MEME Coin Investment Practical Guide: Methodology, Techniques, and Tools

Author: 罐子种子，Jarseed

Since the cryptocurrency market entered the MEME season, countless myths of fortune and overnight failures have been unfolding. People marvel at the hundredfold and thousandfold increases of $PEPE, $Turbo, $AIDOGE, and $MILADY, yet when they buy MEME tokens, they often incur losses immediately or see their investments go to zero. Many disdain MEME for lacking value, while others argue that trading MEME is about trading emotions and attention; both perspectives seem somewhat mechanistic in their understanding.

Today, I will analyze MEME tokens from the perspective of chip distribution and how to query on-chain address associations, providing some support for those looking to speculate on MEME tokens. While I may not help you pick the best-performing ones, I might assist you in identifying the poorer choices.

If we view token issuance as a business, we need to recognize the following points:

1. The project team is creating a product; although the product may have no specific use, the team must find ways to encourage more people to buy it.

2. Any business must consider the input-output ratio. The project team can choose to take a larger share during the initial token distribution (first level) and then dump it when the time is right; alternatively, they can distribute it at a low initial price to the public and then buy it back from them (second level); or they might even rug the trading pool and run away with the money.

3. Some MEME tokens may even experience a change of operators; the early tokens held by the project team may have been fully dumped, but if the enthusiasm for speculation remains and there is capital to continue the hype, the story can continue.

So how should we start this business? I believe we need to address the following issues:

• Lock in seed users

  There are many cases at this stage, such as using methods like $AIDOGE, which requires eligibility for airdrop based on whether one has Arbitrum; or setting up Presales or LGE/TGE (Liquidity Generate Event/Token Generate Event) through various IDO platforms or Alpha communities; or even distributing fake tokens in bulk (examples will be provided below).

• Create initial liquidity

  For on-chain assets to circulate and trade, funds are needed to provide initial liquidity. The project team will create a liquidity pool by pairing the token with ETH (usually) through Uniswap factory functions, allowing everyone to buy and sell the token through this liquidity pool.

• Media matrix coverage

  If everyone in our CT information stream is talking about a certain MEME token, curiosity will surely drive us to take a look. There are KOLs who promote products organically, some who are paid to do so, and others who attempt to cater to deconstructivist ideologies while selling other products.

• Volume and price rise together

  To facilitate selling, the project team holds a large amount of tokens early on to achieve control and price increase. With the surge in trading volume and price, major quote websites like Dextool and Dexscreen will recommend the token to the Gains leaderboard, bringing it into the sight of retail investors.

Next, I will provide two specific cases to see how these project teams lock in seed users and cold start token distribution, and what kind of trends the tokens develop under such circumstances. It should be noted that the tokens mentioned below are not investment advice, and I hope everyone takes responsibility for their own investments.

Case One:

Simpson

Contract Address:

0x44aad22afbb2606d7828ca1f8f9e5af00e779ae1

Main Trading Pool:

0x7945819d6cab17f94c4089c28767e164ed4acf3e

Contract Deployment Address:

0xC43b6eCaF08b515001d58f4f427e03A4CE4758dd

Total Token Supply: 420,000,000,000,000,000

Let's try to use Arkham to interpret the initial distribution of the Simpson token:

Simpson creator address token distribution

From the above image, we can see:

1. The creator of the Simpson token deployed about 1/3 of the initial tokens to the Uniswap liquidity pool.

2. The token creator distributed 8,800T Simpson tokens to 20 addresses, with each address holding about 2% of the total supply, totaling 40%.

With this operation, 70% of the tokens have already been distributed, and now it's time for the creator's antics.

On-chain behavior shows that the token creator used the Multisender function of CoinTool; those familiar with on-chain data may recognize CoinTool, which dominated the ETH Gas consumption leaderboard for a long time. The token creator used CoinTool to distribute Simpson tokens to a large number of addresses. Through browser tools, we can see that the creator used CoinTool a total of 4 times, distributing tokens to 800 addresses, with each address receiving 1,000 Simpson tokens.

CoinTool token distribution

We can also find that the addresses to which the token creator sent tokens share a common characteristic: they all start with 0x059a. Those familiar with hash algorithms will understand that these are bulk-generated addresses, or some addresses where even the project team does not know the private keys, simply distributed randomly, because 1,000 Simpson tokens are not significant compared to the total supply of 420Q. However, this operation gave the project 800 on-chain holding addresses at its cold start.

