Meme coins like Dogecoin (DOGE) and Pepe (PEPE) have gained massive popularity, elevating this sector to become the fourth most valuable in the cryptocurrency market. Despite the excitement, these assets are known for their volatility and inherent risks.
A Brief Lifespan for Meme Coins
The report “State of Memecoin 2024,” conducted by Chainplay, provides a detailed analysis of the meme coin industry. Published on August 13, the study examined over 30,000 meme coin projects across Ethereum (ETH), Solana (SOL), and Base.
The findings reveal that meme coins generally last only a year, compared to three years for other crypto projects. Shockingly, 97% of meme coins have already failed, with more than 2,000 disappearing every month. This rapid turnover highlights the speculative nature of these assets. Nearly 60% of investors view them as short-term bets.
High Risk, High Reward: The Reality of Meme Coins
Chainplay’s study paints a stark picture of the meme coin market. It reveals that meme coin projects from 2020 are dying at a rate of 20 per month. This decline is largely due to the inability of new projects to gain traction and survive.
The research identified dead meme coins using specific criteria: a 24-hour trading volume below $1,000, no updates on Twitter for three months, a liquidity pool under $50,000, or a deleted Twitter account.
Scams and Malicious Activity in the Meme Coin Market
The report also highlights a troubling trend: the prevalence of scam activities within the meme coin sector. More than half (55.24%) of all analyzed meme coins were categorized as “malicious.” The Base blockchain has the highest percentage of malicious meme coins at 59.15%, followed by Ethereum at 55.59%, and Solana at 51.87%.
These findings underscore the financial risks linked to meme coins. Nearly one-third of investors (28%) reported being victims of scams. However, audit reports have shown to be effective in identifying fraudulent projects, with an 81% success rate.
Continued Popularity Despite the Risks
Despite the high risks, meme coins continue to attract investors. Two-thirds of cryptocurrency investors (58%) have ventured into this market, drawn by the possibility of high returns.
Interestingly, the study reveals a difference in sentiment based on investor experience. Newer investors, with less than six months in the market, are more likely to see meme coins as essential portfolio holdings. In contrast, long-term investors tend to approach these assets with greater caution.
Media coverage of meme coins reflects this caution, with only 13.77% of news reports showing a positive outlook on the industry.
Pump.fun’s Record Revenue Amid Meme Coin Craze
Despite the high failure rate among meme coins, interest in these assets remains strong. For example, Pump.fun, a Solana-based platform for deploying meme coins, generated over $5.3 million in revenue within 24 hours, according to DefiLlama data.
Pump.fun’s revenue far exceeds that of established blockchain networks like Ethereum and Solana, which generated $2.35 million and $1.72 million, respectively, in combined revenue and fees.
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