Meme investment experience: How to deal with this round of meme cycle

Source: Mint Ventures

Host: Alex Mint Ventures Research Partner

Guests: Louie Professional On-chain Investor, Stakeholder Professional Individual Investor & On-chain Studio Manager, Lawrence Mint Ventures Researcher

Program Recording Time: 2024.10.28

Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continue to ask questions and think deeply, clarify facts, explore reality, and find consensus in the WEB3 world. I am Alex, a research partner at Mint Ventures. Today we have specially invited three teachers to talk about how to deal with this round of meme cycle.

Disclaimer: The content discussed in this podcast does not represent the views of the institutions where the guests are located, and the projects mentioned do not constitute any investment advice.

Alex: In this podcast, we have invited three senior investors, all of whom have very long-term investment experience, especially in on-chain crypto asset investment, with rich and cutting-edge front-line experience. The first one is our Stakeholder, who is not only an investor, but also the head of an on-chain studio. The other one is Louie, who is a full-time on-chain investor. The two guests can say hello to everyone and briefly introduce themselves.

Stakeholder: Hello everyone, I am Stakeholder. I first met Alex in the Curve group, and I studied DeFi when I first entered the circle. Later, because DeFi is mainly operated on the chain, I came to Web3 and came to the chain. Later, I studied some on-chain strategies. Last year, I started to do some memes and some hair-pulling, and helped one or two private equity institutions introduced by friends to do on-chain income strategies.

Louie: Hello everyone, I am Louie. I am not an old player in web3. I joined this circle at the beginning of last year, starting with inscriptions, and then I have basically been all in on the meme track. I wrote an inscription at the beginning of last year, and I have been paying attention to the BTC ecosystem until now. After the meme on Sol became popular this year, most of my attention was transferred to the Sol chain. Basically, my main focus now is on the meme on Sol. After I learned about this circle and joined this circle, I basically played meme full-time. This is my personal experience.

Alex: Welcome, both of you. The third guest is our old friend, Lawrence, a researcher at Mint Ventures. He is also one of the people who plays meme more in Mint Ventures. Please let Lawrence introduce himself.

Lawrence: I am Lawrence from Mint Ventures. Like Stakeholder, I also entered the market through DeFi in the last cycle, that is, in 2020. Because I have always been interested in new things on the chain, I have been investing in meme since then.

Understanding and explanation of meme

Alex: Let's get to the point. Today is the first time that we have formally organized a podcast to discuss the topic of meme. We may have touched upon it before, but not in depth. The three guests we selected today have been focusing on meme. They have been studying this track for a long time for the past six months or even a year. But there may be many newcomers in the audience who don’t know much about crypto, and may not know much about Web3, let alone meme. Suppose the three of you want to introduce what meme is to a Web3 newbie, how would you explain this concept to him in plain language?

Louie: Okay. I think I can explain it to you in one sentence. Meme is the realization of attention and hot spots on the blockchain. This is how I understand meme. For example, let's say there are some hot topics in our Web2 world, whether it's Musk or Trump, or the hippopotamus a while ago, or some other hot topics, they all generated a certain degree of discussion in Web2, attracted a certain amount of attention, and then mapped to Web3, mapped to the blockchain, and then corresponding to a token, a logic to monetize these attention and hot topics. This is how I understand these memes.

Stakeholder: Okay, if it's a newbie, then it's definitely not someone in the currency circle. I often encounter such situations in real life, and he certainly doesn't know the word meme. Suppose someone suddenly asks what a meme is, first of all, there must be a transition. He said he had never traded in coins, so he must be interested in some stories of getting rich quickly. I remember once offline, I was having a meal in Shijiazhuang, and I heard people at the next table talking about how much money Dogecoin made and how many times it had increased. They were not in the circle at first, but they were still chatting lively. So I think if you explain it to a newbie, first of all, he will actually understand that this is the essence of trading in coins. Participating in making money is inseparable from speculating in coins. If you know nothing about the technology and background of the blockchain world, then the easiest way for you to get started is to buy and sell Bitcoin. Many people already know about the existence of Bitcoin, and it is no longer a strange term. Another thing is meme. In fact, it is a carrier of values ​​and emotions. You use a coin to replace it, and you can advocate your values ​​and express your emotions by buying, selling and holding it. The more people spread it and the more people buy it, the more money you can make. And in this process, you can find people with the same values ​​and a sense of belonging. As for this token, it itself has no function and it is very easy to lose it. Therefore, you must play with money you can afford to lose, and think of it as buying lottery tickets.

Lawrence: If I am talking to a completely new person, I should first ask him if he knows Doge? Because I feel that when explaining something that a new person does not know much about, it is best to find some of the most widely circulated ones. If he knows Doge, I will tell him that Doge is a typical meme. Meme is a kind of culture with a certain degree of ridicule and popularity, something that can be spread virally. It can be understood as a bit similar to our concept of "stalks", because many popular memes are actually some meme pictures or emoticons.

Observation on meme newcomers

Alex: I know that many of you may be in various groups, especially Teacher Louie, who is in various cryptocurrency trading groups and community groups. According to your observation, is the proportion of newcomers who come in this round of meme playing large?

Louie: Let me answer this question first. Let me give you an example, a very intuitive data presentation, that is, the transaction volume on the Solana chain. About one or two months ago, I don’t remember the exact time, but the 24-hour transaction volume on the chain was 60m, and the unit after 60 should be million, 60 million. Now let’s look at the 24-hour transaction volume on the Solana chain again, which is basically 4 times, 240 million. So I think a lot of new money has poured in during this period. Simply talking about the data on the chain, this is my intuitive experience. Of course, in terms of the target, when we buy meme coins, this feeling is also very obvious. In the past, there may be a hot spot, which will quickly suck the blood of other targets, just like a seesaw, this target rises, and other targets fall. But recently, especially during this period, you can feel that there is more money on the chain. The seesaw effect is not so obvious. It will support the chain at the same time. There are several new targets of hundreds of millions, or even more new targets of tens of millions. This is an intuitive feeling, that's all.

Stakeholder: I didn't join some new groups. Everyone around me who should join the circle has joined. There are no new users around me now, and I am still in some old communities. First of all, I feel that some people who do secondary now come to speculate on memes, and some people who focus on exchanges have also begun to move to the chain. This time, some people are transferred. Another is my observation in the last round. At that time, I was a novice, and there were many novices around me who came in at the same time. Some friends came in to do Shib and babydoge. I think memes are very friendly to new users. They are easy to accept and play. And they are cheap. It feels cheap, although it is not true in mathematics. Everyone feels that they can play with 10 yuan, but Bitcoin is tens of thousands of dollars. Everyone still thinks that they have to buy integers. They think they have to buy one, and buying 0.01 seems to be very little.

Alex: Lawrence actually entered the circle at the early stage of the last cycle. He has experienced a relatively complete cycle of value investment coins in the secondary market, including Defi, many layer1 public chain coins, and some layer2 second-layer coins. He has basically experienced them all. But he has actually been paying attention to memes before. What do you think is the difference between this round of memes and the previous round of memes?

Lawrence: The last round refers to the memes compared to the 2021 round?

Alex: Yes. In fact, there were quite a lot of animal coins such as pigs, dogs, cows, and sheep in the last round, but they were not as popular as this round.

Lawrence: First of all, my own feeling is that from the perspective of money, as Professor Louie just said, everyone’s enthusiasm for this matter is definitely higher than the last round. I can’t say that it has reached the peak now. I feel that overall, the enthusiasm of this round is higher than the last round. Because the last round is actually a stage where meme is established as a subdivision, if it is considered a track. Because in the previous round, there was only Doge, and in the last round, there was Shib, and then there were more meme coins with relatively low market capitalization. In terms of differences, I think this round, from what I have observed in the Chinese community, or in other words, among the Chinese people who speculate on memes, they are basically old faces, some people who have been working on the chain for a long time. Like the transaction volume data just mentioned by Louie, including some memes represented by some portraits of the lower and middle classes in the West, from my observation, including the recent Moonshot explosion, I feel that especially in the United States, and not entirely in the West, including the Middle East and Europe, the penetration rate in these places is much higher. In fact, meme only had a very short period in the last cycle, which was in April and May of 2021, and then in November. Basically, only these two very short time points attracted more attention. The core reason is that the Stakeholder teacher just talked about the money-making effect. The money-making effect of Doge and Shiba Inu is too popular. At that time, it was relatively simple, and it was also a zoo, that is, Shib, Dogecoin, and then there were pigs, snakes, and various small currencies. Overall, it was still relatively simple. In this round, the entire meme track has actually developed quite well. With relatively complete infrastructure, such as various meme bots, and then including very good trading tools on the Web side, as well as on-chain tracking and analysis tools, and many countermeasures for on-chain address copying and anti-copying, I think they are all very mature. In the last cycle, everyone's gameplay was still relatively simple. They bought whichever one they liked, and their understanding of this thing was also similar. In this cycle, I think there are already many people, including many institutions, who are deeply engaged in this matter and have made many different things. For example, murad, who was very popular some time ago, his list is more inclined to some memes with cultural attributes and cult attributes, which have not appeared in the previous cycle. So, I feel that this is also related to the background of the entire industry. I have talked with Teacher Alex many times before. There are too few new things in the entire market. There are no new things like Defi, NFT, and gamefi in the previous cycle. But there is a lot of hot money coming in, and everyone can only chase the direction with the most attention, and the money flows to the direction with the most attention.

Opportunity to invest in meme

Alex: I understand. I feel that the targets of the entire meme in this round, including players, tools and infrastructure, have indeed been greatly upgraded compared to the previous round. The cultural connotations of many projects in this round are also relatively rich, and they are very close to hot events in the real world, and I think the quality of players has also improved a lot. As a person who doesn't play memes on a daily basis, I feel that there is a huge gap between meme players like Louie who are skilled and professional. In the last round, everyone was probably a novice, relying entirely on luck and courage. In this round, I feel that the professionalism in the use of tools, project judgment, data analysis, and emotional grasp is much higher than in the last round. So what was your background when you first came into contact with memes and began to try to invest in memes?

Louie: I think I was quite lucky at the beginning last year. At that time, I chose two tracks, one was GPT and the other was Web3. When Web3 came in, I started to get in touch with inscriptions. At that time, the price of Ordi I came into contact with was still 70 US dollars per piece, and one piece was 1,000 pieces. At that time, 70 US dollars for 1,000 pieces was very cheap. Under such a background, I quickly got feedback from Web3, and then I went all in on Web3. Around May, I quit my job in Web2 and worked on Web3 full-time. Then I got very good results in the inscription ecosystem. Sometimes it's really the aura of a novice. When you come into contact with this thing for the first time, the quality is not bad, and it can be regarded as fine bran. At that time, this belief got positive feedback, which was a relatively lucky result. Then relying on such a novice aura, coupled with the blessing of positive feedback, the belief in this ecosystem continues to expand. When this belief continues to expand, you tend to be more able to hold on to some targets. Of course, in the end, there were roller coasters, retracements, and sell-offs, but overall, I still accumulated my first pot of gold in this ecosystem. The background of my investment in meme is roughly like this. The timing may be a little special, and there is a big element of luck.

Alex: Then Louie, you actually started with inscriptions. In your opinion, inscriptions are actually similar to meme coins like those on Sol chain and Base chain now, right?

Louie: I think it's completely different. If I had come into contact with the Web3 ecosystem at this time this year, it might have been much more difficult, not as simple as inscriptions. Because sometimes the dividends of this ecosystem are still very huge. In the early days of the ecosystem, you can make money no matter what you buy, the only difference is how much you make. But on Solana, you can clearly feel that you need to accumulate some of your own trading logic, including technical advantages, or your own information advantages, in order to obtain certain good returns. I think this is the difference.

Alex: We will talk about this part in detail later. Stakeholder, how did you start playing meme? Because after all, you, Lawrence, and I started to enter this industry more from Defi, starting from the fundamentals. How did you switch to saying that I am willing to play meme and spend a lot of energy on playing meme? What is your background?

Stakeholder: I actually had a prejudice against meme at the beginning, and I thought it was air. Before I entered the cryptocurrency circle, I was doing financial IT, and I had technical reserves in finance and IT, so I went to study Defi and got started quickly. Then meme is just an avatar and a slogan. What is there to study? There is nothing to study. But during the last bull market, Dogecoin rose a lot, and I also speculated on it. But at that time, my understanding of the meme was just that Musk led the order, which was influential. In addition, I also made up a story in my mind that Musk would colonize Mars, and then our interstellar base currency might have Dogecoin to take on this role, which gave me a reason to convince myself to invest, but I didn't agree with the others. So I didn't feel moved when I saw that Shib coin rose so much, I just watched it perform. After the bear market ended, in 2022, I thought what to do in the bear market, there must be a place to make money. I don't like to simply speculate on the band, so I started to study, mainly doing Uni's V3 strategy. In this process, I found that Bone, the bone coin, is a sub-project of Shib, which is equivalent to saying that I want to do another public chain in the future. This Bone has a large trading volume, and the LP of Uni V3 has a good return, so I started to try this. And the price fluctuations may not be so large and the decline is relatively small, so I think it is still relatively safe, so I started to try it. Later, I made good returns as an LP. I did it for about 9 months, and the annualized rate of return was more than 100%. In this process, I found that memes have the characteristics of large trading volume, so I started to do short-term LP of these memes to earn handling fees, even if I was exposed to them. In the process, I found that I was biased against this. And although these memes are very volatile, they are not as big as imagined. In fact, they are similar to some of our altcoins. If you look at these Dogecoins and Shib now, their decline is actually similar to our current AAVE and UNI. These AAVE and UNI are already recognized as very good altcoins. They have absolutely leading products and fundamentals, which are similar to Shib. So memes that are deeply rooted in people's hearts have investment value. At that time, I started to try, and the first one I hyped was called Harry Potter. Its ticker is Bitcoin, which now has a market value of more than 200 million. I rebuilt it to be an LP when its market value was 8 million. Later, the market value fell to 1 million and fell below. I thought it was over and it was going to return to zero, so I quickly sold it. At that time, I sold one ether. Now it has a market value of several million. There are also Pepe in the middle. I saw it on the day of its launch, but I didn’t grasp the fruits of these. I became an LP for all of them, but I only earned a little bit of handling fees, wasting opportunities. Why did I miss it? It’s still a problem of cognition. So later I wanted to polish my investment strategy in meme, a set of strategies that suit me, and then I participated in it one after another, but I haven’t said that there are any big results yet. At the end of last year, Bonk, Wif coin, and Solana came out a lot, especially when Wif broke through the 1 billion market value, I was stimulated. Because Wif was also very low, I also played when the market value was several million. When Wif broke through one dollar, I thought it was definitely a trend. Then I took a relatively large position at that time, and then I chased Pepe with a large position. Later, just like Louie said, I got the result and got the reward. Then I felt that I should increase the configuration of this thing, and spend more time to study it.

Lawrence: As I said before, I have been paying attention to new things on the chain since the second half of 2020. In the first half of 2021, because I was still playing with algorithmic stablecoins at that time, I studied some addresses on the chain all day and analyzed the addresses on the chain. Then I found that some addresses bought a meme coin that you may not have heard of now, called Hoge, which is also a dog head coin. It is called Hoge.finance. At that time, many memes still had to be covered with the coat of finance, including Shib. At that time, out of curiosity about new things on the chain, I bought a little bit each. Later, from March to April to May, I found that this thing rose a lot. The reason why I can continue to pay attention is also because I gave positive feedback at the beginning. I started thinking deeply about this because Shib was sold out very quickly at that time, and the multiples were very high, which was very painful at that time. Then I started to think of ways to explain this matter, to see whether I was wrong or the market was wrong. So I read books such as the attention economy, including articles written by some investment institutions or some KOLs. After that, I may have kept an eye on the memes on the chain, and participated in some relatively new projects.

Alex: Speaking of this, I remember that there was another thing in the last cycle that left a deep impression on me. At that time, you seemed to have received a domestic meme called loser coin for free, right? What is its Chinese name?

Lawrence: Yes, it is called Lowb.

Alex: I remember that you received it for free and did not sell it at first. At that time, everyone thought it was a performance art, because at that time everyone still had a great prejudice against domestic memes, and felt that domestic projects, especially cultural projects, could not compare with Western ones. As a result, this project was distributed for free, and the operation method was also very strange and down-to-earth. Later, this coin rose from a zero-cost project to a market value of tens of thousands of U?

Lawrence: I don’t remember clearly, the highest seems to be hundreds of thousands of U.

Alex: Yes, it seems that you held it at the beginning, and then sold part of it, and then the part you sold kept rising. This impression is very deep.

The necessary qualities of an excellent meme player

Alex: Just now we talked about the big difference between this round and the previous round of memes. In this round, when we invest in memes, we often see a keyword called PVP. It was originally a term in computer games that refers to human-to-human battles, not human-to-computer battles. But here PVP is mainly used to describe a zero-sum game situation where funds are very fierce, either you cut me or I cut you. In order to win in this environment, in your opinion, what comprehensive qualities should a powerful meme player who can win from it have?

