In the past month memecoins have once again taken center stage of attention within crypto led by the meteoric rise of $PEPE, which stormed its way to a ~$1.5bn market cap in only three weeks’ time. Pepe’s emergence and the resulting FOMO set off a chain reaction of countless other memecoins being created, most of which will undoubtedly serve as pump and dumps and/or brief rotations of money with a select few players walking away with a quick buck. That’s the stark reality, but how everything ultimately unfolds is anyone’s best guess and as with most craze’s a few select winners will likely live on and thrive.
What follows is a recap of the good, bad and ugly of the past month, including some forward-looking thoughts and quick tips from someone who’s dipped his toes in various tokens and has followed closely on a day-to-day basis.
And please note — this is all for fun and for the culture. Do not take any of this as investment advice.
The Good
First, let’s highlight a few good things that have come out of the recent craze.
Pepe
I’m a fan for various reasons. Yes, I get it — it’s a token based on a ridiculous meme with no intrinsic value. But open your mind and don’t let preconceived notions of value cloud your vision of what it might become.
Pepe commands value right now because the community says it does. Although the comparison might seem ridiculous, Bitcoin’s worth has parallels. Its properties and history are obviously different, but it still stands as one of the greatest social experiments to date in terms of the public collectively deeming something of worth. Warren Buffet and Charlie Munger are still scratching their heads. Elsewhere, some collectors spend millions of dollars on baseball cards, comics or other rare collectibles. They see value where others see old paper. The point being that trash for some might be value for others — always keep an open mind.
So, what’s the pitch for Pepe compared to all the other shitcoins out there? The verdict is still out, but my hunch is that Pepe will live on as a mainstay similar to Doge for years to come, and I’m here for it. Reasons are as follows:
- The meme clicks. Exact origins aside (see Coinbase fiasco), what I know is that Pepe the frog memes have been used across Crypto Twitter and the early internet well before the token was ever released. It’s a fun, already widely recognizable and symbolic meme embraced by internet communities, which is partly why it took off so fast. Shout out to Matt Furie who created it.
- For the people. On Pepe’s rise up one of the narratives was that VCs, influencers and others in power missed out. For once they couldn’t get in early ahead of the crowd and reap most of the profits. Many became frustrated and publicly rooted for the token to fail, which only exposed these actors further. For some, the token therefore stands for more than just a meme and represents a beacon of equality.
- DOGE / SHIB targets. #frogsoverdogs on Twitter. The Dogecoin and Shiba Inu pumps were stuff of legend, and those tokens are still kings and sit at ~$10 and $5 billion market caps respectively (down from ~$90 and $40 billion peaks). Pepe ranks third among memecoins with a ~$700mm market cap. What this means is that Pepe’s holders know what is possible, and for those who think Pepe should be the #1 memecoin, the targets ahead are clear. Pepe as the #1 memecoin kind of makes sense as well — although Doge has Elon Musk in its camp, its founders don’t often see the fun in these tokens and are not representative of the general culture. Some Doge and Shiba holders will also probably continue to move over to Pepe to catch some of the momentum.
- Virality. Pepe has become the fastest-growing ERC-20 token in crypto’s history, gaining a $1 billion market cap and 100,000+ on-chain holders in under 20 days. Some context with respect to other tokens is below. #pepe has also taken over Twitter with nearly 300k followers and millions upon millions of tweets and hashtags, and now mainstream media is also starting to report on it. Momentum and hype always fade, but these stats are striking and potentially representative of the beginning of a movement more than anything.
Pepe has also provided a number of people newfound wealth and possibly kickstarted a new bull run in the process. Could it turn into a multi-billion dollar or even $10 billion-plus people’s token embraced by crypto natives and widely incorporated across protocols? Potentially. Overall good.
Other Communities / Stories
These are memecoins, so let’s not forget to have fun. Besides Pepe, there’s been a few other tokens that I’ve enjoyed following.
$MONG. Mong Coin is a self-proclaimed vibe (no argument here). Born out of the court ramblings of Congressman Brad Sherman, watch this video and tell me you’re not pumped or at least mildly amused. It’s hilarious. @1MPROVMUSIC also created an anthem for the movement that’s on point and catchy. The token is one of the larger memecoins out there after Pepe this season (currently sitting at a $75 million market cap), and it’s turning into a bit of a cult led by Crypto Bitlord who’s a wild man that commands respect as a crypto OG. Memes are supposed to be fun and this has fit the bill with a really active following.
Turbo. I like the story here. You can read the origins thread on Twitter — essentially its founder Rhett Dashwood asked GPT-4 how to create the next great memecoin with a $69 budget (including concept, tokenomics and white paper), and a yellow Turbo Toad was born. It’s kind of like the Robin to Pepe’s Batman in this run given the frog theme, and Rhett has an emotional story (see 22:30) and seems to be a genuinely nice guy.
The Bad
Although memecoins and trading are fun, I can’t help but think how we’re right back where we started years ago with the first memecoin run, NFTs and other speculative mania. The blockchain industry and crypto sometimes gets a bad rap for being scammy and just gambling, which all of this further feeds into.
