Who Really Profits From Meme Coins? Galaxy Says It’s Not the Traders

A brand new Galaxy Research report finds that the main beneficiaries of the meme cash are usually not the merchants, however the infrastructure suppliers. 

Platforms reminiscent of launchpads, decentralized exchanges (DEXs), and automatic buying and selling bots seize substantial revenues. Meanwhile, the majority of particular person members incur losses in what known as a zero-sum sport with detrimental anticipated worth (EV).

The Meme Coin Paradox: Mass Participation, Concentrated Profits 

Meme cash, often described as tokens created round web jokes or cultural tendencies with no utility, have been round for over a decade. Notably, the surge in recognition and ease of creation has sparked a full-scale growth. Millions of recent tokens have flooded the market in the previous few years.

Traders are regularly drawn to this area by the promise of fast earnings. Nonetheless, Galaxy Digital famous that, 

“Trading them is much less about fundamentals and extra about what may be described as ‘cultural arbitrage’: predicting or front-running consideration cycles, e.g., shopping for the token for a viral TikTok development earlier than the market acknowledges it’s viral. In the future, the overwhelming majority of market members find yourself dropping cash buying and selling meme cash, and in lots of respects, it’s simply plain playing.”

In the newest report, Galaxy Digital’s analysis analyst Will Owens defined that the meme coin ecosystem capabilities as a stack. Here, the stream of cash is generally concentrated in the infrastructure that helps creation and buying and selling.

At the base degree, blockchains like Solana dominate. It hosts over 32 million tokens, a greater than 300% improve since early 2024. The blockchain accounts for 56% of the 57 million meme cash throughout main chains, together with Ethereum, Base, and BNB Chain. 

“Base and BSC additionally host important exercise, whereas Ethereum hosts larger tokens and a much less cutthroat tradition,” the report reads.

Solana’s low charges and high throughput have made it the most well-liked venue, with meme cash accounting for about 20- 30% of its DEX buying and selling quantity, down from 60% in January.

Next, launchpads kind a vital layer, enabling speedy token deployment. Solana’s Pump.fun, which debuted in early 2024, exemplifies this development by industrializing the course of by bonding curves that assure liquidity at minimal value. 

The platform has created about 12.9 million tokens, which make up 40.31% of the whole 32 million Solana tokens. Tokens launched on Pump.enjoyable boast an aggregated absolutely diluted market cap (FDMC) exceeding $4.8 billion, although this peaked above $10 billion earlier in the yr. 

“The power-law distribution of worth amongst Pump.enjoyable tokens is astonishing. Out of practically 12.9 million tokens launched on the platform, simply 12 account for greater than half of all absolutely diluted market cap (FDMC). Those dozen tokens collectively characterize $2.69 billion, or 56% of the whole $4.8 billion FDMC, whereas the different 44% is break up amongst the remaining hundreds of thousands of tokens,” Owens famous.

Furthermore, Pump.enjoyable has generated important charges from creation and buying and selling. In summer time 2024, it briefly misplaced ground to competitors like LetsBonk. Nonetheless, the launchpad reclaimed dominance by improvements reminiscent of Project Ascend, which introduces dynamic fee models for creators, and integrations with streamers for interactive launches.

Meanwhile, DEX aggregators and automatic market makers (AMMs) like Jupiter, Raydium, Orca, and Pump.enjoyable’s in-house PumpSwap additional extract worth by dealing with rapid post-launch buying and selling. These platforms profit from high volumes, with meme cash fueling consumer acquisition and ecosystem progress.

Trading bots, together with Axiom, BONKbot, and Trojan, improve this by enabling sniping—buying tokens at inception—and speedy execution, contributing to a hyper-competitive, player-versus-player (PvP) atmosphere. 

“Axiom, for instance, has damaged $200 million in cumulative income with a workforce of lower than 10 people,” the report highlighted.

Lastly, token deployers, insiders, and key opinion leaders (KOLs) additionally reap rewards. Developers and insiders typically retain massive provide parts in hidden wallets, dumping into retail liquidity for positive factors. KOLs on platforms like X amplify narratives by coordinated campaigns.

“X (previously Twitter) communities and Telegram teams amplify memes and coordinate shilling campaigns. Communities are incentivized to push their token increased, with collective perception substituting for fundamentals. KOLs are an enormous a part of this layer,” the analyst wrote.

Are Retail Traders the Biggest Losers in the Meme Coin Boom? 

In distinction, most merchants face structural disadvantages. The report revealed that the median maintain time for Solana meme cash is round 100 seconds. This is sort of a drop from 300 seconds a yr prior.

“This signifies that the common participant isn’t ‘holding’ a token for hours, not to mention days. Instead, they’re rotating quickly, scalping a couple of p.c revenue towards different merchants in what is actually a PvP buying and selling sport,” Owens detailed.

Risks abound, together with honeypots—tokens that enable buys however block sells—rug pulls, the place insiders withdraw liquidity, and vamping, the place copycats siphon worth from originals. High-profile incidents, reminiscent of the LIBRA token incident, have resulted in hundreds of thousands in dealer losses whereas insiders profited. 

This ecosystem paradox highlights a broader development: whereas meme cash function onramps to cryptocurrency, drawing new customers into wallets and DEXs, the speculative frenzy primarily enriches a concentrated group of infrastructure homeowners. 

For most members, buying and selling stays detrimental EV. Thus, meme coins may look like a on line casino, however it’s the home — not the gamers — that all the time wins.

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