Dialogue Trader ZEPUMP: 100 days, 200 times. He summarized two important principles for trading Memes

How to Understand the Popularity of MEME?

FC: What was the most successful MEME trade you've made? How long did it take? How much did you earn?

Zepump: Actually, I don't trade very frequently. The time I was really willing to invest in meme coins was probably around May or June of last year. At that time, I genuinely felt the need to pay more attention to this market, and I didn't invest much either because I generally find projects quickly and buy in early, probably when the market cap was less than a million. I didn't invest much at first, maybe less than 10,000 yuan, and then I started to gradually increase my position.

FC: Can you share which token it was?

Zepump: It was Harry Potter.

FC: So you didn't create it, right?

Zepump: Definitely not. If I had that kind of operational ability, I would have become rich long ago.

FC: I'm curious about your thought process during this. You mentioned you increased your position; let's start with how you discovered it and why you decided to buy.

Zepump: The discovery was quite coincidental. I usually browse Twitter a lot, and at that time, I was scrolling quite frequently and happened to see some smaller bloggers talking about this person named jingtao. So I started paying attention to it. Jingtao had previously posted about this thing (Harry Potter), and when I saw it, I realized it was something I had never seen before. Later, I took a closer look and researched it, and then I jumped in without thinking too much. I think the most important thing is to truly participate in the community and build it together. I believe this is quite important for memes, especially for community-based projects.

Because there are different types of memes, I think one type is community projects, and another might be pump-and-dump coins, where the community aspect doesn't matter as much. But for community-based projects, you really need to participate; you need to go out and engage. Many people previously said that I created it or that Harry Potter is a Chinese project. I said it's quite impressive if a Chinese person can create something like this. I haven't seen it so far, and I think maybe the understanding of memes among Chinese people isn't that deep, so they might not be able to create such projects.

FC: We must avoid discussing regions, as it's quite sensitive lately. Following up on what you just said, you mentioned you followed a smaller blogger who mentioned someone. Recently, when we talked about base, one of the guests mentioned that he is currently focusing on smaller bloggers. If he sees someone with a few thousand or tens of thousands of followers mentioning a meme, he might prioritize that over larger accounts, which he feels are already at the end of the dissemination chain. Was that your thought process as well, or was the person themselves very important?

Zepump: What do you mean?

FC: You mentioned that person with a few hundred followers; was their authority very high?

Zepump: I haven't seen it. Now there might be similar cases, like that Newsy Johnson guy, but back then, there wasn't this kind of style. So many people would imitate him in their speech. At that time, I took a closer look at what he was posting. Yes. He wasn't very popular then; when I followed him, he had maybe a few hundred followers, and he followed me back. We would often banter, and later he became a big influencer.

FC: I see. So he wasn't related to Harry Potter, right?

Zepump: Not at all. He was just a GEM Hunter; he was just out there trading meme coins.

FC: I understand. Why were you interested in his language? For example, what made his way of speaking unique?

Zepump: The stylistic feature was that, first, no one had said it before, and second, it was a foreigner pretending to be Chinese and posting some absurd things. I felt I hadn't seen anything like it before, and I thought this would become popular. I tend to make predictions when I see some projects or people; I predict whether they might become popular. If I think they will, I pay attention to them. This applies to projects as well; I don't just look at the present; I look a bit further ahead.

FC: I see, that's quite interesting. But I understand that the most important aspect you mentioned is uniqueness, right?

Zepump: Yes, something that hasn't existed before.

FC: Ok, unique and potentially viral. Because today I actually saw a report on memes, which mentioned the definition of memes, as it comes from the book "The Selfish Gene." How do you currently understand memes? For example, if you were to explain to your friends what a meme is, how would you describe it?

Zepump: You mean meme coins, right?

FC: Yes, or if someone asks you what you are trading in memes, how would you explain it?

Zepump: I think you can understand it this way: you can view meme coins as short videos, like those on TikTok, while the so-called value coins can be seen as videos on YouTube or Bilibili. This makes it easier to understand. Nowadays, especially for young people, they might not have much time to watch long videos. If you give me a 10 or 15-minute video, I really don't want to watch it. But if you give me a one-and-a-half-minute video, I can understand everything. That's the best. If it grabs my attention, I naturally choose TikTok or Douyin over YouTube videos.

I think the same applies to coins. Once meme coins emerged, everyone realized that if they could trade attention in a short time, why would they still want to buy so-called value coins? They would have to wait for development and other factors. I don't have time to look at that; I might as well just focus on short-term things.

