What comprehensive qualities should a powerful Meme player possess to succeed?

Host: Alex, Research Partner at Mint Ventures

Guests: Louie, Professional On-chain Investor; Stakeholder, Professional Individual Investor & On-chain Studio Manager; Lawrence, Researcher at Mint Ventures

Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continuously question and deeply think, clarifying facts, exploring realities, and seeking consensus in the WEB3 world. I am Alex, a research partner at Mint Ventures, and today we have three special guests to discuss how to navigate the current meme cycle.

Alex: In this episode, we have invited three seasoned investors, all with extensive investment experience, particularly in on-chain crypto asset investments. The first is our Stakeholder, who is not only an investor but also the head of an on-chain studio. The second is Louie, a full-time on-chain investor. Could both guests introduce themselves briefly?

Stakeholder: Hello everyone, I am Stakeholder. I first met Alex in a Curve group, and I started researching DeFi when I entered the space. Later, since DeFi mainly operates on-chain, I transitioned into Web3 and began studying some on-chain strategies. Last year, I started getting into some memes and doing some yield farming, helping a couple of friends introduce private equity firms to on-chain yield strategies.

Louie: Hello everyone, I am Louie. I wouldn’t consider myself an old player in web3; I joined this space at the beginning of last year, starting with inscriptions, and I have been all in on the meme track since then. From the inscriptions at the beginning of last year to now, I have been paying attention to the BTC ecosystem. After the meme explosion on Sol this year, I shifted most of my focus back to the Solana chain. Basically, my main energy is now focused on memes on Sol. After I learned about this space and joined it, I have been playing memes full-time. That’s a brief overview of my personal experience.

Alex: Welcome to both of you. The third guest is our old friend, Lawrence, a researcher at Mint Ventures, who also plays a lot of memes within Mint Ventures. Lawrence, please introduce yourself.

Lawrence: I am Lawrence from Mint Ventures. Like Stakeholder, I entered the space in the last cycle, specifically in 2020 through DeFi. I have always been interested in new things on-chain, so since then, I have been investing in memes.

Understanding and Explaining Memes

Alex: Let’s get to the main topic. Today is our first formal podcast episode discussing memes. We may have touched on it before, but not in depth. The three guests we have selected today have been focusing on memes, and they have been deeply researching this track for the past six months to a year. However, there may be many newcomers in the audience who are not very familiar with crypto, Web3, or memes. If the three of you were to explain what a meme is to a Web3 novice, how would you do it in simple and understandable language?

Louie: Alright. I think I would explain in one sentence that a meme is the monetization of attention and trends on the blockchain. That’s how I understand memes. For example, in the Web2 world, when some hot topics arise, whether it’s Elon Musk, Trump, or the recent hippo incident, or other trending topics, they generate a certain level of discussion and attention in Web2, which then maps to Web3 and the blockchain, corresponding to a token that monetizes that attention and those trends. That’s how I understand these memes.

Stakeholder: If I were explaining to a novice who is definitely not from the crypto space, I would often encounter situations in real life where they wouldn’t know the term meme. If someone suddenly asks what a meme is, I would first transition a bit. If they say they haven’t traded coins, they would definitely be interested in some get-rich-quick stories. I remember once when I was dining in Shijiazhuang, I overheard people at the next table talking about how much they made from Dogecoin and how many times it multiplied. They clearly weren’t from the circle, but the conversation was quite lively. So, if I were to explain to a novice, I would first help them understand that this is the essence of trading coins. Making money is inseparable from trading coins; if you know nothing about the technology or background of the blockchain world, the simplest way to get started is actually to buy and sell Bitcoin. Many people already know about Bitcoin; it’s no longer a strange term. Another thing is memes. They are essentially a carrier of values and emotions. You can use a coin to represent it, and by buying, selling, or holding it, you can express your values and emotions. The more people spread it and buy it, the more money you can make. Moreover, in this process, you can find like-minded people and a sense of belonging. As for the token itself, it has no inherent function and can easily lead to losses. So, you must play with money you can afford to lose, treating it like a lottery.