The subsequent story is well-known; with Binance listing $PEPE on May 5, the MEME token craze reignited the enthusiasm of many traders, who began frantically searching for the next $PEPE. What are the typical criteria for finding new tokens? New tokens, a certain number of holding addresses, a certain trading volume, simple and easily spread imagery, and good social media performance.

However, while buyers are dreaming of getting rich, the early-positioned chips have already dumped these tokens to cold hard cash.

In addition to token distribution, we also have another perspective to observe: the interaction in the trading pool.

We can see that besides some common retail trades and trading aggregators, there are also participants who are boosting the MEME craze, namely MEV Bots.

Various MEME tokens have casually seen daily trading volumes rise to millions or even tens of millions of dollars, mainly thanks to MEV Bots. It can be said that about 90% of the trading volume of most MEME tokens comes from MEV Bots, as some tokens have trading tax mechanisms, which forces traders to increase their slippage, making them easy targets for MEV.

Here, I recommend a tool called Eigenphi, where you can input the trading pool address of the token you want to trade, and Eigenphi will provide statistics on MEV trading volume, allowing you to estimate the real purchasing intention and further compare the situations among various MEME tokens.

Summary:

In the case of Simpson, we can summarize the following two points:

1. To play the game of strategy with the project team, we need to calculate their costs. In this project, the team spent 6 ETH as the initial liquidity pool and 2 ETH as gas fees using CoinTool to create 800 holding addresses for themselves. Adding in the costs for promotion and price manipulation, we can roughly estimate the team's costs.

2. Concentrated selling. We can see that the 20 addresses distributed early concentrated their selling on May 13. If you continued to participate in this game at that time, it might not have been a good choice.

Case Two:

GenerationalWealth (GEN)

Contract Address:

0xcae3faa4b6cf660aef18474074949ba0948bc025

Main Trading Pool:

0x1ca4713fc4a95f76fcb498b2a5fe8759c53df1a1

Contract Deployment Address:

0x6579116367e0090d1cA6F5F712e172996E527E4c

Total Token Supply: 420,690,000,000,000

Let's try to use the same method to interpret the initial distribution of the GEN token:

The initial distribution of the GEN token included a Presale process, and we first need to find the Presale contract address (contract address link).

According to the project team's description, 15% of GEN tokens will be sold through Presale. On-chain data shows that a total of 672 people participated in the Presale, each paying 0.05 ETH to receive 105B GEN tokens.

Here we can see that among the addresses participating in the Presale, many have ENS domain names, and many are marked by Arkham as OpenSea users. These addresses have diverse characteristics and some on-chain activity records, making this seed user group healthy and diverse, leading to a relatively successful initial token sale.

On the other hand, among the large holding addresses, we can see:

1. The GEN token creator deployed 302T GEN tokens, accounting for 72% of the circulating supply, to the Uniswap liquidity pool.

2. The three addresses with the largest holdings, 0x83Fae943b5381eCE611bda1fA44f744966Bc9552, 0xa0F06e6Ab3A999294E4b6B1EF8f4689c5D785482, and 0x7E0DaBBC101402880D281f86E51E439f897A752a, hold approximately 12.5% of the circulating supply, with 6.9%, 3.68%, and 2% respectively. Observing these, we find that two of the addresses currently have no ETH and cannot transfer tokens.

So what have we discovered when speculating on such tokens? What should we pay attention to?

1. First, we find that the seed user group for this token may come from NFT/Alpha communities or from some NFT circle KOLs. Users participating in the Presale at a price of 0.05 ETH have already made over 20 times their investment.

2. Next, we observe that while the project team retains 12.5% of the tokens on paper, they currently have no ETH in their accounts, so we can monitor these large holding addresses to observe their actions.

3. Is there a possibility of a rug pull? The token creator has deposited LP Tokens into the GEN token contract, and there have been no further actions, so we can continue to monitor.

4. Through Eigenphi, we find that GEN indeed experienced strong buying pressure during certain time periods.

5. The interaction level in the trading pool is also quite active.

Summary:

In the case of GEN, we can summarize the following two points:

1. The diversity of seed users can bring many surprises to the project in its early stages, especially accompanied by the wealth effect.

2. By excluding MEV trading volume, we can discover the real demand trading volume, making it easier to compare MEME projects horizontally.