Module 11: Sector and Narrative Analysis
Memecoins
Chapter 10 of 13 · about 5 minutes
10.1 The screenshot
Mint's friend posted a screenshot: $200 turned into $40,000 on a memecoin in three days. Mint felt a familiar pull. "Maybe I should try it."
"Before you do," said Hash, "let's look at the screenshots nobody posts. And then let's be honest about what memecoins are."
10.2 What memecoins are
Memecoins are tokens driven mainly by humour, internet culture, community, and attention, usually with no product, revenue, or utility (Module 1, Chapter 5). Some started as jokes and grew into large communities with multi-billion-dollar market caps. The vast majority are created, briefly traded, and abandoned.
Memecoins are the purest example of an attention market: their price depends almost entirely on how many people are paying attention and buying.
10.3 Why memecoins exist and persist
| Reason | Explanation |
|---|---|
| Easy to create | Launch platforms let anyone create a token in minutes, often for very little money |
| Simple to understand | No whitepaper or tokenomics to evaluate; just a meme and a community |
| Fair launch appeal | Some launch without venture investors, which feels more equal than insider-heavy tokens (Module 5, Chapter 4) |
| Lottery-like payoffs | A tiny chance of huge gains attracts players |
| Community and fun | Being part of a joke or movement has social value |
| Attention economy | Online culture rewards whatever gets noticed |
At times, memecoin launch platforms have seen very large numbers of new tokens created every day.
10.4 The numbers nobody posts
Mint's friend's screenshot was real. But consider an illustrative memecoin portfolio:
| Value | |
|---|---|
| Number of memecoins bought | 20 |
| Amount in each | $50 |
| Total invested | $1,000 |
| Tokens that went to nearly zero | 17 (−$850) |
| Tokens that doubled | 2 (+$100) |
| Tokens that went up 10x | 1 (+$450) |
| Total result | −$300 |
Even with one 10x winner, this portfolio lost 30%. And many real experiences are worse: no winners at all.
The people posting screenshots are a tiny, self-selected group. This is survivorship bias: you see the winners, not the thousands who lost.
10.5 Who wins in memecoins
| Participant | Typical advantage |
|---|---|
| Creators and early insiders | Hold large shares bought at near-zero prices |
| Snipers and bots | Buy within seconds of launch, before ordinary users can (Module 3, Chapter 11) |
| Coordinated groups | Buy early, promote, and sell into the attention they create (Module 2, Chapter 11) |
| Paid promoters | Receive tokens or payment to promote |
| Late retail buyers | Usually provide the exit liquidity for those above |
In many memecoins, a large share of supply is bought by a small number of wallets in the first minutes after launch. On-chain tools can show this (Module 6, Chapter 9), and it's worth checking before buying.
10.6 Specific memecoin risks
| Risk | Explanation |
|---|---|
| Rug pulls | Creators withdraw liquidity or dump holdings (Module 2, Chapter 11) |
| Honeypots | Contracts that prevent selling |
| Insider concentration | A few wallets hold most of the supply |
| Extreme volatility | 50% to 90% moves in hours |
| Thin liquidity | Selling even small amounts can crash the price |
| Fake tokens | Copies with the same name as popular memecoins (Module 1, Chapter 5) |
| Malicious approvals | Scam sites and fake trading tools (Module 2, Chapters 7 and 8) |
10.7 Memecoins as a market signal
Memecoin activity is also useful information about the broader market, even if you never buy one.
| Memecoin activity | What it may suggest |
|---|---|
| Surging launches, volume, and attention | Late-cycle, risk-on speculation (Chapter 1, phase 5) |
| Celebrities and politicians launching tokens | Possible mania signal (Chapter 2) |
| Memecoin activity collapsing | Risk appetite fading |
10.8 If you choose to participate
Some people treat memecoins as entertainment, like a night out or a lottery ticket. If you do:
- Only use money you'd be comfortable losing entirely. Assume every position goes to zero.
- Use a separate burner wallet with limited funds (Module 2, Chapter 12).
- Verify the contract address from the official source.
- Check holder concentration and whether liquidity is locked.
- Take profits on a plan. If a position multiplies, consider withdrawing your original amount at least.
- Never use leverage on memecoins (Module 7, Chapter 14).
- Keep it a tiny share of your overall portfolio (Module 12).
Node, who'd been listening quietly, summed it up. "So memecoins are a casino where the house is whoever got in first."
"Often," said Hash. "And like any casino, a few people walk out rich, which keeps everyone else coming back."
10.9 Try it yourself
On a memecoin launch platform's data page or a DEX analytics site, look at tokens launched yesterday. How many still have meaningful trading volume today? Pick one with high volume and check its top holders: what share of supply do the top 10 wallets hold, and when did they buy?
Key takeaways from this chapter
- Memecoins are attention-driven tokens with little or no product; most are created and quickly abandoned.
- They persist because they're easy to create, simple, lottery-like, and socially fun.
- Survivorship bias hides the losers; even portfolios with a big winner often lose overall.
- Creators, insiders, snipers, coordinated groups, and promoters typically gain at late buyers' expense.
- Risks include rug pulls, honeypots, concentration, extreme volatility, thin liquidity, fake tokens, and scams.
- Memecoin activity is a useful signal of speculative risk appetite.
- If participating, treat it as money you can lose entirely, use a burner wallet, verify contracts, and never use leverage.