Meme coins on Solana: saturated supply and limited Liquidity

Author: hyphin, On Chain Times author; Translation: Golden Finance xiaozou

1**、Preface**

Since our last memes article (in March this year), the total market size and market share of the industry have continued to rise without any 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 nature), extremely low barriers to entry, and constantly emerging fresh narratives, which attract speculators. Although many (if not most) fail to sustain meaningful followings in the long term. Nevertheless, market participants have become accustomed to this, often entering and exiting profitable short-term trends, leveraging momentum, maintaining loyalty to high-conviction bets, and making them more enduring. Despite some unwillingness to admit it, in the current market environment, the likelihood of the demise of long-standing memes that have been thoroughly tested by the market is lower than that of assets that rely solely on impressions and do not provide any substantive value (limited to capital transfer).

While Solana may not be the sole contributor to the market capitalization of these large tokens, most of the activities in this space do take place within its ecosystem. For this reason, this article will continue to focus on this chain and attempt to provide a global picture.

2**, paying homage to Pump**

With the birth of pump.fun (a Solana native Token incubation platform), a significant shift has occurred in the local market dynamics. Interacting with speculative Tokens has become simpler, cheaper, and more secure (from a security perspective). Through a user-friendly interface, standardized Token deployment can be carried out in a controlled environment, allowing anyone to create new Tokens based on common configurations, thus eliminating the abuse risk of potential malicious actors hidden in Smart Contracts. In fact, this only requires the deployer to provide some creative input, without any technical knowledge. Abstracting away all complexity, attention is focused on what really matters—mass speculation. When a tokenization meme is created, it can be directly traded in the internal market of the platform, and once the Market Cap reaches about $69,000, it will be automatically deployed to Raydium. However, most creations have failed to reach this threshold and have never been released to the market.

About one out of every 100 Tokens ‘graduates’ from pump.fun due to high saturation, limited liquidity, and other reasons beyond the scope of this article. Those who step onto the stage must show something interesting, shocking, and unique to catch the attention of the warriors in the trenches. Despite these challenges, the protocol quickly established itself as a true gateway for trading micro-cap Tokens and launching new Tokens, surpassing all other competitors in the field.

So far, the deployment dominance of this application compared to other alternative solutions has reached an astonishing 71.9%, demonstrating its widespread popularity and far-reaching impact. The recent development momentum has quickly made it mainstream, with many new users from TikTok joining in ambitiously to make it bigger and keep the fire burning brighter.

3. All roads lead to Raydium

Whether it’s a secret launch, pump.fun release, or presale Token, the majority of memes’ liquidity pools come from Raydium. The influx of a large number of memes into the market increases its market share, and Decentralizationexchange accounts for a significant proportion of Solana’s current on-chainvolume.

In the gold rush, those who sell shovels to speculators often reap the most rewards. This analogy also applies to the current situation. No matter how well meme tokens perform, platforms that facilitate trading activity will benefit greatly from the volume generated by increasing speculation. Much evidence and common sense indicate that only a few tokens will gain followings, while the rest are destined to gradually fade from people’s view. This viewpoint can be confirmed or refuted simply by observing the distribution of market capitalization across all existing trading pairs.

Due to the lack of effective tagging methods by data providers, it is quite difficult to differentiate between memes and non-memes on a larger scale. After careful consideration, the method used to plan the comprehensive dataset is to collect information on all RaydiumLiquidity 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 AddressTokens, which will serve as the basis for this section of the analysis.

Most Tokens, at any given point in their lifespan, tend to have a range of activity that falls within $10,000 to $100,000, even with very little activity. They typically form distinct peaks in the early and middle stages. It’s clear that the chart forms a gradually smooth declining tail, highlighting a few Tokens with high valuations. This is expected, as 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 originating from pump.fun and those directly deployed to Raydium.

Looking at them separately can provide important insights into the overall distribution patterns, as well as their respective performances, and showcase unique features.

**（1）**pump.fun

Please note that pump.funToken needs to exceed a certain Market Cap threshold to obtain Liquidity pool. Since more Liquidity is provided at the time of issuance, their value is usually higher, mostly in the range of $5000 to $15000. This indicates that most issued Tokens cannot sustain or exceed the Market Cap before migrating to Raydium. These Tokens are also largely in the mid-range (hundreds of thousands to a few million), as the deployment pipeline to some extent filters out unattractive memes and allows the community to leverage the reputation or traction gained on the platform as a catalyst for rise.

(2) Direct Deployment

In the lower market capitalization swing trading, there is still a significant density, which indicates that many smaller and less ideal tokens are struggling to gain significant attraction. Part of the reason may be due to saturation, poor timing of introduction to the market, or a clear lack of narrative, originality, and appropriate publicity. Although not obvious, the density of memes with extremely high market capitalization listed on multiple centralized exchanges is more concentrated, and these memes appeared long before pump.fun.

In our dataset, aggregation around low market cap tokens confirms the above points. While trend exhaustion and the inevitable burst of speculative bubbles are huge obstacles for any token, inconsistent incentives have largely led to many meme’s instant collapse and subsequent demise. Anonymous scammers mislead their users, while those with ulterior motives known as ‘developers’ have made open fraud in this field a norm, leading to the immediate demise of many seemingly promising concepts. Upon careful examination, it is found that a large part of tokens are deliberately set up for failure in order to obtain maximum value from unsuspecting speculators, which remains a persistent threat to those who dare to take risks behind the table.

In just the past 30 days, nearly two-thirds of Tokens have been slaughtered within the initial 24 hours, with over 90% of available Liquidity evaporated. It is often impossible to recover from such catastrophic events during the birth period, but occasionally, disgruntled Token holders try to regain lost momentum by creating new social media accounts for community takeovers. In some cases, they may stubbornly or resentfully start over. The result of doing so can be anticipated, but if done well, it may give supporters a dignified exit.

4**、Conclusion**

The memes landscape on Solana is both unpredictable and vibrant, a mix of boundless creativity, rampant speculation, and ever-present risks. Platforms like pump.fun and Raydium have become the epicenter of this thriving ecosystem, offering opportunities and challenges for participants. While some prominent Tokens have quickly risen to fame, igniting dreams of overnight success, the sobering reality is that most memes fail to sustain their initial momentum, leaving behind a trail of shattered hopes. As this speculative frenzy continues to unfold, one thing remains clear: in a viral world where perception often outweighs facts, a cautious attitude and thorough investigation are crucial. Whether you’re a curious bystander or an active participant, navigating niche markets requires both a keen eye for trends and a steadfast skepticism towards get-rich-quick promises.