Blockworks Research: Memecoin from on-chain data

Source: Blockworks Research; Compiled by: 0xjs@黄金财经

Memecoin has long been a point of contention in the cryptocurrency space,

with pump.fun tokens accounting for more than 20% of Solana’s daily DEX trading volume.

Is the industry’s dissatisfaction with Memecoin redundant? This article briefly describes one or two.

Memecoin has been around since the early days of cryptocurrency, first appearing on DOGE in 2013. In 2021, DOGE and SHIB reached astonishing heights along with other tokens such as the infamous Safemoon. Over the past year, a new crop of memes have gained traction.

If we trace the historical dominance of public chains on which new tokens are created, we see similarities to memecoin’s dominance.

Initially, almost all tokens were created on ETH, followed by the enduring BSC era, and more recently Solana has solidified itself as a hub for token creation.

Today, Solana introduces over 100,000 new token pairs to the on-chain economy every week, largely thanks to pump.fun. The Pump platform has reduced the token creation cost and effort to nearly 0, sparking more ideas to try in the form of memecoin.

The growth of Memecoin can also be seen through the growth of Telegram DEX Bot activity. The category has a trading volume of over $30 billion and has achieved significant diversification and growth in the past year. Looking back at the historically most popular pairs among the category leaders, we see that memecoin has historically and currently dominates DEX bot usage. In other words, they have become the professional trading venue for memecoin traders. Interestingly, both pump.fun and the DEX bot app charge around 1% for in-app volume. These are lucrative businesses - retail investors are willing to pay to participate in the memecoin lottery.

In addition, the introduction of Farcaster Frames and Solana Blinks means integrating memecoin directly into existing social messaging and expanding the connection between memecoin and content creation.

However, while retail investors are happy to chase memecoin volatility, institutions remain on the sidelines. But it may be possible to develop advanced strategies to trade these tokens by their beta velocity relative to gas assets (e.g. WIF to SOL).

Looking forward, we are beginning to see a shift from memecoin to generalized attention tokens, where socially integrated tokens can serve as the basis for incentivizing online content generation.