FC: I think your analogy is excellent. According to your logic, whether it's TikTok or Douyin, the videos that go viral are often those that replicate others that have already gone viral, combined with their unique characteristics. So, I wonder if memes have this characteristic, where they might build upon previous trends or iterations and also create something new?

Zepump: I think I would respect originality more. As for imitation projects, I don't particularly appreciate them; I wouldn't touch imitation projects. Also, I'm not a fan of animal coins.

FC: Why not?

Zepump: Because I think animal coins find it hard to have a community culture. I think it's relatively difficult. Of course, there might be exceptions, but generally speaking, it's harder. For example, if you're doing a dog or cat project, it's purely a gamble on whether the market maker will pump it, rather than whether the community can create a culture around it later.

How to Select Targets and Build Trading Strategies?

FC: Let's dive deeper into trading strategies. I want to know, for example, when you trade memes now, what key points do you set for your overall investment strategy? In other words, how do you find the next Harry Potter? How do you set or understand these key points?

Zepump: You mean how I select targets, right?

FC: Yes, selecting targets.

Zepump: I think I look at it from two aspects. For example, when a coin comes out, the first thing I need to check is its community. What's the vibe of the community? If it's a chill vibe, I might consider buying. Then, you think about its virality—does this meme have the ability to spread? Or do you have the ability to create derivative content to share it with others? Because memes are also evolving; if you're still using the same format of memes from before, it's actually hard to become popular again because everyone likes new things.

FC: You mentioned before that when a community forms a meme, it's actually a very important start. Can you give some concrete examples of what a chill community or a good community looks like?

Zepump: I haven't seen many good communities, but I can give a few examples. First, I think Chainlink is a typical example. It's a so-called oracle project, but in reality, it's a meme. It became popular on 4chan, where many people would post various meme images of its founder, treating him like a leader figure. You might parody or do something similar, and all the creations revolve around that person's image.

Then, a group of internet nerds really liked that image, which was chubby and cute. I think Chainlink, to some extent, helped popularize PEPE. Because in its memes, they often use an image called APU, which is a variant of PEPE. Many memes incorporate this image; that's a community.

Another project I think did well is Magic, which is Treasure DAO. They also have their own set of images. When they first came out, they had a monkey called Small Brains, and I participated in that. They managed to give people in the community an identity recognition, so everyone on Twitter changed their avatars to that little monkey and followed each other. This formed a so-called echo chamber, where you keep holding Magic, and the community's cohesion gets stronger.

FC: Is the term echo chamber something from the community, or did you coin it?

Zepump: I coined it.

FC: So, the more it spreads, the further it goes, and the louder it gets, right?

Zepump: Not exactly that concept. Echo chamber refers to a closed environment where everyone talks to each other, and saying the same things continuously reinforces that concept.

FC: I understand. That's interesting. Please continue with the third point.

Zepump: The third project is Harry Potter. It has its own coin and also its own NFTs. I think the NFTs have a bit of a MyLady vibe, a bit crazy. I think what they did is quite similar to Magic, but better in that they have stronger community creativity. They basically have new derivative creations almost every day, and the community knows how to stir things up. Their team participates in boxing matches and donates wells to villages in Nigeria. They always have something going on to keep you engaged in the industry and maintain relevance.

FC: I wanted to ask about the groups that share projects. First, why can you join them? Second, why are they willing to share with you early on? Because essentially, in some ways, you might also be a bag holder.

Zepump: Yes, I think first you need to have the ability to find these projects, and you also need to have a certain influence. Only then can you join these groups, or you have been in the industry for a while, and you have some degenerate friends who appreciate each other. Naturally, I think you would get pulled into the group; it's that simple.

FC: What I mean is that you might need two things: first, you have strong project-finding abilities, and second, you have influence yourself, which makes you part of the echo chamber, enhancing the atmosphere or making more people aware of these things. I understand it like this, right?

Zepump: Yes.

FC: Ok, I see. Following up on our discussion about trading strategies, now that we have identified targets and discussed our methods, the next question is about capital allocation. For example, another friend of mine has $2,000, while he has $100,000 or $200,000. His strategy is to buy one every day, and after buying, as long as it doubles, he will take out his principal, and the remaining money he will play around with. What is your strategy?

