The Problem With Solana Tokens
Last updated
Last updated
Solana lately has been riddled with scam launches. DIY memecoin minting platforms are making it easier than ever for anyone with an idea to launch their own meme coin project. Makenow.meme claimed that they helped launch 4,229 projects within 3 days of their launch on July 31. Anyone can do it.
Unfortunately, the majority of such launches are scams and rug pulls.
According to DexScreener, between 40,000-50,000 new crypto tokens are created every day. Solana leads with 17 to 20 thousand new tokens a day. The majority of these coins never truly launch or self-rug too quickly to be counted.
Every though contract is renounced and liquidity burnt, there are a lot of tactics project owners use to take advantage of people who buy. These include:
Not adding all tokens to liquidity and then selling team tokens as price goes up. They will add let's say 70% of the supply as liquidity, and the remaining will be distributed to multiple wallets who sell slowly as the price starts to go up.
These 30% of tokens are essentially team tokens and with low liquidity on new projects, selling these 30% of tokens will rug the project.
Paying KOLs and Influencers a large portion of the supply for publicity. This is good to get the name out there, but these KOLs have no interest in your success. They will simply dump the bag and move onto the next project. If you have given a large % of your supply away, this can result in massive price dumps.
Sniping their own launch: Teams will sometimes buy large amounts of their own supply after launch, distribute to multiple wallets and slowly sell as the price goes up. This puts constant sell pressure on the chart and even with great daily volume, the price will stay stable (as they eat all the buys) or go down (if buying slows down but they continue to sell).
Hiring dodgy Market Makers to generate volume but when it goes wrong, these market makers crash the token due to their illicit activities.
Here is an example of a token currently at the $5 Million MarketCap. Using bubblemaps, you can see the token distribution.
As you can see, there are 3 massive clusters. One person owns 33% of the supply (distributed to many small wallets) and controls most of the top 30 wallets. If most/all of these wallets start to sell, the project will go to zero. This project is very centralised and even with 2000+ holders, 3 holders of these clusters have the power to tank the price in an instant. This is seriously risky!
You can also see above that even though the token supply was 420 Trillion, the team added 271 Trillion (65%) as liquidity and kept the rest of the tokens. These were not burnt or airdropped. The team is holding onto 35% of the supply secretly which is a very big red flag!
Due to these reasons, investors day trade these tokens and are afraid to sleep on them. This is why the majority of projects don't last a few days, let alone a few weeks. Bad actors are ruining the space and its time to do things the right way!
