Open App
Back

Anatomy of a Meme Coin - Choose Your Token, Wisely

Published on June 13, 2024 · Reading time 3 minutes · Created by Fyde Labs

TL;DR
Memecoins like Pepe and Pepe2 have shown potential for high returns, but analyzing their network interactions reveals crucial differences. Pepe’s network is decentralized and dynamic, primarily run by trading bots, making it potentially safer for investors. In contrast, Pepe2 is more centralized, controlled by a few wallets, posing higher risks. Our study also highlights CEX and DEX interactions not listed on platforms like CoinMarketCap, providing further insights.

Anatomy of a Meme Coin: Choose Your Token, Wisely

Memecoins have become a major subclass within crypto, efficiently onboarding new users. Identifying potential breakout tokens early is crucial for substantial returns. To demonstrate the significance of structure, we’ll analyze Pepe and Pepe2 due to their contrasting network patterns, focusing on the underlying structure beyond mere virality.

The meme of Pepe the Frog predates the term “memecoin” itself, making it an ideal case study for examining network-driven investment strategies. With countless “Pepe” tokens in circulation, navigating through them requires understanding network dynamics.

Overview of Fyde’s Methodology

Network analysis allows us to examine relationships between entities via a graph-based system, revealing interactions among traders, bots, and contracts. For each token, we process transfer data (e.g., ‘to’, ‘from’, ‘amount’, ‘time’) and calculate centrality measures like closeness, betweenness, and eigenlayer. By identifying outliers three standard deviations from the mean, we highlight influential wallets that drive liquidity and trading dynamics.

Using AI-driven PCA and network analysis, we uncover hidden patterns, equipping Fyde’s AI agents with logic to filter tokens for our liquid vault. Below are visuals showing the interaction variance for Pepe and Pepe2.

Pepe Analysis:

  • Influential wallets identified: 77 among 242,206 holders, including CEX, DEX, LP contracts, whales, and MEV bots.
  • Decentralized and dynamic network, with significant interaction diversity, enabling deeper liquidity.

Pepe2 Analysis:

  • Fewer significant outliers, with only 8 wallets among 11,758 holders, dominated by CEXs and lacking large whales.
  • Centralized structure with fewer liquidity providers, increasing risks for token holders.

Interpretation of Findings

Pepe’s wide distribution of influential wallets provides a decentralized network supporting higher liquidity, whereas Pepe2’s limited influential wallets make it more susceptible to market manipulation. These differences reveal that Pepe may offer a safer trading environment with greater exit liquidity.

For a detailed list of influential wallets, see this document.

In our next analysis, we’ll dive into identifying sybil-filled and centralized scam tokens, revealing further risks for traders.

Follow us to stay updated: