Memecoin Research: How to Identify a Good Memecoin – Part 1

– Crypto has been around for over a decade. During this time, every bull run brings with it new narratives into the space.

In 2017, it was ICOs. In 2021, it was DeFi, GameFi and NFTs. So, what could be next for 2024’s bull run? One potentially strong narrative would be memecoins.

Why Memecoins?

Memecoins have little to no utility or value-add to the crypto space. They’re full of scams, and they don’t solve any problems. So why are they gaining so much popularity now? Well, the short answer is:

• Memecoins are led by the community. Rather than trusting utility coins with VCs that dump their investments on retail, investors now trust memecoin communities more.
• Costs of trading are little to none with low-cost Layer 1 (L1) and Layer 2 (L2) chains like Solana and Arbitrum respectively.
• Celebrity endorsements and memes engage the audience better, in turn pushing the popularity of memecoins to greater heights.

So, now you understand why memecoins are the space to get into right now. But, how do we know which memecoins are good, and which are bad (or even outright scams)? To understand this, let us show you a few simple steps below to sieve out the gems.

Step 1 — Strong Community and Cult

A strong community and cult improves the chances of survival for a memecoin. To check for this, look out for:

• A large and active community on X (Twitter), Telegram and Discord.
• The memecoin project should also be active in the comments section and engage with the community as well.
• There should be a unique identity around a meme (E.G. Frog for $PEPE or Doge for $DOGE).

Step 2 — Token Distribution

To check this effectively, you can use the free version of Bubblemaps here: Key in your memecoin and the chain in which it resides. Then, check for the distribution of its tokens. If the bubble map looks colored, clustered, and large, many tokens are held by a few entities. That means a dump is highly likely.

In short, look for distributions that are even (the bubble map is dark) and not clustered (bubbles not connected).

Step 3 — Token Holders

Solid memecoins have token holders that are increasing over time. Look for an uptrend in some holders by looking at block explorers like Etherscan. You can see an example using $PEPE as shown below:

Source: Etherscan

Step 4 — Volume and Liquidity

Look for memecoins with high volume and matching high liquidity. This is especially true for memecoins with over a $100 million market cap. In a nutshell, look for:

• Volume which is over 8%-10% of market cap.
• Liquidity of over 2%-4% of market cap.

You can find both the above info on DexScreener.

Step 5 — Past History

Memecoins that have survived a huge dump of about 80% are likely to do well if and only if:

• The large holders are not selling.
• The community is supportive.
• Holder counts continue to increase.

Conclusion

Alright, we’ve come to the end of this guide on how to pick out the strongest memecoins in the space. But, a word of caution before you go full degen. Here is the first part.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.