Memecoins: A Double-Edged Sword for Blockchain Adoption
Meme coins, a type of cryptocurrency that often gains popularity through social media and online communities, can attract new users to blockchain platforms. However, a recent report from Galaxy Research reveals that the profits generated by these coins largely benefit the platforms that create and facilitate their trade, rather than the individual investors. The study, which analyzed the Solana blockchain, found that most traders lose money in the short-term market, while infrastructure providers such as launchpads, decentralized exchanges, and trading bots reap significant income.
The report highlights the success of Solana’s Pump.fun, a meme coin launchpad that debuted in early 2024. With tokens on the platform representing a combined market value of $4.8 billion, Pump.fun has become a major player in the Solana ecosystem. According to Galaxy Research, almost 13 million of the 32 million tokens on Solana were launched by Pump.fun, marking a nearly 300% increase in less than two years. This dominance has led Galaxy Research to conclude that “the platform has essentially cornered the token creation market on Solana.”
Total token sales at Solana. Source: Galaxy Research
The report also notes that the median holding time for Solana meme coins has decreased to approximately 100 seconds, down from 300 seconds a year ago. This suggests that bots and scalpers dominate the meme coin trade, with traders often buying and selling coins quickly to capitalize on price fluctuations. Axiom, a trading platform, has generated over $200 million in fees from meme coin activities with fewer than ten employees. Other tools, such as Bonkbot and Trojans, collect income by automatically charging new tokens at launch.
Daily income from meme coin infrastructure. Source: Galaxy Research
Pump.fun’s Continued Growth
Despite offering little utility beyond cultural value, platforms like Pump.fun continue to grow. On July 12, the platform launched its own token, PUMP, in a sale that raised $500 million in under 12 minutes. The initial coin offering (ICO) provided 125 billion tokens. According to Defillama data, Pump.fun achieved sales of $13.48 million between August 11th and 17th, marking its strongest week since February.
Pump.fun token on Solana. Source: Galaxy Research
CoinTelegraph reported that Pump.fun completed over $1 billion in trading volume on September 14, reaching $1.02 billion after recording $942 million the previous day. In the past 30 days, Defillama metrics show that the meme coin launchpad has generated around $120 million in fees. While meme coins may not offer significant value beyond their cultural appeal, platforms like Pump.fun continue to attract users and generate substantial revenue.
For more information on the report and its findings, visit https://cointelegraph.com/news/memecoins-attract-users-platforms-reap-profits-report?utm_source=rss_feed&utm_medium=rss_tag_altcoin&utm_campaign=rss_partner_inbound
