A Memecoin Story

Anon, I want to tell you a story. It’s a cautionary tale. I wanted to dig deep into a meme coin, understand the circumstances of its launch. Who makes these things? How does their launch play out? I vaguely understand that there is often a group, a plan, a little light insider trading (or a lot). Often the creator keeps much of the supply to themselves and just waits for the right moment to dump. It’s a timeless story we’ve all seen play out over and over again. But when I started to peel back the layers of the onion, I found something scarier than I’d imagined. It was a yawning abyss whose implications are so dark it gave me a new perspective.

I traced back through the history of the social media and on chain activity of a particular token and put together a detailed timeline of events. The story starts as I’d expected. Some bros get in a Telegram chat, they scheme up a coin. The ticker is absurd. A Twitter account is created for it, a website is launched. Incredibly, in the public Telegram, the creator lets ten insiders know when it will be launched. They’re having fun, vibing, joking, hoping to get rich quick. The deployer sends himself some SOL from Binance for the liquidity pool. And then they lose control almost immediately.

You see I’m going light on details here. I’m keeping it vague to protect the innocent. Even though the meme coin deployer alerted his ten co-conspirators when he would launch the coin to give them a material advantage, this example was actually a pretty fair launch. 90% of the token is deposited in the initial liquidity pool along with 20 SOL. The deployer only kept 10% back for himself, which is frankly about 300% more fair a launch than many of the serious token projects out there.

The deployer is busy setting up a website for the token and preparing the token for launch when outsiders start to join the Telegram group almost immediately. It only took four minutes and forty-three seconds from the time of the first Tweet from the new meme token’s account which included the Telegram group link. “Who’s leaking?” the deployer asks. Other group members point out that it’s already public on X. They seem unpracticed, unprepared. The token has just been minted forty three seconds before the first outsider has joined their Telegram group and there is no liquidity yet.

The deployer goes back to his work, setting the freeze authority and the mint token authority to no one. Then he creates the initial liquidity pool on Radium ten minutes after it’s minted. The merry band of ruggers isn’t prepared for what comes next.

The first bot I’m going to call the Meg, because he almost swallowed them whole. It only takes one minute and eleven seconds for it to happen. The first buyer into the pool takes 78% of the initial supply in one transaction in almost the blink of an eye. There are one trillion tokens, and the Meg swaps 20 SOL for 704 billion of the meme coin. He is the captain now.

Of course, it’s possible that the botlord is one of the initial eleven insiders, perhaps even the deployer himself, but it doesn’t make sense to me. That would be pretty bad form on any of their parts to immediately seize 78% of the supply, leaving little for the other members to scoop up. They’re all just in the Telegram room, cooking up memes, celebrating their imagined wealth, and generally clowning around. It doesn’t fit with the vibe. New members are asking “wen launch?” And the group is explaining they’re too early. They’re posting on X, asking for raids.

One of the group members creates a buy bot in Telegram to announce new sales, but it’s after the bots have started their feast so I’m not clear they even know the Meg has gotten the jump on them. And the Meg isn’t the only one, the bots just keep coming.

Within a second of the Meg finding them, three other bots have swooped in. After the Meg, another bot buys 87 billion, then a third 22.8 billion, and the fourth 2.7 billion. In the first second of the liquidity pool’s active life, bots have scooped up over 90% of the supply of the token. Only then do any humans stand a chance of getting a share.

I start looking at the bots, seeing how they behave. All four of them are doing this constantly with meme token after meme token, sniping them the second they launch. They stand silently watching, waiting for new travelers into the dark forest, and then they pounce. They’re on you before you can blink, and then you’re dead.

I realize a couple things about the bot ecosystem, watching the data on chain. There isn’t one simple strategy they all follow. If they all did the same thing, it wouldn’t be profitable. It also changes with the times. The low cap trading scene is always changing, always evolving, and the bots must too. They are under constant evolutionary pressure to hone their craft. I imagine the botlords ending every day at a whiteboard assessing their beast’s performance, thinking of how to tweak their strategy. A bot that doesn’t make fresh kills every day is a bot that will starve. The botlord will lose his capital and new, stronger bots will take his place. The wheels of evolution grind on.

Some bots focus on arbitrage, or its at least a core part of their strategy. I’m sure many of you have seen the almost comical gorilla drop by your favorite meme coin. DCAKxn5PFNN1mBREPWGdk1RXg5aVH9rPErLfBFEi2Emb better known as 🦍🦍🦍…🦍.sol, I’ll call him Harambe, will arb you for laughably little. Here is an example I saw today:

Back to back transactions where he gains less then sixteen hundredths of a penny. It may seem absurd, and it is, but understand that this bot is just trying to sprint faster than the other bots, and settle for smaller scraps. He must accept 16/100 cent arbitrages, because if he lets it get to 20/100 cent, another bot will gobble it up. Nature, red in tooth and claw. But arbitrage isn’t the only tool Harambe has in his toolkit. He’s playing n-dimensional chess I can’t even fathom without a dissertation-level effort.

Back to our degens. After a mere two seconds, the Meg has dumped right back on them for an almost 8 SOL profit. Actually at this point he’s just fighting with the other bots. No human has even placed a trade yet. The frenzy of bots and their whirling blades of death spins on. Humans begin to filter into the trading pool, undoutedly a few of the insiders begin to nibble. The market cap starts to climb, but there is less and less of the pie for actual humans to get their hands on. If they understand what happened back in the Telegram room, they’re not saying anything about it.

It broke my heart a little to see the meme coin deployer capitulate only an hour and twenty-five minutes after he deployed the liquidity pool. The 100 billion he kept back for himself he sent in two transactions to a new address, and then… he swapped it back for SOL, recouping less than 2.5 SOL of the 20 he committed initially. That’s when I decided to keep it generic. It felt a lot more like they were just trying to have a bit of fun, share some laughs with the world, than that they were hardcore scamming. Pour one out for the fallen homies.

So what’s the lesson here? I thought I was going to write a story about how cynical ruggers are bamboozling crypto anons desperate for the next big hit. I turned out to be wrong. Yes, there are serial meme coin ruggers out there stacking the deck against you, but even worse are the bots. They will come at you from every angle, following every imaginable strategy with one unyielding imperative: extract value. If they aren’t good enough at it, they will be eaten by their mates, and new bots will take their place.

Anon, you’re not just trading against the insiders. You’re facing off against only apex predators from every ecological niche. You’re trading against a swarm perfect killing machines, honed by light-speed epochs of evolutionary pressure. They do not sleep. They do not fear or pity. Do not enter the dark forest, Anon, you cannot win. Not with a regularity that matters.

Now I know none of you are going to listen to me and we’re all going to punt into shitcoins anyway. But meditate on this a bit when you’re doing it. Even if you’re not enriching some serial scammer, which you probably are, you are providing new succulent flesh to the ravenous bots. I urge you not to lie to yourself about “what you’re willing to lose.” You will almost certainly lose it.