MEMECOINS 2024: MARKET, TRENDS AND OPPORTUNITIES. (2024)

Introduction

The launch of Dogecoin in 2014 attracted the attention of both the general public, crypto enthusiasts, the media, and - later - serious investors. It was the starting point of a new type of project - tokens based on popular and relevant memes.

Fast-forward to 2024, and the memecoin market remains one of the fastest-growing niches in the current bull market.

Crypto market capitalization by project type

Market analysis

Memecoin issuance

According to DEX aggregator data, every day between 40,000 and 50,000 new crypto tokens are created; thiscan reach 100,000 during periods of intense viral hype. Solana leads with 17 to 20 thousand new tokens a day.

Top 15 chains by the number of memecoin pools launched every day (DexScreener, as of March 29, 2024)

The level of memecoin creation activity remains very high: the average age of a liquid token is only 1.3 hours. Once again, Solana leads in terms of emission activity.

The number and mean age of coins across the top 10 chains with the most active emission rates; the size of each circle reflects the total liquidity of all the coins issued (data: DexScreener)

One of the first stages in the promotion of a new memecoin is its listing on a DEX and on popular DEX screener platforms. As an additional marketing tactic, memecoins use listings on generalized crypto aggregators, such as CoinGecko and CoinMarketCap. This is particularly relevant for the leading, highly liquid projects.

Number of liquid memecoin projects (those with non-zero trading volume). Data: CoinGecko and CoinMarketCap)

As of March 2024, there are over 2,000 memecoin projects overall, out of which around 1,000 are liquid (i.e. have a non-zero trading volume).

Liquid vs. zero-volume memecoin projects in March 2024 (data: CoinGecko and CoinMarketCap)

The majority of memecoin projects (89%) have a market cap between zero and $1,000. Only 5% of memecoins had a market cap above $10 million in March 2024.

Memecoin distribution by market cap

Market capitalization

The number of liquid memecoins vs. their market caps (data:CoinGecko and CoinMarketCap)

Starting from the emergence of memecoins in 2014, the overall market cap of this niche has fluctuated greatly. The first big upward move happened inQ2 2017(1,198%), when the overall market cap of memecoins reached $343 million. In Q1 2018, the market crossed the $1 billion mark for the first time, after which the market cap ranged between $250M and $900M. The next period of growth took place inQ1 2021 (+1,287%), when the memecoin market cap reached $7.2 billion. Throughout the rest of 2021, it skyrocketed to $30-60 billion.

The 2022-2023 crypto winter caused memecoins’ overall market cap to plummet to $17-21 billion. In Q4 2023, the market consolidated around $22 billion before the next push. In Q1 2024, the memecoin market cap grew significantly (by 169%) to reach$60 billion, which isn’t far from the ATH value. Due to ongoing interest in memecoins, their overall market cap could now amount to $60-75 billion.

Volatility

The memcoin market is very sensitive to the prices of BTC and ETH (0.87 correlation).

Total memecoin market cap and BTC market cap

In spite of this strong correlation, since 2017 the memecoin market has been far more liquid - in the sense that the ratio of meme tokens’ trading volume to their market cap is several times higher than that of Bitcoin. As of March 2024, the turnover ratio for memecoins is77% - and only 1.8% for Bitcoin.

Annual turnover ratio (Volume-to-Mcap) for memecoins and BTC

Memecoins’ extra-high volatility - even in a market that is considered generally very volatile - is a consequence of the current high virality in this niche. Memecoin buyers are mostly short-term investors or traders. Many projects can’t manage to stay liquid even for a week (this applies to 90% of newly issued coins). For this reason, only 1,000 out of the 40,000-50,000 new memecoins ever get listed on a well-known exchange.

Blockchain trends

An analysis of the memecoins listed on aggregator platforms shows that Ethereum leads among all chains by the absolute number of projects (45%). Other popular blockchains for launching memecoins are BNB Chain, Solana, and Arbitrum (53% of all liquid memecoins). Solana has the highest number of new DEX pair created daily.

