Why do we need memecoins?
The main purpose of creating memecoins is to generate profits for their creators, insiders, and occasionally, for random lucky individuals. Analyzing the chart, finding an entry point, or predicting why the token might rise is nearly impossible. The token can suddenly drop by 90% in less than an hour.
Why do exchanges need such pump/dump projects? Like the project itself, exchanges are also in it for the money. Imagine the massive community that can form around a hyped project—this represents a potential source of liquidity for exchanges.
Exchanges make substantial profits from commissions on each trade. They don't care if the token’s price rises or falls. On some tier 2-3 exchanges, these projects might even pay to have their token listed. Life cycle of an average memecoin
- Early Phase This phase occurs right after the token is released. If you’re in at this stage, you might actually have a chance to make some money because memecoins usually operate like Ponzi schemes.
- Pump Phase The market maker increases trading volumes, pushing the token to the top on DEX or CEX platforms. Simultaneously, a marketing campaign might kick off on social media, often on Twitter. The project gains hype, the token is mentioned more frequently, and more investors start noticing it, leading to a further price increase.
- FOMO Phase At this stage, the coin is at its all-time high and enjoying peak popularity on social media. Less experienced investors, often referred to as "hamsters," start buying due to fear of missing out on potential profits. In most cases, this serves as the final liquidity pool for the project creators, and that’s where it all ends.
- Create new token (Repeat) =)