Lawrence: If I were talking to a complete novice, I would first ask if they know about Doge. I feel that when explaining something unfamiliar to a newcomer, it’s best to reference something widely known. If they know about Doge, I would tell them that Doge is a typical meme. A meme is a cultural phenomenon that carries a certain sense of humor and trendiness, something that can spread virally. It can be understood as somewhat similar to our concept of "meme" because many popular memes are actually meme images or emoticons.

Observations on Newcomers in Memes

Alex: I know many of you are in various groups, especially Louie, who is in many trading and community groups. Based on your observations, do you think the proportion of newcomers entering the meme space this time is significant?

Louie: I’ll answer this question first. I’ll give a very intuitive data presentation, which is the trading volume on the Solana chain. About a month or two ago, I can’t remember the exact time, but I recall that the 24-hour trading volume on-chain was around 60 million. Now, if we look at the 24-hour trading volume on the Solana chain, it’s basically quadrupled to 240 million. So, during this period, I feel that a lot of new money has flowed in. Speaking purely in terms of on-chain data, that’s my intuitive experience. Of course, in terms of the assets we buy meme coins, this feeling is also very evident. In the past, when a hot topic emerged, it would quickly siphon off other assets, like a seesaw effect—when one asset rises, others fall. But recently, especially during this period, you can feel that the money on-chain has increased. The seesaw effect isn’t as pronounced anymore; it can support several new assets worth hundreds of millions, or even more tens of millions. That’s an intuitive feeling from my side.

Stakeholder: I haven’t joined any new groups; everyone who should have entered the space around me has already done so. There are no new users around me; I’m still in some old communities. First of all, I feel that some people who were doing secondary trading have now come over to trade memes, and those focused on exchanges have also started moving on-chain. Some of these people are transitioning. Another observation from my last cycle is that I was a novice back then, and many newcomers entered at the same time. Some friends came in to trade Shib or Babydoge. I think for new users, memes are very friendly; they are easy to accept and play with. Plus, they seem cheap, even though mathematically that’s not the case. People feel they can play with 10 dollars, but Bitcoin is tens of thousands of dollars, and they still think they need to buy whole numbers; buying 0.01 seems too little.

Alex: Lawrence actually entered the space relatively early in the last cycle; he has experienced a complete cycle of value investment in secondary market coins, including DeFi, many layer 1 public chain coins, and some layer 2 coins. He has basically gone through it all. However, he has always been paying attention to memes. How do you feel this round of memes differs from the last round?

Lawrence: Are you referring to the meme cycle in 2021?

Alex: Yes. In the last round, there were quite a few animal coins like pig, dog, cow, and sheep, but they didn’t catch fire like this round.

Lawrence: First of all, my personal feeling is that, from a financial perspective, as Louie just mentioned, everyone’s enthusiasm for this matter is definitely higher than in the last cycle. I can’t say we’ve reached a peak yet, but overall, I feel that the heat of this round is higher than the last. In the previous cycle, memes were established as a niche, if we consider it a track. Before that, there was only Doge, and then in the last cycle, we had Shib and many more relatively low market cap meme coins. In terms of differences, I think this round, from what I’ve observed in the Chinese community or among people trading memes, are mostly familiar faces—people who have been working on-chain for a long time. Like Louie just mentioned regarding trading volume data, including some memes that represent the middle and lower classes in Western society, from my observation, especially with the recent explosion of Moonshot, I feel that the penetration rate has significantly increased in places like the U.S., and not just in the West, but also in the Middle East and Europe. Memes in the last cycle only had a very short phase, specifically in April and May of 2021, and then again in November; those were basically the only two very brief time points that attracted a lot of attention. The core reason is still the profit effect that Stakeholder mentioned earlier; the profit effect of Doge and Shiba Inu was too hot. At that time, it was relatively simple, just a zoo of coins—Shib, Dogecoin, and other small coins, which were overall quite singular. In this round, the entire meme track has actually developed quite well. There is a relatively complete infrastructure, like various meme bots, and very good trading tools on the web, as well as on-chain tracking and analysis tools, and many strategies for following and counter-following on-chain addresses, which I think have matured significantly. In the last cycle, everyone’s approach was relatively simple; they would just buy whatever they thought was good, and their understanding of these things was quite similar. In this cycle, I think many people, including many institutions, are deeply engaged in this and have created many different things. For example, the recently popular Murad, whose list leans more towards cultural attributes and cult characteristics of memes, which did not appear in the last cycle. So, I feel this is also related to the overall background of the industry. I’ve discussed with Alex multiple times that there are too few new things in the entire market; there are no new things like DeFi, NFT, or GameFi that emerged in the last cycle. However, a lot of hot money has come in, and everyone can only chase the direction with the most attention, directing their money towards the area with the most attention.