Liquid memecoins by blockchain, the top 10

The majority of memecoins are single-chain, but we have also identified 64 multichain projects. The first multichain memecoins emerged in late 2021.

Memecoins by the number of chains they operate on

95% of all multichain memecoins support Ethereum.Ethereum + BNB is the most popular combination of chains, with 40% of multichain memecoins using this pairing.

Multichain memecoins ranked by the chain combination used

Memecoin capitalization and volume by blockchain in Q1 2024 (data:

CoinGecko & CoinMarketCap)

Ethereum-based memes lead by market cap and trading volume.

Memecoins with a market cap above $1M by blockchain

The top 50 meme projects (accounting for 99% of the total memecoin market cap) feature tokens issued on the following chains:

• Ethereum - 32
• BNB - 9
• Solana - 4
• Cronos - 1
• Base - 1
• Arbitrum - 1
• Avalanche C-Chain - 1
• Cardano - 1

The 10 biggest memecoins account for 90% of the overall memecoin market cap. 7 out of 10 run on Ethereum. Most of these projects have been around for months and have a large community.

The rest of the top 5 is constituted by BNB Chain, Solana, Cronos, and Base: together, the projects that run on these chains account for 51% of the overall memecoin market cap.

Ethereum also leads in terms of the absolute number of projects with a high market cap. The top 3 blockchains by market cap per project are BNB Chain ($62M), Ethereum ($56M), and Cronos ($491M).

Top 10 memecoin projects by market cap, March 2024

A structural analysis of these projects grouped by blockchain reveals a few features of the current memecoin bull market:

a growing number of high market cap projects on Ethereum and BNB Chain: the share of memecoins with a capitalization between $10M and $100M is increasing;

an explosive growth of memecoins on Solana: the share of projects with a market cap above $100M has been growing fast since Q4 2023.

Memecoin market cap structure on various blockchains

Earning with memecoins: the strategies

Investing in memecoins

• Investors track memecoins that are ready to attract investments, such as MEME (Binance), SLERF, BOME, etc. Each is a new opportunity to buy meme tokens at a low price.
• Entry criteria are usually determined in advance by an investor: market cap between $500,000 and $2-3 million, trading volume upwards of $2 million a day, various scam checks, etc.
• Some investors focus on specific chains, such as only Ethereum or only Solana.
• Money management strategies used include splitting an amount equally among several assets, scaled selling, etc.
• Investors also track insider info on launches by experienced teams or VCs.
• Automated memecoin sniping tools are often used, such as Gem Hunter Dog, Block X-Ray, Sniper Scores, Ushi.pro, BananaBot, UniBot/Trojan, Maestro, SolTradeBot, Rock, etc.

Memecoin investment risks

• Widespread scams: 40% of projects are affected by pumps & dumps, 30% are rug pulls, 20% have extra fees attached, and 2-3% are honeypot scams.
• High volatility: memes are 50 times more volatile than BTC.
• Lack of objective data: people often buy memecoins based on name alone.
• A memecoin project can be simply abandoned;
• Manual traders lose out to bots: the latter initiate transactions too fast for human traders to react, leading to losses or lost opportunities. Bots cause sudden price fluctuations, which make the market even more volatile and hard to understand for regular users. Fast-changing market conditions and the noise created by trading algos complicate analysis and reduce the effectiveness of regular trading strategies.

Types of scams

Mean vulnerability ratio of memecoin contracts (for tokens issued less than 3 months and over 3 months ago)

Vulnerability ratio is the ratio of the mean number of vulnerabilities found in memecoin contracts to the maximum number of vulnerabilities.

In the past 3 months, we’ve seen an increase in the share of projects in whose contracts vulnerabilities have been identified. Overall, at least 20% of memecoins feature at least one vulnerability in their contract code.

Share of memecoins affected by specific vulnerabilities (for tokens issued less than 3 months and over 3 months ago)

Whitelisting, Tax modification, Antiwhale, and Blacklist are the most common vulnerabilities discovered in memecoin contracts in the past 3 months. During this period, each of these threats has become 15% more common on average.

