The market size and attention in the meme coin space show a sustained growth trend, with no apparent signs of stagnation. Undoubtedly, this makes it the fastest 'racehorse' on the field.
The emergence of this phenomenon can be attributed to several factors:
Social media-driven virality
Extremely low barriers to entry
Continuously emerging new narratives that attract ongoing attention from speculators
Nonetheless, many (if not most) of the narratives within these stories struggle to maintain genuine attention over extended periods. Market participants have become accustomed to this, frequently switching between trends with short-term high returns while remaining more loyal to thoughtfully considered investments with stronger durability. While some may not want to admit it, in the current environment, the possibility of a meme coin that has existed for some time and has been fully tested by the market going to zero is much lower than people's expectations for these assets, which are purely driven by hype and lack real utility.
Although Solana may not be the sole contributor to the massive total market cap of these tokens, most of the activity in the meme coin space indeed occurs in the 'trenches' of its on-chain ecosystem. Therefore, this article will focus on Solana and explore the landscape of this field from a more macro perspective.
Respect 'Pump'
Since the inception of the Pump.fun platform, the native meme coin incubation ecosystem of Solana has significantly changed the dynamics of the local market. Interactions with speculative tokens have become simpler, cheaper, and more reliable than ever, while also enhancing security. Through a user-friendly interface, the platform has achieved standardized token deployment in a controlled environment, allowing anyone to create new tokens based on common configurations, eliminating potential risks caused by malicious actors hiding vulnerabilities in smart contracts. This process requires almost nothing more than some creative input from the creator, without any technical skills. All complexities are shielded, naturally directing users' attention to what really matters—massive speculative gambling.
When a tokenized meme is generated, it is traded directly on the platform's internal market. Once its market cap reaches approximately $69,000, it will be automatically deployed to Raydium. However, most tokens fail to reach this threshold and remain unable to 'break out of the circle'.
Out of about every hundred tokens, only one can graduate from Pump.fun's 'Academy'. This phenomenon arises from reasons such as high market saturation and limited liquidity (beyond the scope of this article). To stand out in a competitive environment, participants must present interesting, shocking, or unique content to capture the attention of these 'trench warriors'. Nevertheless, the Pump.fun protocol has quickly established its status as a practical gateway for micro-cap token trading and new token issuance, swiftly surpassing other platforms in the field.
As of now, the platform's market share in token deployment has reached an astonishing 71.9%, showcasing its wide popularity and far-reaching influence. Recent developments have further pushed it into the mainstream, such as attracting a large number of new users through TikTok, who harbor the ambition of 'getting rich overnight', adding more fuel to the entire market.
All roads lead to Raydium
Whether it is tokens released discreetly, those launched on the Pump.fun platform, or pre-sale tokens, the vast majority of meme coins' liquidity pools are concentrated on Raydium. The influx of meme coins into the market has significantly increased Raydium's market share, making it an important component of Solana's current on-chain trading volume.
In a gold rush, those selling shovels often make the most profit. This metaphor also applies to the topic discussed in this article. Regardless of the performance of meme coins, the platforms facilitating trading activities will benefit significantly from the increased trading volume brought by speculation. Based on common sense and some anecdotal evidence, only a few tokens can stand out, while most are doomed to fade into obscurity. This viewpoint can be validated or refuted by observing the market cap distribution of all existing trading pairs.
Distinguishing between meme coins and non-meme coins over a broader range is somewhat difficult, as data providers lack efficient labeling mechanisms. After careful consideration, the approach taken for this data organization is to collect all liquidity pool information on Raydium as of November 25, 2024, filtering out non-zero liquidity pools and excluding official token lists and legitimate projects listed on CoinGecko. The remaining 493,203 liquidity pools cover 474,161 unique tokens, and this data will serve as the basis for the analysis in this section.
Among these tokens, the majority, even if they experience some trading volatility during their lifecycle, generally have market caps concentrated in the range of $100 to $10,000, with significant peaks forming at mid to low thousands. This indicates that the data presents a clearly right-skewed distribution, where the tail gradually smooths down, representing a lower number of tokens with higher market caps. This is not surprising, as maintaining a moderate market cap is a challenge in a market that heavily relies on attention.
Although the above examples encompass the entire dataset, it is also meaningful to delve deeper into the structural differences in distribution between tokens generated by Pump.fun and those directly deployed to Raydium.
Analyzing the two separately not only provides insights into the overall distribution patterns but also helps understand their respective performances while revealing some unique characteristics.
Pump.fun
As tokens on the Pump.fun platform need to reach a certain market cap threshold to gain liquidity pool support, these tokens are often assigned higher valuations at launch due to greater liquidity, with market caps typically concentrated in the range of $5,000 to $15,000. However, most successfully graduated tokens struggle to maintain or exceed this valuation after migrating to Raydium. These tokens are also more commonly found in the mid to high market cap range (hundreds of thousands to low millions), as the platform's deployment process filters out less attractive meme coins while allowing the community to leverage the visibility or hype gained on the platform as a catalyst for growth.
Direct deployment
In the lower market cap range, directly deployed tokens are significantly dense, indicating that many smaller, less popular tokens struggle to gain significant attention. This may be partly due to the market saturation, the timing of these tokens' releases, or a lack of effective narratives, originality, and promotion capabilities on Twitter. Although less obvious, in the higher market cap range, there are more meme coins listed by multiple centralized exchanges that were created well before the emergence of the Pump.fun platform.
The continued accumulation of tokens in the dataset around lower valuations confirms the previously mentioned point: trend exhaustion and the bursting of speculative bubbles are significant obstacles that meme coins universally face, while incentive misalignment greatly accelerates the instant collapse and subsequent death of many tokens.
In the meme coin space, the phenomenon where pseudo-anonymous scammers mislead audiences and 'developers' with malicious motives face almost no consequences has led to blatant fraud being gradually normalized, causing many seemingly promising concepts to fail right from the start. A closer observation reveals that many tokens are deliberately designed as tools to extract maximum value from short-term speculators, posing a continuous threat to brave investors.
In just the past 30 days, nearly two-thirds of tokens have been 'slaughtered' within 24 hours of launch, with over 90% of liquidity evaporating. In the early stages of such catastrophic events, it is nearly impossible for tokens to recover. However, occasionally, angry holders attempt to revive the tokens through community takeovers. They may create new social media accounts out of stubbornness or even revenge to restart. While the outcomes usually align with expectations (failure), if executed properly, supporters may find decent exit opportunities.
Conclusion
The meme coin ecosystem on Solana is both vibrant and extremely unpredictable, showcasing limitless creativity, crazy speculation, and risks that can be exploited at any moment. Platforms like Pump.fun and Raydium have become the core of this thriving ecosystem, providing opportunities for participants while also presenting numerous challenges.
While a few standout tokens rise rapidly, igniting the dream of 'getting rich overnight', the sobering reality is that most meme coins cannot sustain their initial hype, leaving behind a trail of broken hopes. As this speculative frenzy continues to evolve, one thing is clear: in a world where hype often outweighs substance, due diligence and caution are crucial.
Whether you're a curious bystander or an active participant, establishing a foothold in this niche market requires not only a keen eye for capturing trends but also a persistent skepticism towards the promise of 'easy wealth'.
