Memecoins can bring huge profits but also come with a lot of risks. Here are tips for risk-averse investors looking for the next DOGE, SHIBA, PEPE memecoins.
Note: Investing in memecoin is an extremely risky form of investment, you need to consider carefully before participating.
Explosion of memecoins
Recently, memecoins are taking up most of the community's attention. The rapid growth of memecoins causes the demand to use the network to increase, network data indicators also show this. At its peak, the demand for memecoin swaps made gwei soar, the fee for a transaction became much more expensive (about 30 USD per transaction).
The average gas fee on Ethereum (in gwei) increased sharply as the memecoin exploded. Source: ycharts
At that time, this trend brought a positive effect as the number of ETH burned per day increased. In the past 7 days alone, the Ethereum network has recorded 76,459 ETH (worth $143 million) burned. Specifically, on May 5, it burned nearly 15,000 ETH, 5 times higher than the previous weeks.
The amount of ETH burned every day. Source: Etherscan
Contributing to that are 4 memecoin projects that reached the top entities with the highest number of interactive users and the highest number of transactions in the past 7 days on Ethereum. At the top is Pepe with 112,000 traders in 7 days. Accordingly, there are 3 projects: Turbo Toad, Bob and Wojak Coin.
Ranked subject with the top number of users interacting and number of transactions in the last 7 days on Ethereum. Source: Nansen
Ways to maximize opportunities with Memecoin
To optimize memecoin hunting, here are a few suggested tips.
Use tools to detect projects
In order to trade memecoin smoothly, the best way is to find potential trading pairs right from the time when the capitalization is small, the project is newly deployed. To get information about new token pairs on Ethereum, users can use bots on Telegram:
iToken: Synthesize new tokens with information about token address, total supply, liquidity... Bot will update contract implementation progress information, should pay attention to tokens that have been deployed to burn/lock liquidity step.
The new token example has implemented all the steps on iToken.
DEXT Live New Pairs Bot: Synthesize new token pairs on DEXTools. Early memecoins are often listed on DEXTools (PEPE has been listed on this platform since April 14, 2023), tracking new tokens or trending tokens on DEX can help users find gems. It is advisable to track tokens with as high initial liquidity as possible.
The most searched pairs on DEXTools.
Dexscreener: This is also a fairly popular platform with investors who love to hunt gems. The platform provides bots that report new trading pairs on Ethereum and many other chains. In addition, Dexscreener also has a trending bot that helps users get information about tokens that have skyrocketed trading volume/price.
New trading pairs with high trading volume in the last 6 hours on Ethereum. Source: Dexscreener
After discovering new tokens listed, users can also search for project information, social indicators, and mentions on social networks via Lunar Crush.
Tools to avoid scam Memecoin project
Buying into memecoin projects at the time of launch has many potential risks such as rug-pull, token trading lock after launch (Honeypot), liquidity sucker (LP drainer), liquidity locked in too short time , tax fees are high or hidden... Therefore, it is extremely necessary to use tools to check contracts carefully.
Some tools support checking contract before buying any memecoin:
- Honeypot Check: Check the basic functions of the contract, whether it is a honeypot or not.
- Quick Intel: Detailed analysis of contract information.
- Token Sniffer: Safe scoring when auditing contracts, analyzing components from swap, holders, liquidity...
Contract analysis of a project from Token Sniffer.
In addition, users can also use Bubblemaps to detect groups of linked wallets. This tool helps users find a group of wallets that interact, combine to release tokens, manipulate market prices, dev wallets, etc.
Interaction between wallet holders TURBO. Source: Bubblemaps
Looking for opportunities on other chains
Currently, gas fees on Ethereum are quite high, even experiencing slow network cases due to the impact of memecoin. Therefore, users can completely find opportunities with projects on other chains.
To optimize for low fees and faster transaction times, users can look for opportunities on Layer 2 like zkSync, Arbitrum... or new Layer 1 like Sui, Aptos. With the new Layer 1, users will have fewer tools to check for scams.
There are many memecoins appearing on Sui. Source: Dexscreener
If transaction fees are not an issue for investors, the Bitcoin network with BRC-20 tokens (mostly memecoins) could also be new ground with a lot of potential. However, operations with the BRC-20 require users with long experience.
Track smart money with Memecoin
The growth of PEPE and some other memecoins will help investors discover smart money with huge profits with memecoin. After having this list of wallets, the next thing is to track and find out if these wallets are holding/interested in any other memecoins.
An example was discovered with smart money of PEPE - Wallet 0x9bcb bought PEPE at 0.000000240 USD with capital ~217k USD, in just 2 weeks has made a profit of more than 1.4 million USD.
Operation of smart money PEPE wallet. Source: Arkham
Following the wallet's activities, it can be seen that this is a risk-loving and memecoin-loving user, in addition to PEPE this wallet also records smart trade with a few other memecoins such as WOJAK, BOBO with a profit of about 10x.
Profit with memecoins of smart money wallet 0x9bcb. Source: Arkham
Using Dune .'s dashboards
To detect such smart money wallets, users can use many tools to filter wallets such as Etherscan, Debank, or Nansen. In addition, Dune Analytics is a free tool with automatic wallet filtering. A couple of Dune dashboards that can be helpful in finding wallets with good returns on memecoins:
Smart Address Search: Filter the list of wallets purchased and sold in a specific time period.
Some wallet addresses bought PEPE from April 27 and took profits before May 6. Source: Dune Analytics
Shitcoin Profit: Profit analysis of wallets by token. Look for wallets with few transactions but high profits.
High-profit wallets at the moment with PEPE tokens. Source: Dune Analytics
Token Analyzooor: Full information about a token such as detecting newly created wallets to collect tokens, trading on DEX with high profit or large volume..
The most profitable DEX trade with PEPE tokens in the last 30 days. Source: Dune Analytics.
After you have a list of wallets, continue to monitor, set an alert to know which wallets with huge profits are interested in new memecoins.
Keep your account safe
In addition to focusing on making profits with memecoins, users need to always ensure the security of their wallets when trading memecoins. Some tips to keep your wallet safe:
- Use only the secondary wallet, split the wallet to trade memecoin.
- Revoke token immediately after completing the transaction.
- Check full contract audit before trading.
- Do not greedily receive token airdrops from untested smart contracts.
Although there have been no allegations related to the team / person behind the memecoin projects. But the hot growth in a short time is always accompanied by the risk of a sharp price correction in the short term.
In addition, there are risks associated with the project development team's interests. Anonymous developers can for personal purposes and leave the project at any time.
Ultimately, any investment involves a certain amount of risk. So always determine your mood and expectations carefully before putting money down. Invest only with the amount you can lose.