid-range (hundreds of thousands to a few million), as the deployment pipeline filters out uninteresting MEME to some extent and allows the community to leverage the reputation or traction gained on the platform as a growth catalyst.
Direct Deployment
In the lower market value range, there is still a noticeable density, indicating that many smaller, less desirable tokens struggle to gain significant traction. This may be due to saturation, poor timing of their introduction to the market, or a clear lack of narrative, originality, and proper promotion. While not very apparent, the density of extremely high-value MEME tokens listed on multiple centralized exchanges is more concentrated, as these MEME had already emerged before the advent of pump.fun.
The aggregation around the lower-value tokens in our dataset corroborates the above points. While the exhaustion of trends and the inevitable bursting of speculative bubbles pose significant hurdles for any token, the misalignment of incentives has largely contributed to the sudden collapse and subsequent demise of many MEME. Anonymous scammers have misled their users, while so-called "developers" with ulterior motives have made blatant fraud a norm in the field, leading to the immediate demise of many seemingly promising concepts. Upon closer inspection, a large portion of the tokens have been deliberately set up for failure, with the sole purpose of extracting maximum value from the unsuspecting speculators, which remains an ongoing threat to those brave enough to take a seat at the table.
In the past 30 days alone, nearly two-thirds of tokens have been slaughtered within the first 24 hours, with over 90% of available liquidity evaporating. In the nascent stage, it is often impossible to recover from such disastrous events, but occasionally, disgruntled token holders will attempt a community takeover by creating new social media accounts, trying to regain the lost momentum, and in some cases, restarting out of stubbornness or resentment. The result is predictable, but if done well, it may provide supporters with a decent exit.
4. Conclusion
The landscape of meme coins on Solana is unpredictable and dynamic, a mix of boundless creativity, rampant speculation, and ever-present risk. Platforms like pump.fun and Raydium have become the center of this thriving ecosystem, offering both opportunities and challenges for participants. While some prominent tokens have risen quickly, igniting dreams of overnight success, the sobering reality is that most meme coins fail to maintain their initial momentum, leaving behind a trail of shattered hopes. As this speculative frenzy continues to unfold, one thing remains clear: in a world where viral propagation often outweighs facts, a cautious approach and thorough investigation are crucial. Whether you are a curious bystander or an active participant, navigating these niche markets requires a keen eye for trends and a steadfast skepticism towards promises of easy wealth.
