Don’t get me wrong, but I fail to understand how and when we got to the point when the Solana meme market cap surpassed $3.5B while overall meme coins aggregated $48B value. What started as a joke has now turned into a multi-billion dollar opportunity … or should I say a huge potential loss? Today, we’re diving into the depths of the Solana meme coin craze to discover what’s on the flip side.
To begin with, all crypto novices who may have heard only about major cryptocurrencies like Bitcoin or Ethereum should be enlightened about the nature of the meme coins and their link to the Solana blockchain.
Meme Coins Explained
The term cryptocurrency is more or less familiar to the general public today. However, if you mention a meme coin, you might still raise a few eyebrows, even among financial innovation-seekers.
In essence, meme coins are cryptocurrency tokens based on some popular or niche internet meme, joke or any event from the popular culture context.
They often start their trading journey as humorous projects. E.g., you may find a meme coin called Memecoin that basically says it has no utility, no roadmap, no promises, and no expectation of financial return. Why would you buy it? Just for fun, I suppose. However, jokes aside, some of these tokens with fun names gain large support communities, solid investments, and even real-world utility.
All meme coins are different, but they all have a lot in common. The most regular meme coin features are:
- they are driven by the community, influencer hype, and market sentiment created by social media;
- they have little to no real-world application or utility;
- they are highly volatile;
- their supply is large or infinite, accompanied by low per-token prices;
- they are often excluded from major exchanges, using DEXs as a common starting point;
- some meme coins introduce staking, reflections, or burns to incentivise holders and add some rewards to the token’s utility;
- they are often distributed through giveaways, airdrops, or contests.
DOGE and TRUMP
Perhaps the first example that comes to mind is Dogecoin (DOGE), continuously promoted by Elon Musk. The cute dog-themed meme coin had no real-world utility whatsoever at the time when a single tweet from one of the world’s richest people propelled its value by thousands of percent. After the token gained popularity, both Tesla and Musk’s rocket company SpaceX started accepting dogecoin for some purchases.
Once the craze wore off and the meme coin lost half of its value, Musk almost got in legal trouble for an alleged “pyramid scheme.” However, that’s another story. What we need to know is that the (in?)famous crypto token is still alive and well. DOGE is not only actively traded on crypto exchanges but also available via Grayscale Dogecoin Trust, boosting institutional adoption among the enhanced interest in meme coins.
Where there’s DOGE, there must also be TRUMP. And no, I’m not suddenly changing the topic to politics. We’re still discussing crypto, as the latest American President has won a significant share of support due to his pro-cryptocurrency stance. Unexpectedly, however, not only Donald Trump but also his wife, Melania, have launched a few crypto coins themselves. Before you ask, they are meme coins residing on the Solana blockchain.
$TRUMP and $MELANIA have lost 81% and 92% of their initial value, respectively, in the few months since their launch. In fact, the majority of this worth was wiped off in a few days after the inauguration. At the same time, despite their high volatility, the coins are still accepted as a means of payment by several websites selling Trump-branded products such as watches, sneakers, and fragrances, along with credit cards and Bitcoin.
Why Solana?
Although we did mention DOGE as the most prominent example of meme coin, it has nothing to do with Solana. Dogecoin is using a mining mechanism similar to Bitcoin or Litecoin, and is hosted on its own blockchain. However, the majority of other meme coins are “tokens” in a technical sense. Therefore, they operate on top of an existing blockchain and have few tech requirements to launch and operate.
As you might know, Ethereum is typically a Mecca for DeFi projects and alternative crypto finance. In the same way, Solana has become the hottest destination for meme coins. Here’s why.
Solana stands out among other blockchain networks due to its remarkable transaction processing speed and extremely low gas fees. The blockchain is highly scalable and can handle countless transactions at the same time. Instead of a multi-layer ecosystem structure like the one offered by Ethereum, Solana hosts a range of decentralised applications (dApps) in the same blockchain infrastructure as cryptocurrency tokens.
What’s most important, however, is that creating a meme coin on Solana doesn’t require deep technical expertise or sophisticated equipment as in the case of Bitcoin, for example. Hence, pretty much anyone can create a meme coin with just a few clicks using free, off-the-shelf software. Millions of people do exactly that, creating speculative tokens without any business plans or technical white papers, a low-budget website, tops. Dozens of thousands of new meme coins emerge each day, millions – each year.
