Memecoin can bring huge profits, but it also comes with a lot of risks. Here are some suggestions for risk-averse investors looking for the next DOGE, SHIBA, PEPE Memecoin.
Memecoin’s explosive growth
Memecoin has been getting a lot of attention lately. Memecoin's rapid growth has led to an increase in demand for network usage, which is reflected in network metrics. At its peak, demand for Memecoin exchanges caused the price of gwei to soar, and transactions became more expensive (around $30 per transaction).
At that time, this trend had a positive effect, as the amount of Ether destroyed per day increased. In the past 7 days alone, the Ethereum network has destroyed 76,459 ETH (worth $143 million). Specifically, nearly 15,000 ETH was destroyed on May 5, which is 5 times higher than in previous weeks.
Four Memecoin projects are among the top entities with the most user interactions and transactions on Ethereum in the past seven days. The first one is Pepe, with 112,000 traders in the past seven days. There are also three other projects: Turbo Toad, Bob, and Wojak Coin.
Ways to increase your chances of using Memecoin
To optimize transactions on Memecoin, here are some suggested tips.
Use tools to detect projects
In order to trade Memecoin smoothly, the best way is to discover potential trading pairs when the market capitalization is small and the project has just been deployed. To get information about new token pairs on Ethereum, users can use the bot on Telegram:
iToken: Comprehensive information about new tokens, including token address, total supply, liquidity, etc. The robot will update the contract implementation progress information, and should pay attention to the tokens that have been deployed for liquidity burning/locking.
DEXT Live New Pairs Bot: Synthesizes new token pairs on DEXTools. Early Memecoins are often listed on DEXTools (PEPE has been listed on the platform since April 14, 2023), and tracking new or popular tokens on DEX can help users find treasures. It is recommended to track tokens with the highest possible initial liquidity.
Dexscreener: This is also a fairly popular platform for investors, and is often used by investors who like to find treasures. The platform provides robots to report new trading pairs on Ethereum and many other chains. In addition, Dexscreener has a trend robot that helps users get information on tokens with surging trading volume/price
After discovering newly listed tokens, users can also search for project information, social metrics, and mentions on social networks through Lunar Crush.
Tools to Avoid Scam-Prone Memecoin Projects
There are many potential risks in buying Memecoin projects at the launch, such as rug-pull, post-launch token trading lock (Honeypot), LP drainer, too short a liquidity lock period, high taxes or hidden fees, etc. Therefore, it is very necessary to use tools to carefully check the contract.
Some tools support checking the contract before buying any Memecoin:
Honeypot Check: Check the basic functions of the contract to determine whether it is a Honeypot.
Quick Intel: Detailed analysis of contract information.
Token Sniffer: Provides security scores when auditing contracts, analyzing components such as exchanges, holders, liquidity, etc.
In addition, users can also use Bubblemaps to detect groups of linked wallets. This tool helps users find a group of wallets that interact with each other, collude to issue tokens, manipulate market prices, developer wallets, etc.
Looking for opportunities on other chains
Currently, Ethereum’s gas fees are quite high, and the network has even slowed down due to the impact of Memecoin. Therefore, users can look for opportunities in projects on other chains.
To optimize for low fees and faster transaction times, users can look for opportunities on Layer 2, such as zkSync, Arbitrum, or on new Layer 1, such as Sui, Aptos, etc. For new Layer 1, users will have fewer tools to check for fraud.
If transaction fees are not a problem for investors, the Bitcoin network with BRC-20 tokens (mainly Memecoin) may also be a new area with great potential. However, operating with BRC-20 requires users to have a longer experience.
Tracking Memecoin’s Smart Money
The growth of PEPE and several other Memecoins will help investors to spot the smart money making huge profits through Memecoin. After getting the list of these wallets, the next task is to track and find out if these wallets hold/are interested in other Memecoins.
For example, it was discovered that PEPE’s smart money - wallet 0x9bcb bought PEPE at $0.000000240 per share, with an investment of approximately $217,000, making a profit of more than $1.4 million in just two weeks.
Tracking the wallet's activities shows that this is a risk-loving user who is keen on Memecoin. In addition to PEPE, the wallet also recorded smart transactions with several other Memecoins (such as WOJAK and BOBO), making about 10 times the profit.
Using Dune's Dashboard
To detect such smart money wallets, users can use many tools to screen wallets, such as Etherscan, Debank or Nansen. In addition, Dune Analytics is a free tool with automatic wallet screening. Here are some Dune dashboards that may be helpful in finding wallets with good Memecoin returns:
Smart Address Search: Filter the list of wallets that bought and sold during a specific time period.
Shitcoin Profit: Profit analysis of wallets by token. Find wallets with low transaction count but high profits.
Token Analyzooor: Complete information about a certain token, such as detecting newly created wallets to collect tokens, high-profit or high-volume transactions on DEX...
Once you have a list of wallets, continue monitoring and setting alerts to see which wallets are showing interest in new Memecoins.
Protect your account security
In addition to focusing on making a profit with Memecoin, users also need to always keep their wallets secure when trading Memecoin. Here are some suggestions to keep your wallet secure:
Use only secondary wallet: Keep your wallet separate for Memecoin transactions.
Revoke token immediately after transaction is completed: Revoke the token immediately after completing the transaction.
Check full contract audit before trading: Check full contract audit before trading.
Don’t be greedy and accept airdrops of tokens with untested smart contracts.
While there have been no allegations related to the team/individuals behind the Memecoin project, short-term hot growth always comes with the risk of a drastic price correction in the short term.
In addition, there are risks associated with the interests of the project development team. Anonymous developers can leave the project at any time for personal purposes.
Ultimately, any investment involves a certain amount of risk. Therefore, always carefully determine your mindset and expectations before committing your money. Invest only the amount you can afford to lose.
