Author: hyphin, On Chain Times Author
Compiled by: xiaozou, Golden Finance
1. Introduction
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, showing no signs of significant 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), extremely low entry barriers, and the continuous emergence of fresh narratives that attract speculators, although many (if not most) fail to maintain meaningful attention over the long term. Nevertheless, market participants have grown accustomed to this, frequently entering and exiting profitable short-term trends, leveraging momentum for gains while maintaining loyalty to high-conviction bets, making them more durable. Although some may be reluctant to admit it, in the current market environment, the likelihood of demise for long-established memes, which have been thoroughly vetted by the market, is lower than that of assets that rely solely on impression-driven factors without providing any substantial value (limited to capital transfer).
While Solana may not be the sole contributor to the total market cap of these massive tokens, most of the activity in the field indeed occurs within its on-chain ecosystem trenches. For this reason, this article will continue to focus on this chain, attempting to provide a global picture.
2. Tribute to Pump
With the emergence of pump.fun (a Solana native token incubation platform), the local market dynamics have undergone a significant shift. Interacting with speculative tokens has become simpler, cheaper, and safer (from a security standpoint). Through a user-friendly interface, standardized token deployment can occur in a controlled environment, allowing anyone to create new tokens based on generic configurations, thus eliminating the risk of potential malicious actors hidden within smart contracts. This practically only requires the deployer to provide some creative input, without any technical knowledge. By abstracting all complexities, the focus shifts to what truly matters—mass speculation.
Once a tokenized meme is created, it can be directly traded on the platform's internal market, and once its market cap reaches approximately $69,000, it will be automatically deployed to Raydium. However, most creations fail to reach this threshold and are never launched onto the market.
About one in every 100 tokens 'graduates' from pump.fun, due to massive saturation, limited liquidity, and other reasons beyond the scope of this article. Those who step into the arena must showcase something interesting, shocking, and unique to capture the attention of the warriors in the trenches. Despite these difficulties, the protocol has swiftly established itself as a bona fide gateway for trading micro-cap tokens and launching new tokens, quickly surpassing all other competitors in the space.
So far, the deployment dominance compared to other alternatives has reached an astonishing 71.9%, demonstrating the widespread popularity and far-reaching impact of this application. Recent momentum has quickly made it mainstream, with many new users from TikTok joining in, ambitiously aiming to scale it up and stoke the fire further.
3. All Roads Lead to Raydium
Whether secret releases, pump.fun releases, or presale tokens, the vast majority of meme coin liquidity pools come from Raydium. The influx of numerous memes into the market increases their market share, with decentralized exchanges accounting for a significant portion of the current on-chain trading volume on Solana.
In the 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, the platforms facilitating trading activities will benefit immensely from the trading volume generated by increasing speculative activities. Many things and common sense suggest that only a few tokens garner attention, while the rest are destined to gradually fade from public view. 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 by data providers, distinguishing between memes and non-memes on a larger scale is quite challenging. After careful consideration, the method used to curate the comprehensive dataset is to collect information on all Raydium liquidity pools with non-zero liquidity (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 this part of the analysis.
Most tokens at any point during their lifespan, even with very little activity, often range from $100,000 to $10,000, forming noticeable peaks in the early and mid-stages. It is evident that the chart forms a gradually smoothing tail—highlighting a few tokens with high valuations, which is expected given the challenges of maintaining a moderate market cap in such an attention-driven environment. While this example encompasses the entire dataset, it is also worthwhile to explore potential structural distribution differences between tokens originating from pump.fun and those directly deployed to Raydium.
Separately examining both can provide important insights into the overall distribution's distinct patterns, as well as their respective performances, showcasing unique characteristics.
(1) pump.fun
Please note that pump.fun tokens require exceeding a certain market cap threshold to gain liquidity pools, and since more liquidity is provided at issuance, their value is usually higher, often in the range of $5,000 to $15,000. This indicates that most released tokens cannot maintain or exceed their market cap before migrating to Raydium. Many of these tokens also fall within a mid-range (hundreds of thousands to low millions), as the deployment pipeline somewhat filters out unappealing memes and allows the community to leverage the reputation or traction gained in this process as a growth catalyst.
(2) Direct Deployment
In the lower market capitalization bands, there remains a significant density, indicating that many smaller, less desirable tokens struggle to gain substantial traction. Part of the reason may be due to saturation, the poor timing of these tokens entering the market, or a clear lack of narrative, originality, and appropriate promotion. Although not immediately apparent, the extremely high market cap meme density listed on multiple centralized exchanges is more concentrated, as these memes existed long before pump.fun appeared.
In our dataset, the aggregation around lower market cap tokens confirms the aforementioned points. While trend exhaustion and the inevitable bursting of speculative bubbles pose significant obstacles for any token, inconsistent incentives have largely contributed to the sudden collapses and subsequent demises of many memes. Anonymous scammers mislead their users, while those with ulterior motives, so-called 'developers,' have normalized outright fraud in the field, leading many seemingly promising concepts to be stillborn shortly after their birth. Upon closer inspection, a considerable portion of tokens has been deliberately set up for failure, aimed at extracting maximum value from unsuspecting speculators, posing an ongoing threat to those brave enough to take risks at the table.
In just the past 30 days, nearly two-thirds of tokens were slaughtered within the first 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 results of this endeavor are predictable, but if done well, it can provide supporters with a decent exit.
4. Conclusion
The meme coin landscape on Solana is both unpredictable and vibrant, characterized by boundless creativity, rampant speculation, and ever-present risks. Platforms like pump.fun and Raydium have become the focal points of this thriving ecosystem, offering participants opportunities and challenges. While some standout tokens rapidly rise, igniting dreams of overnight fame, the sobering reality is that most meme coins fail to maintain their initial momentum, leaving behind a series 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 research are crucial. Whether you are a curious bystander or an active participant, navigating this niche market requires both a keen eye for trend judgment and a firm skepticism towards the promise of easy wealth.