Louie: I summarized four dimensions. First of all, I think the most important and the premise is that you must choose a place with money to play before entering. For example, at this stage, you must choose the Solana chain, right? You can't choose the Ethereum chain. And like last year, you must choose the BTC ecosystem. You can't choose other ecosystems to play. Just like the logic of choosing Defi, everyone also wants to choose a rich ecosystem to get certain benefits in it. The logic of playing meme is the same. First, you must choose a place with money. The second is that you need to have enough time to play meme, and you can continue to accumulate experience in the process, because time is a hard condition. If you don't have time to pay attention to the information of the target and don't have time to understand the sentiment trend of the market, I think there is no difference between simply buying meme coins and gambling. Then in this practice process, as you continue to invest and research, understand this information, and continue to feel the changes in the market, you will continue to accumulate experience. This is actually very important. Experience is something that no one can teach you. Only by feeling and settling by yourself can you experience what belongs to you in this process. The third is a more pragmatic level-the continuous iteration of your tools and the continuous iteration of your trading logic. The market changes very, very fast, and perhaps the only thing that remains unchanged is change. Maybe a strategy this month will not work next month. Many memes on the market now actually reflect this problem quite strongly. Maybe before when people played memes, they would pay more attention to the irony of memes, its cultural attributes, and even some cultural points of foreigners. But now looking at these memes again, they are completely a microcosm of attention and hot spots. Wherever there is a hot spot, which topic is hot, then this coin will definitely go up. Whether it is the hippo in the zoo some time ago, or the change in the wind direction in the past two days, such as A16Z's exit, everyone feels that memes are beginning to be combined with VC again. So the market changes very quickly, and your tool iteration and trading logic must also keep pace with the times. The fourth dimension, I think, is that everyone has a different way of playing memes to make profits in this ecosystem, and you have to find a comfort zone that suits your own money. For example, some people are born to be diamond hands, and they don't move a coin after buying it. Some people like to wave back and forth after buying it because of their personality or other reasons. So no matter which way you use, you must find your comfortable range. For a target, some people will eat the head, some will eat the body, and some will eat the tail. Your characteristics or resources can support you to get a better sense of making money in which range, then you should unswervingly find your own comfort zone, and don't think about eating a target from beginning to end, I think this is unrealistic.

Lawrence: First of all, I personally feel that PVP is very difficult, because I myself did a lot of meme transactions on the chain during the period of not so good market conditions this year, from May to July, and I felt it was very difficult at the time. Then I basically gave up this meme trading strategy with a very high frequency. I still feel that I have to find a way to find opportunities to PVE. Because PVP generally means that there is no incremental funds, that is, these few people in the market, get from your pocket to my pocket, or from my pocket to your pocket. So I think for my recent feelings, I still have to find ways to find opportunities that are not PVP, that is, PVE opportunities, and find opportunities that are still incremental in the entire market. For example, AI a week ago, or A16Z's AI fund three days ago. I can only say that we need to do better in timing, and try to judge whether this small trend can become a trend. So this is probably the most important quality in my opinion, that is, to judge whether new things can attract more people's attention in the future based on some comprehensive personal feelings. Then there are some cultural memes with cultural attributes. I feel that this may be easier recently. Because the problem with chasing hot spots is that hot spots will soon pass. I prefer things with more Lindy effect recently. That is to say, if this thing survives for a longer time in the past, I think it will survive for a longer time in the future. Of course, this may be a difference in personal perception. So the qualities that a good meme player should have, in fact, Teacher Louie has already talked about it very comprehensively. I think it is very necessary to be familiar with and master the tools, as well as a lot of time. At the same time, on this basis, it may also be necessary to judge the culture or some popular small trends.

Stakeholder: Actually, after listening to Teacher Louie's talk, my feeling is that there are 10,000 ways to fail, but the ways to succeed are all similar. In fact, I found that the methods of those who play well are similar, and our methodologies are also relatively close. I think the quality here is to have macro management, which is still at the cognitive level. There are actually two types of macro management. One is the management of mentality. It is not painful to sell at a loss. It is okay to cut losses and leave. The other is fund management. It is also very important to have a fixed investment, what kind of target, and how much money to invest. How big its capacity is and how big the pool is determine how much money you invest. Another point is that if the meme is subdivided, we can divide it into many types, including early ones, grown ones, and temporary hot spots. I think this is a kind of lottery. For example, if you like a concept and think it is good, and the narrative is good, then you will invest a fixed amount, such as 0.1 Ethereum or one Solana, and then you will draw a lottery. Then I will accept its zeroing, and I will not care about it after throwing it in. I will come back to check it after a month, or after a certain period of time. Another thing you need is actually technical reserves, which is also mentioned by the two people before. You need tools, and there are many mature tools available now. Then you have to find these tools first and use them skillfully. There are many technical indicators or other tools in it. The key is to use them easily and they must be suitable for you. There is also a circle. The circle is actually your source of information. How many friends do you have who play with dogs? Do you play alone in a room or with a group of people? I think the two must be combined. I can do it alone in the room, but I must be with a group of people regularly and communicate with them, so that I can hear other people's opinions from different angles and provide more perspectives. Another thing is time. This depends on quantity. You will have a feel for it if you see more. This is a part of deliberate practice, which takes a lot of time. I remember a master of playing dogs said this: "You don't have to say anything. If you see enough pools of 10,000, you will be able to see it accurately." In fact, it is like this. A newcomer comes in and says that he can catch a golden dog. That is luck, but the probability of this luck can be improved by accumulation and summary. Of course, there are many changes in the middle, and we must constantly adapt to new changes. Alex: Yes. I have some observations about the professional investors who play memes and those who insist on not playing memes, as well as ordinary retail investors. I feel that their personality is different. Generally, people who are willing to play memes have a particularly big characteristic of being young. Being young represents many derivative factors, including that they are more energetic, have better physical strength and sharper thinking. In addition, their mentality is often more open, and they are very sensitive to some cutting-edge things, such as what everyone just mentioned is hot spots. Another thing is his attitude towards trading. Because some people like trading very much, they wish they had 100 trading opportunities every day, and they can watch and track. Some people hate trading. They don’t like to look at more short-term information every day. They like to look at longer-term things and don’t like to look at K-line for technical analysis. It must be that these investors who are more enthusiastic about trading and can get more pure pleasure and fun from it are more suitable to participate in meme trading. These are some basic observations of the people around me.