Meme Coin Craze
Meme coins are fuelled by hype and influencer promotion. They have no intrinsic value to offer investors, so constantly being in the public eye is vital for memes to stay relevant and competitive. In recent years, the meme coin market has experienced enormous growth, as humorous tokens go viral in the span of a day.
The nature of meme coin trading is fleeting. People test the waters of one crypto lured by the attractive narrative, then shift to another one just as quickly, bargaining on short-term trends, leveraging momentum to profit and move on. Unlike Wall Street trading, meme coin sales are not meant for long-term financial stability. And yet, meme coin mania on Solana has become a true cultural phenomenon, attracting degen traders, influencers, and retail investors alike.
The rise of meme coins built on the Solana blockchain was particularly explosive in late 2023 and early 2024. Coins like BONK and dogwifhat (WIF) gained traction and were listed on major exchanges like Binance and Coinbase, legitimising the meme coin trend. These coins saw massive gains, some surging as much as 1000% in a day, but many also witnessed the sharpest falls. A lot of investors faced the disappointing realities of crypto scams and pump-and-dump schemes.
Behind the Pretty Meme Picture
If you enter any meaningful Reddit discussion on Solana meme coins, you’ll come across numerous mentions of rug pulls, pump-and-dumps, scam coins and all the explicit synonyms to “throwing your money away” and “being scammed.”
It’s pretty wild that people do expect to gain solid wealth from investing in speculative assets with no value to begin with. However, the massive scale of various scheming mechanisms behind popular meme tokens is no less impressive.
Scheming Mechanics
Most of the schemes involve coordinated groups artificially inflating the price of a newly created token to attract unsuspecting investors, only to sell off their holdings at the peak, leaving latecomers with significant losses. Those groups start numerous projects at once, as creating meme coins doesn’t require much effort.
Teams behind the market manipulations consist of so-called “cabals” – people who specialise in launching meme coins, key opinion leaders (KOLs) – typically social media influencers with large followings, and other assistants. KOLs may not always be aware of the scamming nature of the assets they endorse. They often receive large amounts of the meme coins in exchange for promotion or buy them for their own money at deep discounts. So, when the scheme wipes out the token’s market value, they may actually face monetary losses as well.
Popular Scam Tactics
Scammers regularly capitalise on the fear of missing out (FOMO) persisting in the crypto market by creating a sense of urgency around a new token. They use social media and other platforms to spread hype and conduct aggressive marketing campaigns, enticing investors to buy in quickly before the price crashes.
One common tactic employed by coordinated groups to exploit retail investors is called ‘sniping.’ This involves using trading bots to purchase newly launched memecoins at the very start, allowing them to sell quickly and profit from the brief surge in value, despite the token having little or no real worth. These trader groups can be both connected to the token developers or act separately, profiting from the hype.
This strategy gained widespread attention during the Trump memecoin launch, accompanied by media frenzy, where specific wallets suspiciously managed to acquire large amounts of the token at minimal cost. Shortly after, these wallets offloaded their holdings at the peak price, triggering a sharp price drop.
What You Should Consider Before Investing in Solana Meme Coins
All things considered, before you dive in the meme coin waters, think twice. Meme coin speculation may be profitable in the short-term, but you also risk losing thousands of dollars in a blink of an eye and get a few grey hairs in the process of frantic trading.
Meme coins exhibit 50 times greater volatility than Bitcoin with its ups and downs ever has and are frequently associated with fraudulent activities. By rough estimations, around 40% of these projects involve pump-and-dump schemes, while another 30% turn out to be outright rug pulls.
If you are fortunate enough to come across a rare jewel – a really valuable meme coin with utility potential and long-term prospects – in this pile of rubbish tokens, please mind that most financial regulators of the world do not treat these speculative cryptos as securities or any assets of value. You are unlikely to find protection or reimbursement in case of a scheme or sharp devaluation due to the fading hype.
All in all, this experience might be life-changing but there’s no guarantee that you’ll like those changes and where you end up after that. If you’ve already seen the latest Squid Game season, you know what I mean. So, stay safe, invest responsibly and treat Solana meme coins with extreme caution and scepticism.
