Here I will share some of my investment insights and recommend some investment targets that can return dozens of times.
Due to the convenience and low barriers to entry, trading and creating custom tokens are easier than ever before. Coupled with social media and a growing retail investor base, the proliferation of tokens that offer no utility has greatly accelerated, relying solely on loyal communities and aggressive marketing to sustain their growth.
introduce
Internet culture and memes have long been a big part of the cryptocurrency space. This is evidenced by the massive market cap of Memecoin, which is valued at around $66.65 billion at the time of writing. Dogecoin accounts for around 43.81% of the entire category, with a valuation higher than some well-known names such as Vodafone, Pinterest, and Logitech.
For a long time, the central hub for Memecoin has been Ethereum, until recently when a few competitors emerged. The activity associated with these tokens has changed, with Solana becoming an active location for projects and speculators entering the market.
A big contributor to Solana’s expansion and surge in transaction volume is its vibrant on-chain Memecoin ecosystem, which has gained a lot of attention this year, with names like “dog wif hat” and “Bonk” becoming popular and prices soaring.
While we do not endorse Memecoin transactions, it is still beneficial to understand what is happening in this market that is gaining ground and fame.
At first glance, it may be difficult to discern the reasons behind seemingly nonsensical price behavior, but with a closer look, there may be some clues. Therefore, in this article, we will take a broad overview of the entire Memecoin space, looking at every nook and cranny to try to figure out what is going on.
Overview
Before we proceed to the analysis, it is best to set the scene and familiarize ourselves with the environment and its characteristics, as there is little rationality behind the whole thing and it needs to be viewed with an open mind.
Every space develops its own unique culture, and Solana is no exception. Since the start of the Solana season, stories of missing out on life-changing fortunes and overnight success have been repeated on Twitter. Realizing that a potentially huge opportunity is coming, many people from all backgrounds have entered this space in search of good fortune.
One of the main features of Memecoin on Solana is the sheer number of tokens being created every day.
Since the cost of launching a Memecoin is extremely low, a large number of new trading pairs are listed on decentralized exchanges every day. This makes it a fast-paced field. Most new trading pairs have low liquidity, resulting in high price fluctuations. The average lifespan of a project is often 24 hours or even less, mainly because bad actors try to take advantage of the craze and deceive ambitious and unsuspecting investors through elaborate scams and marketing.
If you spend enough time in Telegram groups, and review and sift through hashtags on Twitter, you can map most of the participants to specific roles that are critical to the field.
Developers: Developers are hailed as gods, and they are seen as shepherds who can lead the community to financial freedom. Their decisions often influence early price trends and determine the life of the project because, as creators, they have full control over Memecoin fundamentals and they usually hold a considerable amount of token supply.
Influencers: Influencers use their influence on social media to share their personal investments to raise awareness of projects with different motivations. Some of them hope to strengthen the community by increasing social proof, and some simply seek to exit liquidity to profit.
Community members: extremely loyal and willing to do whatever it takes. These people frequently appear in chat groups, interact with others, and tirelessly promote their investments under the posts of popular figures whose attention can determine the success or failure of a project.
Snipers: By automating on-chain interactions and indiscriminately buying tokens as soon as a liquidity pool is created and opened for trading, holders of these wallets hope to take advantage of the upward momentum generated by regular traders buying after them. In most cases, they do not hold for the long term, but sell early to take profits as there are many opportunities like this.
Remember, this all happens in a ruthless gaming environment. To stay competitive, we have developed a large number of trading tools with useful analytical features to speed up decision making and execution. Services such as Photon and BonkBot are favored by most traders.
Characteristics of a successful Memecoin
In the vast sea of tokens, only a few have been able to sustain high valuations for long periods of time and have close-knit communities. This means there must be some quantifiable factors that contribute to their success.
Having a solid due diligence framework in place will make the process of screening watchlists easier and save time. This begs the question: what valuable information can we use to conduct effective analysis on these unpredictable tokens?
Using historical data, we can try to identify common patterns and indicators that can give us a measure of a project’s potential. For example, by analyzing the top 50 Memecoins, we can get a rough idea of what attributes outperformers possess.
trend
Since the entire Memecoin space is largely trend and narrative driven, it pays to be mindful of which categories or themes are currently popular to avoid getting on a sinking ship.
By visually presenting hot topics with a vocabulary map, you can easily see the current hot trends.