Meme investment strategy

Alex: Just now we talked about what kind of qualities everyone thinks a meme player should have. So from the perspective of investment strategy, one point we just talked about is that the meme trend is constantly changing, and their target characteristics are also constantly changing. So since investing in memes, what changes may your investment strategy have experienced? What are the content and background of these changes? And in the current market, what strategy do you use to participate in buying various memes?

Stakeholder: It is really changing. As Alex said, I am no longer a young person, which means that I will not have complete autonomy in terms of time. All my time is devoted to this one thing, and I will need to take care of many things. In terms of time management, I have time these days, and I can take it out specifically. In addition, local dogs also have seasons. Before the market starts, I think there will be a wave in front. At this time, I feel that it will come, so I have to take time out and set aside time to watch and participate. In addition, what should I do in the fragmented time in the middle? I will no longer participate in those particularly short-term hot spots, but will look for longer-term ones, and then look for the so-called waves that come and go. Who is the leader of the wave, what position it has reached, and whether I can participate in it. For example, this hippopotamus, I think it has rolled up waves of marine animal crazes before, so I want to wait for it. I also sold it at a high price before, and then I want to wait for it to fall to a certain position and then buy it back. I think it will definitely have a second wave. For this kind of thing, there is not so much time to participate in this way. In terms of dog-beating, Teacher Louie should be more professional. My strategy is mainly lottery. I was actually not very willing to go to Solana at the beginning. Until recently, I felt that Solana has completely crushed Ethereum in these memes. So I gave up Ethereum. Before, I thought that Solana is a master of PVP, and I can't win. My own advantages will be weakened, so I will go back to Ethereum. With this lottery idea, I buy a fixed amount, don't have to stare at it every moment, and accept the return to zero calmly. Until recently, what prompted you to change was that you found that you were not making money, and the previous methods were not making money. Maybe there was something wrong with the methods, and you had to change. The flow of money is changing, and all the money has gone to Solana. Ethereum now feels like an empty city. The top memes have no trading volume at all. They are not as good as the new ones on Solana that have been open for 10 minutes. They may not even be the top three or top four. There are already many imitations, and they can all have millions or tens of millions of trading volumes. It is normal to have millions to 10 or 20 million. On Ethereum, those very mature old memes, which are very popular and have a large market value, do not have this volume. It is a completely one-sided pattern. So I have to switch to Solana and adapt to the gameplay on Solana again. When playing these new ones, I mainly focus on these leading ones. In addition, there are some things. Since I am doing DeFi, I have advantages in this area. Many meme developers may not study things on DeFi and pay little attention to it. Now I also help one or two institutions to make hedging tools to earn some income. For example, Wif and PePe, do LP on the chain, and then add some hedging orders from the exchange to capture the benefits of its large trading volume, and find that it is not bad. Now these are the main ones. And I think meme does not represent small funds. I think large funds can also participate. I think the amount of 10 million US dollars is completely fine.

Alex: When you say that large funds can participate, do you mean the market making strategy of meme's LP that you mentioned at the end?

Stakeholder: Yes. Look at Wif, including PopCat, there are tens of millions of transactions every day, and the pools on the chain are tens of millions. So if you put it in ten such targets, and invest 1 million US dollars in each target, it will not have much impact at all.

Alex: Can you talk about the specific strategy of your market making LP? For example, how is the bilateral funds of market making configured, and how is the interval considered?

Stakeholder: Okay, this also took many attempts to stabilize. At first, I wanted to do fully automatic hedging, to make a tool, without human intervention, and let it automatically run quantitative strategies. Later, I found that it was not as good as manual management, and the interval should be slightly faster. At first, it was plus or minus 50%, combining the past volatility of meme itself. The main thing was not to do non-stable currency, but to do USDC. The positive and negative intervals are generally 50%, 40%, and 35%. I will split one into three levels. The narrower interval can be rebalanced frequently, and the wider interval can be run for a long time. In terms of capital allocation, 2/3 is on the chain, and 1/3 of the funds are used to open short orders for hedging on the exchange. At the same time, it is not possible to do full hedging, because the full amount must be balanced at any time to keep the positions on both ends the same. Since we invest in meme, we must be optimistic about its long-term rise. You know that if you are an LP, your risk mainly occurs if it keeps falling. If it rises, it is just a matter of making less money. So you need to hedge 70% or 80%, not the full amount. When it goes up, if you balance it, you will not easily cause extreme imbalance on both ends. That is to say, your net position is reduced, and you become a net short position, which is very dangerous. In fact, when we do this kind of LP, we are not afraid of it plummeting, but we are afraid of it soaring. I am more worried about this situation. Recently, I tried to do a meme such as PopCat vs. Wif, two non-stable coins with large trading volumes at the same time. If they are used as LPs, first of all, the APR, that is, its rate of return will not be low, and it is easier to control. Why? Because they are relatively in the same frequency. When they rise, basically everyone rises at the same time, because they belong to the same sector. And when they fall, it is basically the same, just with different amplitudes, but relatively in the same frequency. In this way, opening a short position can actually improve the efficiency of your capital use. Because originally, there is USDC on one end, which is equivalent to a higher APR. I have been running for about three weeks recently, and now I think this strategy seems to be slightly higher. Moreover, we can build various new combination pools on Solana. We can create them by ourselves. You can find them by yourself. For example, if a new one suddenly comes up today, the trading volume is very large, and it is the leader, then quickly match it with a familiar and confident variety, and create another one, and then try it alone for a while.