Rug pull

Liquidity share controlled by the team/creators and the share of projects where the team/creators hold a non-zero liquidity share (for tokens issued less than and over 3 months ago)

Arug pull is one of the most common scams: the way it works is that the creators of a token pull out investors’ liquidity from a trading pool. A few factors related to how token liquidity is controlled help predict the risk of a rug pull.

Our analysis shows that the risk of memecoin rug pulls has increased in the past three months:

• growing number of projects where the team/creators hold a non-zero share in liquidity;
• growing share of assets controlled by project creators;
• increasing risk of liquidity being controlled via ‘taxes’.

Token buy & sell taxes and the share of coins with non-zero taxes (for tokens issued less than and over 3 months ago)

Honeypot scams

As the memecoin market exploded, over 85% of all such projects had low liquidity and could hide vulnerability at the level of contract code. Honeypot is one of the most common contract-level threats: it makes it difficult to re-sell tokens and thus artificially inflates their prices. We found that the honeypot vulnerability has become 27% more common in the past 3 months (3.3% of tokens affected vs. 2.6%).

The share of memecoin smart contracts in which honeypot threats were found (for tokens issued less than and over 3 months ago)

Scams by blockchain

Mean vulnerability ratio of memecoin contracts running on different chains (based on smart contract analysis)

Vulnerability ratio is the ratio of the mean number of vulnerabilities found in memecoin contracts to the maximum number of vulnerabilities.

Mean community trust index for memecoins on different blockchains

Sniper bots

Sniper bots are automated trading tools designed for assets with a low market cap and high volatility, such as memecoins.

These bots can quickly identify and exploit good trading opportunities - and do it faster than other traders. They buy or sell memecoins before other market players can react to new information or a trend shift. Bots can buy (snipe) a memecoin as soon as it’s listed on a DEX, for example, or when the price moves suddenly or if there is a difference in prices on two exchanges/DEXes.

Such bots can be very effective. For example, when the SOAR token was launched with a $20 million market cap, sniper bots made $1.36 million in unrealized PnL by investing only $67 across 9 different wallets. In the meantime, the creators of SOAR made only $310k in unrealized PnL.

Sniper bots are one of the most popular types of trading bots.

Types of trading bots - different objectives bots are used for:

• buying immediately after listing- to profit from the initial pump;
• scalping- quickly entering and exiting trades for a small profit;
• arbitrage- using price differences on two platforms to extract a profit;
• front-running- finding unconfirmed transactions in the memepool and executing the bot’s own transactions before the former are confirmed;
• technical analysis-based trades- trading bots can use technical indicators to trigger trades in response to changes in the market;
• liquidity control- used in the crypto ecosystem by both traders, platforms, and ecosystems. Traders use them to automate their liquidity pool positions and profit from spreads, while platforms and projects use them to maximize asset liquidity;
• market making- these bots participate in creating market spreads and ensuring liquidity by placing simultaneous buy and sell orders.

How trading bots work

• A trading bot is engineered to perform specific actions when certain criteria are met.
• Bots can use an API to connect to a trading platform, take trades automatically, get price quotes, and track market activity in real time.
• Bots use routing algorithms to minimize delays. Buy and sell orders or DEX transactions can take only milliseconds to place.
• Some bots use ML and AI to analyze trends and forecast price actions, which helps them find the best opportunities.
• Bots can be programmed to follow automated risk management strategies, including stop-loss and take-profit settings.
• Bots can be integrated with wallets for trading on DEXs.
• Some bots can be used directly from Telegram.

