While early memecoin buyers like PEPE, TURBO, and WOJAK have enjoyed a great start to the month, the market as a whole has been losing ground.
BTC, ETH, and BNB, the three largest unpegged digital assets, have fallen more than 5% in the past seven days.
Despite that, the memecoin craze has continued, with the tokens' cash labels dominating social media and trendy tickers on decentralized exchanges: GeckoTerminal, a data platform developed by CoinGecko, showed that four of the top five trading pairs by volume in the last day were memecoins. .
At over $100 million, LADYS, a token inspired by the recent craze around Milady NFT, shows the second highest volume of all trading pairs. A PEPE/WETH pair on Uniswap is the third highest, at just over $78 million in volume.
retail trap
Giorgi Khazaradze, CEO of Aurox, a software company developing a trading terminal, suggested that while memecoins were fun for some people, less sophisticated players generally lose money on the assets.
โThe experts who are doing banking, they are drawing liquidity from the rest of the market, the rest of retail,โ Khazaradze told The Defiant.
The CEO added that a coordinated effort is needed to push a token like PEPE to such a high market capitalization. โGetting a token, especially a meme token, to trend and climb to a billion dollar market cap is not easy,โ he said.
Khazaradze added that the memecoin craze will not make cryptocurrencies look any better in the eyes of the SEC, which has been litigating against digital asset projects all year.
It is usually not a sign of a healthy market when digital assets with no use cases top the charts. With tokens like PEPE, which emphasize their lack of utility in their websitevalued higher than established DeFi tokens such as manufacturer MKR, raises the question of how useful these assets really are.
To be sure, the crypto market cannot be completely dismissed as unhealthy, while some would say that the attention and capital attracted by memecoins is wasteful, Uniswap, PancakeSwap, and other decentralized exchanges (DEXs) are what make trading easy.
So while the memecoin traders they play hot potato with may not provide lasting value, the DEXs the traders are using continue to show their value.
carpet pulls
Khazaradze discovered that certain sophisticated players were deploying memecoins on a regular basis and then systematically extracting liquidity from them. This is a type of scam known as "rug pulling."
Data provided by Aurox showed that the frequency of carpet pulling is increasing. There were 140 carpet pulls three weeks ago, 189 two weeks ago and 279 last week, with the amounts drained increasing each week, according to the data. In the last seven days alone, malicious developers have raised more than $90 million.
All told, these are the dog days of cryptocurrency. Major regulatory uncertainty persists, making it difficult for legitimate projects to confidently move forward on their roadmaps.
Khazaradze, who plans to take Aurox public this year, says he needs to constantly change the language in his SEC filings as regulatory and compliance actions take place.
โOne of the reasons it goes public is because you want to increase transparency and accountability,โ he said. โThese memecoins are the antithesis of that. Total opacity and absence of accountabilityโ.