Louie: I am also very interested in the LP that the teacher just talked about, but I have not mastered the skills in this area very well. Anyway, I think that for a first-level player, this LP is also an indispensable skill. My own trading strategy is like this, and there have been some stage changes. At the beginning, it must be pure faith, faith players. Because I was playing inscriptions at the time, I had a very, very grand faith. At that time, many people thought that ordi could reach 10 billion, Bitcoin is a big cake, ordi is a small cake, so the market value of 10 billion must be within reach. But later the market poured cold water on us, telling us that hot spots are constantly migrating and changing. From the stage of belief, we gradually transitioned to pvp, which is to change with the hot spots. Where is the hot spot in the market? We have a rough prediction of its market value, and then we may get the expected income, and then we will leave and switch to the next battlefield. Up to this stage, my current strategy is roughly like this. First of all, I think the benefits that meme brings to ordinary people are a track that can transition from 10,000 to 100 million. Meme can support you from A3 to A9 players. But the meme ecosystem may be a market that is more exaggerated than the 80/20 rule. It may not be 20% to 80%, but 1% to 99%. It is often the 1% opportunity that really makes your assets achieve significant progress. But how do you seize this 1% opportunity? This requires you to spend 99% of your time on some tokens that don’t look so sexy and whose market value expectations are not so strong. It requires you to keep a daily focus on this market and this chain. This is my current state, which I call the state of playing in the wild. What is playing in the wild? I require myself to pay attention to the market on a daily basis, and maintain my own state and feel on a daily basis, and make some small transactions. But I will not go all-in if I don't find a particularly good opportunity. Through such small transactions and daily wild play, I can maintain my feel and state. When you find a good opportunity, when you find an opportunity worth a heavy position, you require yourself to look for it and place a heavy bet. For example, Neiro some time ago, like Hippo and Goat some time ago, its window period is also relatively long, it can accommodate a lot of funds, and the rate of return is also very good. Now it is probably this rhythm and state.

Lawrence: When I first started, until about the end of 23, that is, before the beginning of this year, there were actually not many memes on the market. Every day, if you want to find a new meme, scan the chain to see new things, it doesn't take too long. So before, my strategy might be basically to scan the new things on the chain at least every two or three days, and take a look at each one. But since the emergence of pumpfun, this meme coin has exploded, and this strategy can no longer be supported. There are more and more things on the family side. As I just mentioned, in April and May, after losing some money on the chain, the strategy basically turned to the current state. This is also related to personal circumstances. You may not have so much time to chase every hot spot, so you can only say that you pay more attention to opportunities that are not hot. From the perspective of investment strategy, I will look for memes with relatively good fundamentals. If I believe it will not die, then I will do some low-absorption and buy at some low positions. After it has risen a lot, if it can fall again, I will buy some at a relatively low position. Because I think it will not die. For example, like Bitcoin mentioned by the stakeholder just now, I think a meme like this will not die. It may not necessarily be a hot spot in the current market, but its characteristic is that it is not a hot spot, so it will not die. For example, after I lost a lot of money on the chain in April and May, I simply bought Mog on the base chain and bought all PopCat on Solana. In fact, looking back, this strategy is much better than my previous strategy. So my strategy at this stage is more about some memes with relatively large market value, at least some projects that will not die in this cycle, and some projects with a market value of at least tens of millions.

Long-term and short-term allocation

Alex: The question Lawrence just talked about is related to our previous question. When we talk about the conditions for a good meme trader, everyone mentioned time. For various reasons, including personal, family reasons, including professional reasons, or when you are older and you feel that you don’t have so much energy and don’t have such a strong desire to trade, we will consider switching from short-term to long-term. So just now Lawrence said that he might now allocate some memes that he thinks are good for a long term and make a cyclical investment. So when you choose this kind of meme token for long-term allocation, what is your logic and thinking behind it, or what is your standard for screening them? Just now you mentioned the market value, for example, the market value may be tens of millions. Of course, we now find that memes with a market value of more than 10 million, 20 million, 30 million, or even 40 million or 50 million appear frequently on the chain every day. How do you identify them? What conditions do they meet that you think can be included in your long-term asset allocation choices? How do you think about this question?

Lawrence: I just mentioned market value, and the other is time. For example, if it can maintain a market value of more than 50 million for more than a month, I would think that this thing will not die at this stage. For example, this round of AI craze, of course, from the concept I just mentioned, it is definitely not particularly suitable to buy, because it is still relatively short, and at this stage, there are still good and bad, and the quality of many projects may not be very good. But I am personally looking for, for example, in another 10 days, for example, if the market does not rebound significantly, and the entire market does not experience a very strong surge, in this case, if some AI tokens can be at a relatively good market value level, and its holders have good data in all aspects, I may invest in some. The meme for long-term allocation depends more on the logic of the transaction. I have been holding a certain proportion of my positions in Doge since February and March this year. Although the returns are not particularly good compared to other memes, my overall trading logic still believes that if you choose a coin to represent a meme, it is still Doge. And recently, of course, there is another logic, because people will bite Musk through Doge, and then bite Trump. This kind of logic has a time cycle. I think that for example, if Trump comes to power and Musk really works on the department of government efficiency, in the long run, from the perspective of narrative and promotion, it will of course be good for some Doge on the chain, but the capital capacity is larger and it is easier, which is definitely more beneficial to Doge. And for example, I just mentioned the logic of Mog and PopCat. I prefer this kind of logic that can be explained clearly within 10 seconds. For example, Mog and PopCat, if dogs can do it, why can't cats? I think if I talk to anyone with this logic, I can tell him clearly why I want to buy this thing in one or two sentences. So there are probably several logics like this. The first is market value, the second is time, and the third is whether there is any special, long-term logic behind it driven by time. I actually still have quite a lot of political meme tokens, including Harris, Vance, and Tim Walz, the vice president of the Democratic Party. The logic I thought at the time was that this concept might be hyped up before the election. It has been almost half a year now, and I have been holding it.

