Author: hyphin, On Chain Times
Translation: Golden Finance xiaozou
1. Introduction
Since our last memecoin article in March, the industry’s total market size and market share have continued to grow with no clear signs of stagnation. It is undoubtedly the fastest horse on the track.
This phenomenon can be attributed to the virality of social media (its inherent nature), extremely low barriers to entry, and the constant emergence of fresh narratives that attract speculators, although many (if not most) fail to retain meaningful attention for the long term. Nevertheless, market participants have become accustomed to this, often jumping in and out of profitable short-term trends, taking advantage of momentum to gain gains, while remaining loyal to high-conviction bets and making them more durable. Although some people are reluctant to admit it, in the current market environment, long-standing memes that have been well-tested by the market are less likely to die than assets that are merely impression-driven and do not provide any substantive value (limited to money transfer).
While Solana may not be the only contributor to these massive token total market caps, the majority of activity in the space does occur within the trenches of its on-chain ecosystem. For this reason, this article will continue to focus on that chain in an attempt to provide a global picture.
2. Tribute to Pump
With the creation of pump.fun, a Solana native token incubation platform, the local market dynamics have undergone a major shift. Interacting with speculative tokens has become easier, cheaper, and safer (from a security perspective). Through a user-friendly interface, standardized token deployment in a controlled environment allows anyone to create new tokens based on common configurations, eliminating the risk of potential abuse by malicious actors hidden in smart contracts. This really only requires some creative input from the deployer, no technical knowledge required. Abstract away all the complexity to focus on what really matters - speculation at scale.
When a tokenized meme is created, it can be traded directly on the platform’s internal market and automatically deployed to Raydium once it reaches a market cap of approximately $69,000. However, most creations fail to reach this threshold and are never released to the market.
Roughly one in every 100 tokens “graduates” from pump.fun due to massive saturation and limited liquidity, among other reasons beyond the scope of this article. Those who step into the ring must present something interesting and shockingly unique to get noticed by the warriors in the trenches. Despite these difficulties, the protocol has quickly established itself as a veritable gateway for trading micro-cap tokens and launching new ones, quickly surpassing all other competitors in the space.
So far, the deployment dominance over other alternatives has reached a staggering 71.9%, demonstrating the app’s widespread popularity and far-reaching influence. The recent momentum has rapidly made it mainstream, with many new users from TikTok joining in with their ambitions to make it bigger and fuel the fire.
3. All roads lead to Raydium
Regardless of whether it is a secret release, pump.fun release or pre-sale tokens, the vast majority of meme coin liquidity pools come from Raydium. The influx of a large number of memes into the market has increased its market share, and decentralized exchanges account for a considerable proportion of Solana's current on-chain transaction volume.
In the gold rush, those who sell shovels to speculators often reap the most. This analogy applies to the situation at hand. Regardless of how well the meme coins perform, the platforms that facilitate trading activity will benefit greatly from the volume generated by increasing speculative activity. Anecdotal evidence and common sense suggest that only a few tokens gain traction, and the rest are destined to fade into obscurity. This view can be confirmed or refuted simply by looking at the market capitalization distribution of all existing trading pairs.
Distinguishing between memes and non-memes on a larger scale is quite difficult due to the lack of effective labeling methods by data providers. After careful consideration, the approach used to curate a comprehensive dataset is to collect information on all Raydium liquidity pools with non-zero liquidity (as of November 25, 2024), excluding official token lists and legitimate projects in Coingecko. The remaining 493,203 pools contain 474,161 unique address tokens and will serve as the basis for the analysis in this section.
Most tokens, with even very small amounts of activity at any one point in their life, tend to be in the $100k to $10k range, with clear peaks in the early and mid-terms. It is clear that a gradually smoothing downward tail has formed in the chart - highlighting a small number of tokens with high valuations, which is expected as it is challenging to maintain a modest market cap in such an attention environment. While this example encompasses the entire dataset, it is also worth exploring potential structural distribution differences between tokens originating from pump.fun and those deployed directly to Raydium.
Looking at the two separately can provide important insights into the apparent patterns of the overall distribution, as well as how they each perform and exhibit unique characteristics.
pump.fun
Note that pump.fun tokens need to exceed a certain market cap threshold to get access to the liquidity pool, and since more liquidity is provided at launch, their value is usually higher, mostly in the $5,000 to $15,000 range. This shows that most of the launched tokens cannot maintain or exceed their market cap before migration to Raydium. There are also many of these tokens in the mid-range range (hundreds of thousands to a few million), because the deployment pipeline filters out unattractive memes to some extent and allows the community to use the fame or traction gained on the platform in the process as a growth catalyst.
Direct deployment
There is still noticeable density in the lower market cap bands, suggesting that many smaller, less desirable tokens are struggling to gain significant traction. This may be partly due to reaching saturation, poor timing of these tokens’ introduction to the market, or a distinct lack of narrative, originality, and proper publicity. Although less obvious, there is a greater concentration of memes with extremely high market caps listed on multiple centralized exchanges, which predate the emergence of pump.fun.
Aggregation around lower market cap tokens in our dataset supports the above. While trend exhaustion and the inevitable bursting of speculative bubbles are huge hurdles for any token, incentive misalignment has largely contributed to the instant collapse and subsequent demise of many memes. Anonymous scammers have misled their users, while outright fraud has become the norm in the space for those with ulterior motives, causing many seemingly promising concepts to die as soon as they were born. Upon closer inspection, a large portion of tokens have been deliberately set up to fail in order to extract maximum value from unsuspecting speculators, and remain a constant threat to those brave enough to sit behind a desk and take the risk.
In the past 30 days alone, nearly two-thirds of tokens were slaughtered in the first 24 hours, with more than 90% of available liquidity evaporated. Recovering from such catastrophic events during the birth period is often impossible, but occasionally, disgruntled token holders will conduct a community takeover by creating new social media accounts to try to regain lost momentum and start over out of stubbornness or spite in some cases. The results of this are what you would expect, but if done well, it can give supporters a decent exit.
4. Conclusion
The memecoin landscape on Solana is as unpredictable as it is dynamic, a mix of boundless creativity, rampant speculation, and ever-present risk. Platforms like pump.fun and Raydium have become the epicenter of this thriving ecosystem, providing both opportunities and challenges for participants. While a few standout tokens have risen quickly, igniting dreams of overnight success, the sobering reality is that most memecoins have failed to sustain their initial momentum, leaving behind only a series of dashed hopes. As this speculative frenzy continues, one thing remains clear: in a world where virality often trumps fact, caution and thorough research are essential. Whether you’re a curious spectator or an active participant, navigating niche markets requires both a keen eye for trend detection and a firm skepticism of promises of easy riches.
