Author: hyphin, On Chain Times Author
Translated by: xiaozou, Golden Finance
1. Introduction
Since our last meme coin article (in March this year), the total market size and market share of the industry have been continuously growing, showing no apparent signs of stagnation. There is no doubt that it is the fastest horse on the track.
This phenomenon can be attributed to the viral spread of social media (its inherent characteristics), extremely low entry barriers, and the constant emergence of fresh narratives that attract speculators, although many (if not most) fail to maintain meaningful attention in the long term. Nonetheless, market participants have become accustomed to this, often entering and exiting profitable short-term trends, leveraging momentum for gains while maintaining loyalty to high-confidence bets, making them more enduring. Although some may be reluctant to admit it, in the current market environment, the likelihood of long-standing memes that have been thoroughly vetted by the market disappearing is lower than those assets that rely solely on impression-driven value, providing no substantive worth (limited to capital transfer).
While Solana may not be the sole contributor to the total market cap of these massive tokens, a significant portion of activity in the field does indeed occur within its chain ecosystem trenches. For this reason, this article will continue to focus on that chain, attempting to provide a global picture.
2. Tribute to Pump
With the emergence of pump.fun (a native token incubation platform on Solana), significant changes in local market dynamics have occurred. Interacting with speculative tokens has become easier, cheaper, and safer (from a security standpoint). Through a user-friendly interface, standardized token deployments are conducted in a controlled environment, allowing anyone to create new tokens based on common configurations, thus eliminating the risk of potential malicious actors hidden in smart contracts. This essentially requires the deployer to provide some creative input without any technical knowledge. By abstracting away all complexities, the focus is placed on what truly matters—massive speculation.
Once a tokenized meme is created, it can be traded directly on the platform's internal market, and once its market cap reaches about $69,000, it will automatically deploy to Raydium. However, most creations fail to reach this threshold and are never launched into the market.
About one in every 100 tokens 'graduates' from pump.fun, due to significant saturation, limited liquidity, and other reasons beyond the scope of this article. Those who step into the ring must showcase something interesting and shockingly unique to grab the attention of the warriors in the trenches. Despite these challenges, the protocol quickly established itself as the legitimate gateway for trading micro-cap tokens and launching new tokens, swiftly surpassing all other competitors in the field.
So far, the dominant advantage of deployment compared to other alternatives has reached an astonishing 71.9%, demonstrating the widespread popularity and far-reaching influence of the application. Recent momentum has rapidly made it mainstream, with many new users from TikTok joining in, ambitiously wanting to scale it up and fan the flames even more.
3. All roads lead to Raydium
Whether through secret releases, pump.fun releases, or presale tokens, the vast majority of meme coin liquidity pools come from Raydium. The influx of a large number of memes into the market increases its market share, with decentralized exchanges accounting for a significant portion of Solana's current on-chain trading volume.
In a gold rush, those selling shovels to speculators often reap the most rewards. This analogy also applies to the current situation. Regardless of how well meme coins perform, platforms facilitating trading activities will greatly benefit from the increased trading volumes generated by the growing speculation. Many things and common sense indicate that only a few tokens garner attention while the rest are destined to fade away gradually. This perspective can be confirmed or refuted simply by observing the market cap distribution of all existing trading pairs.
Due to the lack of effective tagging methods among data providers, distinguishing between memes and non-memes on a larger scale is quite challenging. After careful consideration, the method used to compile the comprehensive dataset involved collecting information from all Raydium liquidity pools with non-zero liquidity (as of November 25, 2024), excluding official token lists and legitimate projects from CoinGecko. The remaining 493,203 pools contain 474,161 unique address tokens, which will serve as the basis for this section's analysis.
Most tokens, at any moment during their lifespan, even with very minimal activity, often fall within the range of $100,000 to $1 million, forming noticeable peaks in the early and mid-stages. It's evident that the chart forms a gradually smoothing downward tail—highlighting a few tokens with high valuations, which is expected since maintaining a moderate market cap in such an attention-driven environment is challenging. While this example encompasses the entire dataset, it's also worth exploring the potential structural distribution differences between tokens sourced from pump.fun and those directly deployed to Raydium.
When viewed separately, both can provide important insights into the overall distribution's distinct patterns and their respective performances, showcasing unique characteristics.
(1) pump.fun
Please note that pump.fun tokens require a market cap threshold to gain access to the liquidity pool; they typically hold higher value due to the more substantial liquidity provided at issuance, often ranging from $5,000 to $15,000. This indicates that most released tokens fail to maintain or exceed the market cap prior to migrating to Raydium. Many of these tokens also find themselves in mid-range values (hundreds of thousands to a few million) because the deployment pipeline somewhat filters out unappealing memes, allowing the community to leverage the reputation or traction gained on the platform as a growth catalyst.
(2) Direct deployment
In the lower market cap bandwidth, there remains a significant density, indicating that many smaller, less ideal tokens struggle to gain significant traction. Part of the reason may be due to saturation, the timing of these tokens being introduced to the market being poor, or a noticeable lack of narrative, originality, and proper promotion. Although not obvious, the extremely high market cap memes listed on multiple centralized exchanges show a more concentrated density, and these memes had emerged long before pump.fun appeared.
In our dataset, the aggregation around lower market cap tokens confirms the above perspective. While trend exhaustion and the inevitable bursting of speculative bubbles pose significant obstacles for any token, inconsistent incentives have largely led to many meme moments collapsing and subsequent disappearances. Anonymous scammers misled their users, while those self-serving so-called 'developers' normalized blatant fraud in the field, causing many seemingly promising concepts to be stillborn shortly after their birth. Upon close examination, it was found that a large portion of tokens were deliberately set up for failure, aiming to extract maximum value from unsuspecting speculators, which remains a persistent threat to those who bravely sit at the table and take risks.
In just the past 30 days, nearly two-thirds of tokens were slaughtered within the initial 24 hours, with over 90% of available liquidity evaporating. Recovering from such catastrophic events during the birth phase is often impossible, but occasionally, disgruntled token holders attempt community takeovers by creating new social media accounts, trying to regain lost momentum and, in some cases, restarting out of stubbornness or resentment. The outcomes of such actions are predictable, but if done well, they might provide supporters with a decent exit.
4. Conclusion
The meme coin landscape on Solana is both unpredictable and vibrant, comprised of limitless creativity, rampant speculation, and ever-present risks. Platforms like pump.fun and Raydium have become the center of this thriving ecosystem, providing opportunities and challenges for participants. While some prominent tokens have rapidly risen, igniting dreams of overnight fame, the sobering reality is that most meme coins fail to sustain their initial momentum, leaving behind a trail of shattered hopes. As this speculative frenzy continues to develop, one thing has remained clear: in a world where viral spread often outweighs facts, a cautious approach and thorough investigation are crucial. Whether you're a curious bystander or an active participant, navigating the niche market requires both a keen eye for trend judgment and a steadfast skepticism towards promises of easy wealth.