Zepump: Generally, if it's a meme that I really like, I buy it and hold it. Then I will help with the community engagement. If it goes up, I will continue to engage. If it doesn't go up, it doesn't matter; if it goes to zero, it goes to zero. I won't bother selling it because it won't sell for much anyway.

FC: What proportion do you usually allocate to have this mindset? For example, if you allocate 50%, would you still be indifferent?

Zepump: No, I think those are small positions. Because once it rises to a certain extent, I won't touch that meme again. If I didn't buy in early, I wouldn't chase the price later. For example, I discovered PEPE when it was around a $3 million market cap, but I felt this coin had already been mentioned before. Although I really like PEPE, I think it has already been done. If it has been done, I feel it lacks originality, so I might not touch it. So later, no matter how much it rose, I felt that coin had nothing to do with me.

FC: I think that's great. We often talk about having a stop-doing list. I understand that valuation might be a significant signal for you. How do you judge valuation? For example, at what range do you decide to walk away and not play anymore? I think that's quite challenging.

Zepump: I think it relates to the market at that time. In May of last year, if a coin suddenly rose to $3 million, that was already quite high. At that time, my expectation for this thing was probably around $10 million to $20 million because there hadn't been a meme that had risen to such a large scale before. Now, I might think that $10 million to $20 million is a cheap price.

FC: So it's essentially about looking at the market's average valuation, right?

Zepump: Yes, and it also relates to the chain. For example, now with meme coins, there are more on Solana, so naturally, there will be more money on it. At this time, a project on Solana with a $10 million to $20 million market cap might be considered cheap, but on Ethereum, that same market cap might be relatively expensive.

FC: So you also need to consider which chain it's on, the overall proportion of memes on that chain, and then determine your valuation range. The next question is, since we now refer to memes as a large sector, do you think it will continue to exist in cycles, or will it become ineffective in certain situations? When do you think you will stop playing in this sector?

Zepump: I don't think I will stop playing because, as mentioned earlier, regarding short videos, once you get used to short videos, your attention has already changed, and it's hard to go back. Once you try projects that can surge in a short time, you will definitely not go back to those so-called VC coins or value coins. I think this will have a significant impact on the industry; perhaps VC investments in this sector will gradually lose influence.

FC: That's quite pessimistic.

Zepump: Yes, actually, I had this viewpoint last year, which is why we invested less in VC later. I felt that the entire user's habits were changing.

FC: I see. What do you think about these celebrities launching coins on Solana now?

Zepump: These are very short-term. I forgot who said a good point: the moment a celebrity launches something is when the attention is at its peak, and afterward, the attention or influence will gradually decline. I think celebrity coins are different from political coins, like Trump or MAGA coins. Since this is an election year, once there is news, it will continuously strengthen their influence. But as a celebrity, it's hard to make headlines every day.

FC: I understand. For memes, the most important thing is the scriptwriter.

Zepump: I think choosing the right topic is crucial.

FC: It needs to be sustainable, right?

Zepump: Yes, it can't be something short-term. If you want to hold memes for a long time, you need to find cultural symbols. You need to judge whether this thing can continue; it's not just a short-term trending topic or keyword, but something that can live on for a long time in the blockchain world.

FC: Can you give two examples? For instance, a coin that meets these two standards might last longer?

Zepump: If you are already a cultural symbol, like PEPE, it is indeed a cultural symbol. I think that target is worth holding long-term.

FC: I see. I feel everyone should check out "Super Symbols are Super Ideas" by Hua Yu Hua. So what do you think will happen to memes in the future? For example, short videos initially focused on dancing, and now there are storylines and CPs. What do you think will emerge next?

Zepump: It's hard to say, but I think pump.fun's introduction of live streaming is a significant update.

FC: Because that's a variable; it makes the way people receive information more intuitive, right?

Zepump: Yes, the way of dissemination might also change. With live streaming, there might be some new things.

FC: Good, I understand. Let's move on to the next part. Did you buy that BOM?

Zepump: I didn't buy it because I previously bought a lot of Art NFTs, and I'm quite pessimistic about artists in the crypto space because they don't care much about long-term things. Including Turbo, which has surged recently, I bought it before, but I feel deeply disappointed because the artist suddenly decided to launch another coin for satire, and the whole community collapsed. It was initially doing well because it was considered the first coin launched with the help of ChatGPT. The artist didn't even know how to launch a coin before, and after it was launched, it gained quite a bit of attention. But then he made a foolish mistake, and I felt very disappointed in that artist. In general, I think artists' thoughts can be quite random, and I can't predict these things.

