What Memecoins Even Are?

To help you understand the concept a bit better, let’s first determine what Memecoins even are, and how they work.

Memecoins are often created as a joke or a parody, meaning that most of them, do not actually provide any real value to the real world, like your classic big bosses like Bitcoin, Ethereum and Solana.

Creating a memecoin is very cheap and easy, meaning that thousands are created every. single. day.

Memecoin's value primarily depends on the hype and community around it or on social media.

Memecoin Investing Miniclass

Let’s start with Pump.fun.

A platform where 10,000 - 20,000 memecoins are created EVERY DAY.

All of the memecoins on Pump.fun must finish graduating a bonding curve to be traded on the open market.

What is a bonding curve? A bonding curve on Pump.fun is a pricing model where a token's price rises as more are bought. Once it hits a $60,000 market cap, it moves to Raydium for open trading.

On average, only between 150 - 200 “graduate” a bonding curve and reach Raydium.

In simpler terms, that is a 1.5% success rate. 

That said, out of over 3 million tokens created on Pump.fun so far, only 89 of those reached a $1 million market cap.

What is a market cap? Market Cap (Market Capitalization) is the total value of a cryptocurrency or asset. It's calculated by multiplying the current price per token by the total number of tokens in circulation. Formula: Market Cap = Price per Token × Total Supply

So, Should You Invest in Memecoins?

The answer is both yes and no.

On one hand, it’s very risky due to the high volatility.

But, on the other hand, with a 1.5% success rate to reach at least a $60,000 market cap, it gives you a 1 in 67 chance to win, while the lottery gives you a 1 in 292 million chance to win! 🤯 (Make sure, to send this to a friend of yours, who still plays lottery)

Our advice:

Our recommendation would still be to keep most of your portfolio in stablecoins like Bitcoin and Ethereum, and only allocate a small portion of your funds to have fun with the memecoins.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.