As can be seen, animal-themed tokens are the most popular, with cats being the most popular sub-theme. The second largest sub-theme in the graph is “Internet culture”, which usually includes crypto Twitter and mainstream memes.
An interesting detail about the above graph is the keyword “copy”, which includes projects that are derivatives of the original concept and have their own unique twists. They keep popping up, providing a second chance for those who missed out on the previous project.
index
Once you’ve narrowed down the potential categories, it’s time to evaluate some technical details.
Percentage of projects with Mint authorization disabled: 100%
Each project should prohibit minting additional tokens to avoid unlimited selling pressure. In our observation group, all projects have disabled this setting.
LP burn percentage: average — 78.7%, median — 98.0%
The LP tokens that deployers receive when adding initial liquidity are destroyed, which reduces the risk of creators withdrawing liquidity. The median percentage here shows that typically most of the initial LPs are destroyed.
Percentage of tokens held by the top 10 wallets: Average — 27.51%, Median — 21.79%
In most cases, the top token holders hold around 20% and vary from project to project. The lower the percentage, the lower the chance that a few people can cause damage through a massive sell-off.
Days since trading started: Mean — 23.52, Median — 6.66
Since most memecoins have a lifespan of only a few days, an age of over 100 hours is usually a good indicator. The fact that the average age of the top 50 memecoins is just under a week is an indication of how fast the market changes. However, the top memecoins tend to remain relatively stable and hold their own in terms of leaderboard rankings.
Community
The hardest, yet most critical aspect is probably the cornerstone of every Memecoin - the community. An active, vocal community with its own unique culture is essential to spread the message and attract new members to fuel its growth in an extremely saturated market.
In order to first stimulate discussion and market themselves at an early stage, projects need to be present on media platforms (such as websites, Twitter, Telegram, and Discord) to gain verifiable credibility and maximum impact.
Number of media platforms per project:
1 platform — 2%
2 platforms — 10%
3 platforms — 78%
4 platforms — 10%
We observed that more than two-thirds of Memecoins had at least 3 marketing channels, so the lack of Telegram and Twitter chat features should immediately raise red flags.
Using these channels, we can survey the community to look for positive indicators, which are typically (but not limited to):
Don’t fight among yourselves: People constantly bickering in group chats or on Twitter is not good for your project’s image and may put investors off. Positive emotions and healthy discussions are more appealing to investors.
A strong Twitter presence: Having a well-known brand on Twitter with distinguishable characteristics (e.g. inside jokes) is a necessity to maximize the chances of the brand being memorable, recognizable, and going viral, thereby attracting as much attention as possible.
Respected influencers: Having the backing of a reputable social media personality is a huge plus, while notorious influencers with a tendency to pump and dump should be avoided.
Final Assessment
The final stage of the analysis will bring together all of our thoughts and observations using an evaluation matrix to draw conclusions. Each person should form their own approach based on personal parameters and risk tolerance. In this section, we will use an in-house solution provided to us by On Chain Times’ quantitative analysts.
If you’re wondering why the “Red Flags” axis starts at 4, the answer is: there simply are no Memecoins on Solana that don’t have red flags. By building a ratio between the community ranking and the number of negatives present, we can loosely assign each coin to a category.
The goal should always be to identify and interact with Memecoins that have high community ratings and the fewest warning signs, as they have a greater chance of success.
However, there are some general observations that should be considered when trying to categorize items:
Community takeover: In some cases, the developers of a promising and popular concept decide to exit the project by selling all of its tokens, and in response, the community creates new communication channels, essentially restarting the project without the risk of developer shenanigans.
Influencer resurgence: This is hard to predict, but there are extreme cases where a dead project gets a second chance and receives widespread attention due to the involvement of a popular creator.
Sniper Exits: Early exits by snipers often leave a stain on the leaderboard for the project, and they can increase their chances of marketing on social media because they are less likely to offset community efforts through huge sales pressure, which can easily scare people away.
Finding gemstones is a difficult task, but as history has proven, they do exist and occasionally appear on our radar.
in conclusion
Memecoin has become too important to ignore, and despite its somewhat ridiculous nature, it is here to stay. Even with no intention of getting involved, it would be a grave mistake for any informed cryptocurrency investor to ignore an important area of the market. With the knowledge gained from this article, hopefully you won’t feel like you’re stumbling around in the dark and grasping at straws as you navigate the world of tradable memes.
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