Memecoins
Solana protocol offers a way to short the $53 billion memecoin market — and it’s teasing an airdrop – DL News
- A memecoin short-selling protocol has been launched on Solana.
- Most memecoins have almost lost all value, including those linked to celebrities.
- The memecoin cryptocurrency market is worth at least $53 billion.
A new protocol allows traders to profit from falling memecoin prices by short selling them.
Most memecoins are only available for spot trading. But major tokens like Dogecoin, Pepe, Shiba Inu, and Brett have large enough market caps that centralized exchanges offer leveraged futures trading.
Centralized exchanges allow traders to borrow funds at a leverage ratio that matches the margin they have deposited as capital. The borrowed amount can then be used to make long or short bets on crypto tokens.
The new protocol, Dumpy.fun, claims to make it easier to short-sell memecoins and plans to allow permissionless listing of all memecoins.
Currently, the protocol is in beta and only users on the waiting list have access to the protocol.
Shorting memecoins could prove profitable. The two largest memecoins in cryptocurrencies, Dogecoin and Shiba Inu, have fallen by about 80% from their peak prices.
While some memecoins spark frenzied trading activity, most gains are fleeting — a likely target for future short traders.
In June, celebrity memecoins were all the rage, with many notable figures such as Iggy Azalea and Caitlyn Jenner launching tokens. These memecoins initially skyrocketed upon listing, but have since plummeted. Azalea’s price has dropped 79% while Jenner’s has dropped 75% from its all-time high.
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Tuesday’s launch includes leveraged trading on a single memecoin, Catwifhat, a $36 million The token was launched earlier this year. The token is down 52% from its June peak.
Dumpy.fun traders will be able to vote on new offerings, with the protocol promising to add one token every day during the beta phase. The platform has not announced when the full rollout will take place.
Early traders will also be rewarded with airdrops, although the protocol has not specified the reward mechanism for its token distribution.
The protocol’s name appears to be a play on words from the popular Solana memecoin generator, Pump.fun, which was part of the Cambrian memecoin explosion on the blockchain.
Solana represents 85% of all newly created tokensmany of which are memecoins, which are traded on decentralized exchanges. The blockchain’s DEX trading activity has eclipsed that of Ethereum and its layer-2 networks combined.
This year, memecoins have gained considerable attention in the cryptocurrency industry, with the sector reaching a market capitalization of $53 billion, according to data from CoinGecko.
This figure, however, only takes into account the so-called top memecoins cataloged by cryptocurrency market tracking platforms such as CoinGecko.
This pales in comparison to the actual size of the memecoin market, as dozens of new tokens are launched every day on different blockchains.
Pump.fun alone has created more than 1.5 million memecoins since its inception earlier this year.
Slorg, the pseudonymous business development director of Solana DEX aggregator Slorg, recently catalog the 30 celebrity memecoins launched on Solana last month.
The best performer was a token linked to internet personality Andrew Tate, down 73% from its all-time high price.
The performance of these memecoins is consistent with a recent study That said, while these tokens promise big crypto gains thanks to their celebrity backers, the reality is that most are doomed to fail in the long run.
And this is what the developers of Dumpy.fun say is the reason behind creating a protocol for memecoin shorting.
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or information on articles, please contact him at osato@dlnews.com.