Alex: According to the logic you just mentioned, it is a long-term narrative. This narrative is easy to appear repeatedly in the public eye and be talked about repeatedly, like the Mars City mentioned by Musk before, which was also very popular for a while. Does the meme of this track also belong to this concept, is it this category?

Lawrence: Yes, but this is specific to Mars City. Mars City was quite popular some time ago. Another problem is that the market value of Mars City on Solana is not very high. The two on the Ethereum chain are still fighting fiercely.

Alex: I would like to add a piece of information here, because some listeners may not know much about the US election, including the relationship between Musk and Trump, and the connection between the two of them and DOGE. Let me briefly talk about it. Because I just mentioned that DOGE is a relatively long-lived coin that is closely related to the current political hot spots and the political hot figure Musk. Doge, whose Chinese name is Dogcoin, is related to this election. The first is of course Musk's frequent calls. The other part is Trump's political platform, which means that he wants to cut the government budget and improve the efficiency of the entire federal government. He also mentioned two days ago that he wanted to cut the federal budget of about two trillion US dollars. The organization department to cut the budget and improve efficiency is the Efficiency Committee, and he hopes that Musk will lead the Efficiency Committee. Musk also readily accepted it. So if Trump comes to power, Musk is likely to be a member of Trump's cabinet. Then he will lead the government's reform and do things to reduce costs and increase efficiency. This must be a long-term job. The word doge he told Musk is the abbreviation of the Department of Government Efficiency. So from this narrative, he seems to be a narrative that will be mentioned repeatedly and has vitality for a long time. Here is some relevant information for everyone.

Louie: I don't have much faith in memes. I may only take Bitcoin often, and other memes like Ethereum and Sol, I will only keep a new position. This is how I configure my position, because I prefer the first level, and the teacher just now may be better at a meme configuration of the 1.5 level. I am used to buying 1% of a token in some early days. As it rises, I pay some costs and profits, and then leave 0.2%, which is a position of 1,200. I call it a "dream position." When the target rises to 500 million, 0.2% of the chips are worth 1 million U. Of course, you have to watch the changes in the target, whether it is a market sentiment or a change in its fundamentals, it is also possible to sell it, but even if you sell it, it is a profit beyond your own cognition, and you cannot earn it. Through such a configuration, I can not only meet my needs for short-term profits, but also meet my needs for long-term profits by earning some targets. But I will not have a very long-term expectation for some meme tokens, maybe a few months, I will not. Because through the market reaction during this period, a narrative like a zoo or an AI narrative, its approximate survival cycle, like this S-level, very high-quality narrative, it is about 10 days in the market. After 10 days, it will basically switch to the next narrative. So I prefer such a configuration, and I will not have a very heavy position in some meme tokens.

Stakeholder: I allocate it for the long term, mainly because I think meme is a separate sector. If we regard Web3 as a large investment ecosystem, it has a very important function in it, which is to attract traffic. In the total market value of the entire Crypto, it has a certain share. For example, Murad, which has been popular these days, actually has a large room for growth in the future, because those VC coins are still relatively watery. In general, from an investment perspective, since it is a sector, we also have this "28". Because in the past few years, it may have accounted for a certain share of the market value of the entire sector. From this perspective, it is actually calculable, so we can reversely infer how much market value it can have, how much it occupied in the past few years, how much it is now, and how much potential income it has, so I will allocate it. If I allocate it, my strategy is not to just hold it and wait for it to rise, I still have to do those things on the chain that can generate income. For long-term play, I will throw it into the V2 pool to ensure that you will not collect more goods when it falls, and you can continue to increase your holdings in the currency standard. In addition, I think there are so-called rookies or upstarts in every bull market, so I will find them and hold them for a long time. For example, at the end of last year, there was a wave of Wif and PopCat, and they were very conspicuous at the time. If you had such an understanding at that time, looking back, if you had allocated a portion of it for a long time, you would be very good today. Since we are using this time machine rule, let's talk about the small cycle today. I think there is a small cycle every year, that is, the market conditions in the first and second quarters are different from those in the third and fourth quarters, or there are market conditions in the first and fourth quarters, but not in the second and third quarters. At the end of a year, it is easy to produce these new upstarts. If the Golden Dog falls to a very low point, you can get a basket. Why do I get so many? Because I don't know which one will come out. My best way is to buy a little bit of them all after I have screened them, throw them there, and wait for the miracle to happen. The main reason behind this is to do it based on such a thinking. This is pure alpha income, like Bitcoin, Solana, or now I think that including Ethereum, Beta income is more certain. For example, Ethereum and Solana, there is no situation where you buy now and worry about losing money in the future, or being trapped forever and having no way to get out. I don't worry about this problem because we are optimistic about this industry as a whole. But these memes may increase their value by dozens of times, and it is obvious that the ones mentioned above do not have such potential returns.

Alex: Just now you mentioned that you might buy the selected targets. What are your screening criteria? After all, there are so many in the market now, and there may be dozens of similar market capitalizations with a value of tens of millions. What are your criteria?