How do sniper bots work?
(based on the source code from 28 sniper bot repos on GitHub)

• Finding a liquidity pool.Sniper bots use various methods to locate new memecoin liquidity pools. They can scan the blockchain memepool to find transactions that add liquidity to a pool, or interact with the smart contracts of AMMs calling functions (like getPair on Uniswap) to find swapping pairs that include a specific token. However, the existence of a pool doesn’t guarantee that it has liquidity, so the bot also needs to check the reserves using a function like getReserves.
• Scam protection. These checks help sniper bots to avoid buying scam or suspicious tokens. They can make a test swap, request data from the RugDoc service, or check the source code of the token’s smart contract on popular blockchain explorers. Some bots also check that a liquidity pool contains sufficient reserves before buying.
• Advanced features. To circumvent contract code that restricts bot activity, sniper bots can use features like waiting for a certain number of blocks after liquidity is added, or checking that trading is already enabled. Some bots can make multiple buys if the contract limits the amount of tokens that can be bought in a single transaction.
• Buying tokens.Sniper bots can interact with the AMM contract or use their own to perform complex operations, such as checking that a token isn’t a honeypot scam.
• Selling tokens. Not all sniper bots support automated selling. Those that do allow users to set the profit ROI that triggers a sale, as well as stop-loss and even trailing stop settings to protect against excessive losses.

Sniper bot types

• Single-target - bots that buy tokens of a specific project immediately after the initial DEX listing.
• Multi-target - bots that buy all newly-listed memecoins in order to sell them almost at once, as long as the price is high.

Sniper bot examples: BananaBot, PancakeSwap Sniper Bot, UniSwap Sniper Bot, UniBot/Trojan, SolTradeBot, Rock,Hummingbot,Bogged Finance,Mizar,Unibot,Maestro etc.

Advantages of sniper bots

• Speed: bots can open trades much faster than a human, which is especially important in highly volatile markets where each second can impact profits.
• Automation: bots can run 24/7 and trade in accordance with their algorithm, freeing traders from having to constantly watch the market.
• No emotions: automated trading helps avoid emotion-driven decisions that could lead to losses. Instead, bots promote a more rational approach to trading.

Disadvantages of using bots

• Legal risks: using certain types of bots (e.g. front-running) can be considered an unfair market practice and even be illegal in certain jurisdictions.
• Anti-snipe measures: some platforms actively try to prevent bot activity and block addresses or accounts that are found to be used by a bot. Other measures include increased fees for initial swaps in a new pool;
• Provider reliability: a bot is only as good as its algorithm. Plus, bots with opaque source code can contain hidden features, such as being able to capture a user’s private key.
• Scams: bots end up buying tokens that quickly become worthless.
• Front-running: other bots can profit from front-running a user’s transaction.

Overall, the use of sniper bots leads to a fast increase in price in the initial period after pool launch due to limited supply and high demand. Arecent study shows that 28 open-source sniper bots made a total of 14,000 snipe transactions on Ethereum and over 1.4 million on BNB Chain, buying tokens worth $28.8 million. Considering that there arer hundreds of such bots, they can have a real impact on memecoin price fluctuations.

How projects fight sniper bots

• Limiting the number of transactions that a single address can execute within a set time period - in order to avoid mass buys and sells by bots;
• minimum hold time - a requirement that an address hold the tokens for a set time before it can sell them; prevents fast buying and selling by bots;
• temporary locks for new pools - a time window immediately after pool creation during which it’s important to transact with the pool;
• anti-snipe functions in smart contracts - these can identify and block sniping attempts, for instance, by rejecting transactions placed too soon after a listing;
• captcha and other verification methods;
• fees for early selling;
• blocking addresses or accounts that use bots.

Memecoin launch strategies

Around $500,000 to $1 million is needed to launch a mid-sized memecoin with a $10-50 million market cap:

• $100,000+ locked liquidity;
• Market making costs: ensuring a good trading volume, paying fees, maintaining price support levels;
• Influencer marketing: up to 15% of token supply + USDT fees;
• Screener costs: listing on Dextools, DexScreener, Coingecko Terminal, Birdeye;
• CEX listings: from $30k to $200k in USDT for a Tier-2 or Tier-3 exchange + a token allocation.

