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Meme Tokens: Risky or Lucrative?
Beili Baraki
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Key Takeaways
16 min read
  • In order to gain insights into this specific market, over 50 meme token projects on Ethereum were included in this research. These include projects such Shiba Inu, Dogelon Mars, Baby Doge Coin, Kishu Inu and Tyrant to name a few
  • The most profitable wallet address based on ROI managed to generate a profit of over $2.3m with just $450 spent
  • Overall, the top 200 wallet addresses (based on ROI) spent over $160k and generated a combined sum of over $82m from trading meme tokens
  • The average amount spent by each wallet was $800, with an average number of trades of just over 5, showing that the most profitable wallets didn’t risk a significant amount of capital trying to make those returns
  • 213 wallet addresses managed to generate more than $1m in profit trading meme tokens
  • The wallet address that generated the most amount of net profit from trading meme tokens is an MEV bot, and it accumulated a total amount of over $78m. However, in order to gain this profit it risked over $213m
  • In total, these 213 wallet addresses invested over $1.97b and generated over $753m in profit
  • Interestingly, the average number of trades for these 213 wallet addresses was around 243. That is significantly higher in comparison to the average number of trades made by the top 200 wallets with the highest ROI
  • These wallets are associated with more sophisticated investors in comparison to the wallet addresses with the top ROI who tend to be retail traders
  • One thing that the two groups of investors had in common, is that the wallet addresses in both groups generated profits from similar tokens. However, their strategies were rather different - top ROI traders made very few trades with big wins whereas those making over $1m in profit made many trades with more sophisticated strategies

Introduction

This report focuses specifically on investments attributed to meme projects. It is well understood that meme coins (especially at the start) have no real utility or use case. Early investors in these projects are mainly speculative investors and traders that embrace risk. A significant majority of these types of projects do not create any value and turn into “dead” tokens shortly after launch if they fail to garner community support. Their success is heavily based on narratives and popularity on social media, as a result, they can be extremely volatile.

Having said that, the very few tokens that “succeed” can experience parabolic rises in price and popularity, yielding extremely attractive returns for early backers (as it...