Behind the Memecoin surge: the game between the development team, snipers and whales

2024-05-29 14:19

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Original author: Ansem, crypto KOL

Original translation: Felix, PANews

There has been a lot of discussion about Memecoin, "conspiracy teams" and whales for a while, so I wanted to provide some context.

There are three elements to altcoins that are issued directly on a DEX without venture capital backing:

· Development team

· "Snipers"

· Whales (TBD)

The degree to which these three are intertwined and repeated varies from token to token, but a good combination of all three is needed to keep the performance of the token healthy in the long term.

Development team

Each development team has a different degree of decentralization and organization. On pump.fun, the development team is actually just one person, with only a photo and a title. Teams like BONK, on the other hand, are very organized and have some of the smartest active traders on Solana. Both types of teams can do well, but projects rely on two other factors (snipers and whales) for long-term success.

The advantage of organized development teams is that they usually have a budget set aside for marketing and future development, so these tokens have more "utility" than memes from pump.fun. bonkbot is a good example of this, other fully decentralized memes don't have such a product because they don't have funding to back them. Another example is MEW, which was able to airdrop a large amount of supply to all BONK and WIF holders. These teams also usually have easy access to market makers and are easily listed on exchanges.

On the other hand, fully decentralized teams usually start with low market caps because there is no funding from all parties. These teams usually do a good job of forming enthusiastic communities early on because the cost of early entrants is extremely low and the supply of all tokens is widely distributed. The best examples are WIF and MICHI, which have very active communities and very low market caps at launch. The risk with these tokens is that, in general, they are more likely to fail early on because all the "snipers" want to exit as quickly as possible, and there aren't any whales or teams interested in the long-term development of the project.

"Snipers"

For "snipers", they usually don't care what the project is, they just want to be the first to buy in, and if there is enough liquidity to exit, they will exit immediately. Many projects without an organized team have failed because of this. If they snipe a large number of tokens at launch, they will sell them, and the price of the coin will be smashed.

The ETHWIF derivatives that launched a few months ago are a great example of this, with many wallets buying the token immediately after launch and selling it a few hours later for a six-figure profit or loss.

90% of projects that launch on DEXs will never exceed a market cap of $5 million. The reason for this is that most development teams are anonymous and very good at making quick profits. This is also why the CTO (community takeover) narrative is so popular, as developers often sell instantly.

Whales

Every project that goes from 0 to billions of dollars in market cap needs whales at some point to drive the price up. What usually happens with meme coins is that a community forms early on, and then once the meme is successful in terms of attention and virality, the market cap exceeds $100 million. Once the market cap "holds" or exceeds $100 million, larger whales come in because there is enough liquidity to build large positions. In addition, players who own these Meme coins early must be diamond hands, and once they become whales by holding at such an early cost, they cannot sell. These enthusiastic holders in the community are crucial to the project and everything else.

Conclusion

Each token has a team, with varying degrees of organization; each token has the participation of "snipers" + whales. For projects with a market value of more than billions, a clever combination of these different elements is necessary, regardless of whether the participants are the same.