At least $10 million is needed to launch a top-tier memecoin

Types of launches

• Fair launch – a DEX listing of the full available supply; everyone has equal chances to buy tokens;
• Launchpad presales: Pinksale, Solanapad, DAO Maker, etc.;
• Presales in Twitter and Farcaster (e.g. BOME, Slerf, DuDiez);
• Takeover - gradual buying of a ‘dead’ token off the market and re-launching the project after getting control over its social media accounts.

Factors influencing a memecoin’s success

• Concept

In short, dogs are more popular than cats.

Memecoin concepts (among the top 200 memecoins on CoinMarketCap and CoinGecko)

The biggest memecoins overall areDOGE, SHIB, and PEPE. Dog-themed memes remain the most popular concept with a total market cap of over $46 billion.

It’s worth reminding thatDogecoin, whose title was connected to the popular “doge” meme featuring a shiba inu dog, was the first-ever memecoin: it appeared in 2013. $DOGE didn’t have any specific utility or goal: its creators simply wanted to have a laugh about the emerging crypto market. Today, $DOGE boasts a $20 billion market cap. Even though no serious changes were made to the code of Dogecoin since 2015, DOGE remains popular - partlythanks to Elon Musk’s support.

The success of the first memecoin predictably led to the appearance of competitors. Shiba Inu was launched in 2020 with the plan to exceed the popularity of DOGE. The team behind SHIB used a similar image of a shiba inu dog. Today, SHIB can boast a $15 billion market cap, partly thanks to its ecosystem with two additional tokens (LEASH and BONE) and a DEX (ShibaSwap). Recently, the teamlaunched a new L2 called Shibarium, which serves the needs of SHIB.

PEPE Coin was launched in 2023 and based on the popular Pepe the Frog meme characters. Its creators announced the end of the dog era and the start of frog domination - but, as this study shows, dog-themed coins still lead, evolve, and develop.

PEPE’s big advantage is that it runs on BNB Chain, which is faster and cheaper than Ethereum. PEPE is one of the fastest-growing memecoins that attracts a lot of attention from the Web3 audience.

Other memecoins, such asDogwithhat (WIF) andBaby Doge Coin (BABYDOGE),have also been growing together with the price of Bitcoin. WIF’s market cap now amounts to $2 billion, while BABYDOGE’s is $306 million. The strategic positioning of BABYDOGE as the successor of Dogecoin helps it remain popular with investors, while its highly active marketing and community teams help promote brand awareness and engagement. .

Just as active is BONK - the first big dog meme on Solana, whose developers clearly reference DOGE and Shib.The partnership between BonkDAO and Revolut (a leading EU fintech firm) could help increase the memecoin user base to 500 million users.

Solana-based memes, such as Book of Meme (BOME), seem to be taking over the media space and pushing out memecoins on Ethereum. According to thisSantiment report, both SOL and BOME have been dominating conversations on X, Reddit, Telegram, and 4Chan. Binance recently published an investigation into potential insider trading of BOME, which could both hurt the project’s reputation or increase the hype around it.

Another hyped new memecoin on Solana is the sloth-themed SLERF, whichraised $10 million on the presale - even though the developer made an error in the code and sent all the raised funds to a burner address.

• Deployer wallet

The success of a memecoin is also linked to the wallet that deploys its smart contract: a large amount of funds in the wallet signals serious intentions, while the history of previous launches by the same team and positive experience with their previous projects reflects their reputation. High investments and positive track record and increase investors’ trust in a new memecoin.

• The team behind the memecoin

Having a well-known team or creators can impact the success of a new crypto project - and this is true for memecoins, too. Our analysis has shown that memes with known teams behind them exhibit much faster market cap growth.

• BOME – $600 million (Darkfarms)
• WIF – $2.1 billion (created by ben.eth eth, who is also behind BEN, PSYOP, Nakamigos NFT, and FINALE (inactive)
• Bonk – $1.3 billion (Solana Labs)
• Shiba Inu – $15 billion (team associated with the founder of Coinmarketcap)

Memecoin market cap change over 4 months for tokens created by well-known and unknown teams