FC: Let's talk about your trading experience next. You mentioned your trading strategy, but I think it's essential to understand how trading strategies are formed. Can you tell me about your biggest loss in trading? What did you buy, and why did you buy and sell?

Zepump: I'm losing money every day. Here's the thing: if it drops too much, I just won't sell it. If it goes to zero, it goes to zero; I won't sell. I think each cycle has a different methodology. The method I used in the last cycle is completely unusable now. In the last cycle, I started browsing Twitter and was looking at things early, so I made money by finding projects that were just becoming popular on Twitter, which foreigners might not have known about yet, and the Chinese-speaking community definitely didn't know about. I would buy these projects, and then as they slowly got listed and spread to the Chinese-speaking community, I would sell. I made money from that wave. But now I feel the time difference is getting shorter. Once something is on Twitter, basically everyone can know about it quickly, and I feel that advantage is gone. So I started researching other things, like memes. The essence of the crypto space is about who gets in early. No matter what you buy, even if it's a bad project or a scam, if you get in early, you still have the chance to sell it at a higher price to the next bag holder.

FC: I want to ask, who or what kind of cognitive shift was crucial for you during the entire trading process? For me, the biggest change was during the 312 incident when I chased prices and sold in panic, listening to KOLs saying the industry was over on one side and others saying to go all in on the other. At that time, I felt I needed to establish my trading system. What was it for you? What did you encounter or see that led you to form your current trading system?

Zepump: I think it was quite important that a friend taught me to constantly adjust my stop-loss points. For example, when you open a contract and start making a profit, you keep adjusting your stop-loss point upwards. This way, it's relatively hard to lose money unless you were wrong from the start.

FC: How would you do that with memes?

Zepump: With memes, I just buy and hold. After buying, I hold and engage with the community.

FC: So what are your selling reasons for memes? How do you determine the timing for selling?

Zepump: I definitely won't sell before Harry Potter reaches a $1 billion market cap. For projects I particularly like, I will help them think of ways to market. But for projects I don't like, if they rise, I will quickly sell them off; it doesn't matter if I sell too early.

FC: How do you generally help these projects?

Zepump: For a project you can help, you can assist in various ways. Since I might have more resources on the exchange side, I will find ways to help them get listed. I will also help connect them with market makers or partners, or think about what they should do. Many memes actually don't have strong resources in the crypto space; they might be strong in marketing or operations, but they might not fully understand the players in the crypto space. So sometimes you need to intervene and tell them what they need to do at this stage and what they need to do at that stage. They might have great ideas, but they might not have other factors to support them well.

How to Better Trade MEME?

FC: I'm actually curious about personality traits because I've suddenly noticed that people around me who trade memes particularly well tend to have a more easy-going personality. Do you see any common traits among people around you who trade memes? Should we let go of some of our previous fixed notions to do better in the meme sector?

Zepump: I think what you said makes sense. You shouldn't be too serious; many things should be a bit more relaxed. You don't need to get too caught up in details. Memes themselves are not very serious; they deconstruct the serious aspects of finance. Isn't Bitcoin like that? I think the crypto space shouldn't be treated too seriously. If you treat it too seriously and try to calculate the data, the price is actually completely unrelated to that data. I saw a report today that said how many users the Brave browser has, and so on. If no one is buying your coin, that data has nothing to do with the coin. Originally, the coin is an independent thing; I think it doesn't have much to do with your product. If you look at it too seriously, I think it's easy not to make money.

FC: How do you see the people around you or how do you plan to maintain sensitivity to the market? Or how did you do it in the past?

Zepump: Browsing Twitter is definitely the most helpful thing, at least you know what's happening in the industry. Because I think most of the obvious things happen on Twitter, and for the hidden things, you need to find ways to get to know the core institutions in the crypto space to understand the real undercurrents.

FC: If everyone is browsing Twitter, how can I do it better than others?

Zepump: You need to continuously optimize your follow list. I think that's very important because there's too much noise. Initially, I thought it might be good to follow more people, but gradually I felt it wasn't necessary to follow so many people, so you might gradually reduce your follow list.

FC: Last question, what is your current position? This is not investment advice.

Zepump: Recently, I bought Solana and some degens on Base. Although it dropped after I bought it, I think Base might have a second wave. After Friend.tech, it might be the one to carry the flag, so I'm willing to bet on it.