This has never been a flash in the pan; the meme supercycle has arrived. We are being escorted to the land of dreams. In the new paradigm, there are no pullbacks.
— All those predicting meme coin prices on Twitter
Introduction
Since our last discussion on meme coins in March this year, both the total market size and attention in this field have shown a continuous growth trend, with no obvious signs of stagnation. Undoubtedly, this makes it the fastest 'racehorse' on the field.
The emergence of this phenomenon can be attributed to several factors:
Viral dissemination driven by social media
Extremely low barriers to participation
New narratives continuously emerge, attracting the ongoing attention of speculators.
Nevertheless, many (if not most) of these narratives struggle to maintain genuine attention over a longer period. Market participants have become accustomed to this, frequently switching between trends that offer high short-term returns while remaining more loyal to high-conviction investments that are well thought out and possess stronger persistence. Although some may be reluctant to admit, the likelihood of a meme coin that has existed for a while and has been thoroughly vetted by the market going to zero is much lower than the expectations for these purely hype-driven and practically useless assets.
While Solana may not be the sole contributor to the enormous total market capitalization of these tokens, most of the activity in the meme coin space indeed occurs within the 'trenches' of its chain ecosystem. Therefore, this article will focus on Solana, exploring the landscape of this field from a more macro perspective.
Respect the '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. Interacting with speculative tokens has become simpler, cheaper, and more reliable than ever before. Through a user-friendly interface, the platform has achieved standardized token deployment in a controlled environment, allowing anyone to create new tokens based on general configurations, eliminating potential risks caused by malicious actors hiding vulnerabilities in smart contracts. This process only requires creators to provide some creative input, with no technical skills needed. All complexity is shielded, and users' attention naturally focuses on what truly matters—mass speculation gambling.
Once a tokenized meme is generated, it will be traded directly in the platform's internal market. Once its market value reaches approximately $69,000, it will automatically be deployed to Raydium. However, most tokens do not reach this threshold and remain unable to 'break out of the circle.'
Of approximately every hundred tokens, only one can graduate from the Pump.fun 'academy.' This phenomenon stems from reasons such as the high saturation of the market and limited liquidity (beyond the scope of this article). To stand out in a competitive environment, participants must present certain intriguing, shocking, or unique content to capture the attention of these 'trench warriors.' Nevertheless, the Pump.fun protocol established its status as a practical portal for micro-cap token trading and new token issuance without spending much time, quickly surpassing other platforms in this field.
As of now, the platform's market share in token deployment has reached an astonishing 71.9%, demonstrating its widespread popularity and far-reaching influence. Recent developments have further propelled it into the mainstream, such as attracting a large number of new users through TikTok, with these new users harboring ambitions of 'getting rich overnight,' adding more fuel to the entire market.
All roads lead to Raydium
Whether it is tokens released discreetly, tokens launched on the Pump.fun platform, or presale tokens, the vast majority of meme coins' liquidity pools are concentrated on Raydium. The phenomenon of a large influx of meme coins into the market has significantly increased Raydium's market share, becoming an important component of the current on-chain trading volume on Solana.
In a gold rush, those selling shovels usually make the most money. This metaphor also applies to the topic discussed in this article. Regardless of how meme coins perform, the platforms facilitating trading activities will significantly benefit from the increased trading volume brought about 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 perspective can be verified or refuted by observing the market capitalization distribution of all existing trading pairs.
It is somewhat difficult to distinguish meme coins from non-meme coins across a broader range due to the lack of efficient labeling mechanisms from data providers. After careful consideration, the approach taken for this data organization is to collect all liquidity pool information on Raydium as of November 25, 2024, filter out non-zero liquidity pools, and exclude official token lists and legitimate projects listed on CoinGecko. The remaining 493,203 liquidity pools encompass 474,161 unique tokens, which will serve as the basis for analysis in this section.
Among these tokens, most, even if they experience some trading fluctuations during their lifecycle, typically have their market caps concentrated in the $100 to $10,000 range, with significant peaks formed at several thousand dollars. This indicates that the data presents a clear right-skewed distribution, with a gradually smoothing tail that represents a smaller number of tokens with higher market caps. This situation 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 into the structural differences in distribution between tokens generated by Pump.fun and those directly deployed to Raydium.
By analyzing the two separately, we can not only gain insights into the overall distribution patterns but also understand their individual performances, while revealing some unique characteristics.
Pump.fun
Since the tokens on the Pump.fun platform need to reach a certain market value threshold to gain liquidity pool support, these tokens are usually assigned a higher valuation upon launch due to greater liquidity, with market caps mostly concentrated in the $5,000 to $15,000 range. However, most successful graduated tokens struggle to maintain or exceed this valuation after migrating to Raydium. These tokens are also more common in the mid to high market cap range (hundreds of thousands to low millions of dollars) because the platform's deployment process screens out less attractive memes while allowing the community to leverage the fame or hype gained on the platform as a growth catalyst.
Direct Deployment
In the lower market capitalization range, directly deployed tokens are significantly dense, indicating that many smaller, less popular tokens struggle to gain significant attention. This may partly be attributed to the saturated state of the market, the timing of these tokens' release, or a lack of effective narrative, originality, and promotion on Twitter. Although less apparent, in the higher market capitalization range, there are more meme coins listed on multiple centralized exchanges, many of which were created long before the Pump.fun platform came into existence.
The ongoing accumulation of tokens around lower valuations in the dataset confirms the previously mentioned viewpoint: trend exhaustion and speculative bubble bursts are significant obstacles faced by meme coins, while incentive misalignment greatly accelerates the instantaneous collapse and subsequent death of many tokens.
In the meme coin space, pseudonymous scammers mislead audiences and 'developers' with malicious motives face almost no consequences, leading to blatant fraud gradually being regarded as the norm, causing many seemingly promising concepts to fail right from their inception. Upon closer observation, it can be found that many tokens are deliberately designed as tools to extract maximum value from short-term speculators, posing a continued threat to daring investors.
In just the past 30 days, nearly two-thirds of tokens have been 'massacred' within 24 hours of their launch, with over 90% of liquidity evaporating. During the early stages of such catastrophic events, it is almost impossible for a token to recover. However, occasionally, angry holders attempt to revive tokens through community takeovers. They may create new social media accounts out of stubbornness or even revenge, starting over again. Although the outcome usually aligns with expectations (failure), if done properly, supporters may gain a decent exit opportunity.
Conclusion
The meme coin ecosystem on Solana is both vibrant and extremely unpredictable, showcasing boundless creativity, frenzied 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 dreams of 'getting rich overnight,' the sobering reality is that most meme coins cannot sustain their initial hype, leaving behind a shattered hope. 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 are a curious bystander or an active participant wanting to establish yourself in this niche market, you need not only a keen eye for spotting trends but also a persistent skepticism towards the promise of 'easy wealth.'