Of course, there’s a lot of great innovation going on elsewhere, but the fact that interest in memecoins can absolutely take over the narrative so easy shows that the industry and its collective participants may not have made as much progress in the past five years as some of us would like to think. Are we still in a bubble amongst ourselves, innovating for innovation’s sake without broader public adoption occurring? Maybe we still are for the time being, which this craze only brings to light.
Scaling takes time, but it also pains me that gas fees on ETH can still get so high just from a pop in retail trading.
The Ugly
There’s been an incredible number of knock-off memecoins trying to ride Pepe’s wave, a lot of which are quick pump and dumps or worse. Although some of these tokens are all good and fun (e.g., $GEN for generational wealth), some have crossed the line a bit (e.g., $PISS is a recent one trending).
The biggest controversy to date has been the ben.eth and $PSYOP launch, which in essence represents everything wrong with crypto today. In short, after launching and gaining traction with a token named after himself called $BEN (which Bitboy since took over), this guy somehow raised over $7 million in pre-sale for another token called $PSYOP. People actually trusted ben.eth and in aggregate sent over $7 million worth of ETH to his wallet in anticipation of the token’s launch. What could possibly go wrong. Days after launch, 50% of presale tokens have been circulated and rules are being made on the fly (e.g., bonus tokens rewarded to those who don’t transfer airdropped $PSYOP tokens). Others have been burned by the slow set up of the liquidity pool, resulting in them receiving a fraction of the token’s worth when trying to buy. All in effort of artificially maintaining a higher price and delaying the inevitable dump. If anything goes wrong, blame it on the $PSYOP. This just can’t end well and if it rugs we’re the only ones to blame.
Quick Trading Tips
To round out this discussion, see below for a few quick tips for those bold (or foolish) enough to enter the fray.
Dextools. This is the go-to for charting, locating trending tokens and to quickly see what’s going with a token’s underlying contract (ETH and BNB Chain). When looking at a particular token’s pair (e.g., PEPE/WETH) there’s a few quick items helpful to check.
Contract Verified and Renounced. If the token’s contract isn’t verified, be cautious. Verification on Dextools could be delayed at times, but if not verified the code of the token’s contract might not be visible to the public and there could be hidden traps. You can also check Etherscan and BscScan for this detail.
Relatedly, it’s also helpful to know whether the token’s developer has renounced the contract, meaning no further changes can be made to it. Otherwise, what may seem safe or reasonable today might not be the case tomorrow (e.g., tax fee changes, supply increase, etc.). One way to check whether a contract has been renounced is to go to the Contract / Owner section of a token on Etherscan. If the address shown is a wallet, the contract is not renounced, but if it’s a burn address such as 0x0000000000000000000000000000000000000000 then it is.
Honeypots. A honeypot means that a token might not be able to be sold as a result of malicious code. For example, there could be a sweeper script in place that automatically redirects funds sent to the address before any other type of transaction or subsequent sale can occur. A transaction history that suggests any transfers in are immediately transferred out are therefore indicative of this type of scam. There’s also tools out there like TokenSniffer which help check for honeypots and other scams by simply pasting a smart contract address into a scanner.
Buy / Sell Taxes. It’s best practice for these taxes to be zero. These are additional fees paid to the contract to either buy or sell the token, and it’s a warning sign if the creator is profiting from trading volume.
Holders, Total Transactions and Liquidity. The more holders and transactions the better. Be wary of rushing into a trade with low holder or transaction count (e.g., in the hundreds or sub-hundred) no matter the market cap — either you’re super early (unlikely) or you’re about to enter a trade that’s going to be difficult to exit.
Similarly, the higher liquidity the better. Liquidity represents the number of tokens present in smart contracts to facilitate trades for a DEX pool. If this is in the low $100ks and/or you see it dropping, you could be looking at a rug or high slippage generally. This is why it’s also helpful to know whether liquidity is ‘locked’ and for how long or else a dev might help set up a liquidity pool to lure traders in and then subsequently remove liquidity, which would prevent any further selling and present a rug. There’s various guides out there on how to specifically check whether liquidity is locked — see here for Etherscan and here for BscScan.
Lastly, note that total liquidity shown is only for the particular pool you’re looking at in Dextools and does not include other pools or centralized exchanges (CEXs) — this nuance is deceiving for some. For example, the PEPE/WETH pairing currently shows $10mm of liquidity for a ~$700mm market cap token, but with hundreds of millions of dollars in volume a day Pepe is much more liquid across other DEX pools and CEXs.
Final Thoughts
This is just a fun article and trading memecoins can be exciting, but make no mistake — this is a more or less a casino. There’s often no rhyme or reason why a token goes up, and as soon as volume slows or the crowd rotates to the next hot thing, most people are left holding the bag. Those that follow the volume and trade in and out of positions quickly following a disciplined set of buy/sell rules therefore probably fair the best, despite potentially missing out on the tremendous upside some tokens might offer (like Pepe). Easier said than done.
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