Stakeholder: We need to make some classifications, such as memes, which should also be divided into sectors, such as animal sectors, AI sectors, and narrative sectors such as the space sector mentioned recently, such as Mars City, which is also a sector. Ground promotion plates should also be configured. I think in order to find them out, we also need to add other dimensions to screen. Market capitalization is one aspect. Market capitalization of more than 5 million is fine, and between 5 million and 200 million is fine, which is suitable for small funds to make big profits. We also need to see how long it will survive, and the trading volume and pool ratio should be found online. If some trading volumes are not sustained, then it is definitely not good. In addition, although it is an attention economy, we also need to look at the so-called "long-term builder", which is actually a small group of people. Let's not talk about faith. Maybe they like it more or it is related to their interests. They will do a lot of things to develop it. These people may suddenly have a point that explodes one day because of their interests. Attention will be turned to this, and the token will rise a lot. In this case, they will spend some time to look at it. They will also look at secondary creations. I think good things are empathetic. Some secondary creations made by him, you can see whether they are shoddy or exquisite, whether they have viewing value, and people can understand them and smile knowingly after watching them. I think this is very important. If there is such a mass base, I will definitely match it, and I will make comprehensive considerations to match it. I will also distinguish between large and small quantities. Maybe I can invest 100 yuan in this one and 200 yuan in that one.

The daily life of meme players

Alex: As senior meme players, how do you spend your day? If you want to let those newcomers who may want to play memes or want to try to trade memes more, how do you spend your day?

Louie: I don’t actually spend that much time, because basically 95% of my positions are in the market, and my main income comes from the changes in the market. But the overall rhythm is still very boring, because the market is relatively good now, I will not stay up late to watch the market, and basically turn off the computer at 11 o'clock in the evening. Because I go to bed at about 1 o'clock, I can't fall asleep too early, and it's not good to stay up too late. If I turn off the computer at 12 o'clock, I can't fall asleep until at least 2 o'clock, because the brain still needs a buffer and distraction process. So I usually turn off the computer before 11 o'clock, and there will be a certain amount of exercise time in the afternoon. I have a treadmill at home, and I have a fixed exercise time of half an hour to an hour every day. It's about this rhythm, and the rest of the time is basically watching the chain.

Alex: Does your specific work of watching the chain mean that you keep scanning some activities on the chain, or communicating with other friends in the community? What kind of things may it include?

Louie: This is quite a lot. First of all, you have to watch the real transactions on the chain, and then there are probably two major communities with heavy participation. One is a 24-hour conference room where everyone can talk about their views on memes or some new hot spots. The other may be more focused on data and some discussions on cognition. Everyone may conduct an in-depth analysis of some targets. There is also some monitoring of Twitter and KOLs on the chain, and information also needs to be filtered and absorbed. It is probably these three parts, the chain, the deeply involved groups, and the information sources that you monitor yourself.

Alex: Do you have regular eating and waking times?

Louie: Regular. Because it has been irregular before, so it needs to be regular. I think playing meme is essentially anti-human and very boring. All you have to deal with are K-lines and letters. There is no communication. Otherwise, how can you say it is sitting still? Without communication with the outside world, it is not a normal human life. Normal human life is to eat, drink, have fun, and chat. Although the income is considerable, when the market is good, even if you are not a top first-level player, you can still earn tens of thousands of RMB a day, but sometimes you may just want to watch TV or play games, and don’t want to go back to watch the market. It is a very anti-human work process.

Lawrence: This problem actually bothered me a lot some time ago. When I spent a lot of time on the chain in April and May, some of the time had to be spent with my family, especially with my daughter, but her bedtime is usually the trading time in the United States. In fact, on meme, it is a time period with the most new projects and the largest fluctuations. Since then, I have done some reflections. If I have time, I will check more new projects on the Solana chain before going to bed, maybe at 11pm, 12pm or 1am, because the Ethereum chain is not active enough. Then I will check some addresses that I follow, including some new projects promoted by KOLs. For those very new projects that may have just been launched within a day, I will scan them. In my spare time when I don’t have work tasks, I will check some memes that were previously placed in the observation cabin. For example, whether its holder data has changed, try to analyze the reasons behind the change. The time for trading memes alone seems to be these. The rest is like what Louie just mentioned, to pay attention to the information flow of various Twitter, the channels that TG follows, and the news of WeChat channels.

Stakeholder: I am at home about half of the time and not at home half of the time. When I am at home, because I have to pick up my child every day, he has to get up at 7 o'clock in the morning, so I get up at about 6:30. I have to go through all the lists and cultivate my sensitivity to data. At the same time, if there are some news that have a large trading volume, I will add it to my watch list. For the groups that mainly hype memes, I will quickly go through them. Basically, they will be over in 20 to 30 minutes. If there is still a little time, I will check Twitter. As for trading, since I don’t have the opportunity to participate in those short-term and very early ones now, I will just go with the flow. If I happen to have free time in the past few days, I will focus on it. As for rest, I must be regular at home. Normally, I go to bed at 12 o’clock. If I am not at home, for example, Lawrence talked about the time in the United States, then I think it is probably between 4 and 7 in the morning, which is the time when I am very sleepy. Sometimes I will play cards with people all night, and in the second half of the night, I will watch the chain to see if there is a chance to encounter the golden dog today. Maybe I will do this and not deliberately spend a lot of energy. One day I also felt guilty, thinking that I wasted my good time on doing this kind of thing. Life will become meaningless. Our original purpose is to make money. To put it more directly, it is a speculative behavior, which itself has little meaning. If that's the case, why don't I make it more fun and casual? For example, if I accidentally come across a golden dog today, I'll be happy if I make money, and I can share it with my friends and wife. That's about it.

Alex: It seems that after playing memes for a long time, everyone will still look for a rhythm of life that is more balanced with life and more conducive to physical and mental health, so that they can invest in a longer-term and healthier way. Thank you three guests, I hope there will be more opportunities to communicate with you in the future.