Opportunities for Investing in Memes

Alex: Understood. I do feel that this round of meme assets, including players, tools, and infrastructure, has indeed seen significant upgrades compared to the last round. Many projects this time have richer cultural connotations and are closely tied to real-world hot events, and I think the quality of the players has also improved a lot. As someone who doesn’t usually play memes, I feel a significant gap when trying to engage with skilled and professional players like Louie. In the last round, everyone was probably a novice, relying entirely on luck and courage. This time, the level of professionalism in using tools, determining projects, analyzing data, and grasping emotions is much higher than in the last round. So, what was the background for each of you when you first encountered memes and started trying to invest in them?

Louie: I would summarize that I was quite lucky at the beginning last year. I chose two tracks: one was GPT, and the other was Web3. When I entered Web3, I started getting into inscriptions. At that time, the price I encountered for Ordi was still $70 each, and one was 1,000 pieces, so $70 for 1,000 pieces was very cheap. With that background, I quickly got feedback in Web3, and I went all in on Web3. By around May, I quit my Web2 job and started working full-time in Web3. I achieved quite good results in the inscription ecosystem. Sometimes, it really is the halo of a novice. When you first encounter something, if the quality is good, it can be considered fine grain, and at that time, this belief received positive feedback, which was a relatively lucky outcome. Then, relying on that novice halo, along with the reinforcement of positive feedback, my belief in this ecosystem kept amplifying. When that belief kept amplifying, I often found myself holding some assets that allowed me to have a broader perspective. Of course, in the end, I also experienced ups and downs, retracements, and missed opportunities, but overall, I still accumulated my first pot of gold in this ecosystem. That’s the background of my investment in memes; perhaps the timing was a bit special, with a significant element of luck involved.

Alex: So Louie, from your perspective, since you started with inscriptions, do you think inscriptions are actually quite similar to the meme coins on chains like Solana and Base?

Louie: I think they are completely different. If I were to encounter the Web3 ecosystem at this time this year, the difficulty would be much higher; it’s not as simple as inscriptions. Because sometimes, the dividends of this ecosystem are still very significant. In the early stages of the ecosystem, no matter what you bought, you could make a profit, just varying in how much you earned. But on Solana, you can clearly feel that you need to solidify some of your trading logic, including technical advantages or your own information advantages, to achieve decent returns. I think that’s the distinction.

Alex: We’ll discuss this part in more detail later. Stakeholder, how did you start playing memes? After all, you, Lawrence, and I entered this industry more from DeFi, starting from the fundamentals. What was the background that made you switch to wanting to play memes and invest a lot of energy into it?

Stakeholder: At first, I actually had a bias against memes, thinking they were just air. Before entering the crypto space, I was in financial IT, so I had a technical background in finance and IT, which allowed me to quickly study DeFi. But memes were just an avatar and a slogan; what was there to study? There wasn’t much to research. However, during the last bull market, Dogecoin surged a lot, and I also traded a bit. But at that time, my understanding of memes was just that Musk was promoting it, which had an influence. I also concocted a story for myself, thinking that Musk would colonize Mars, and perhaps Dogecoin would serve as the basic currency for interstellar transactions, which was my justification for investing, but I didn’t really believe in it otherwise. So, when I saw Shib coin rise so much, I wasn’t tempted; I was just watching it perform. After the bear market ended, in 2022, I thought, what should I do during the bear market? There must be places to make money. I didn’t like purely trading swings, so I started researching, mainly focusing on Uni V3 strategies. During this process, I discovered Bone, which is a sub-project of Shib. It was like saying I would create another public chain in the future, and Bone had a large trading volume, and the LP returns on Uni V3 were very good, so I started trying to do that. Moreover, the price fluctuations were relatively stable, so I felt it was quite safe, and I began to experiment. Later, the LP returns were very good; I did it for about nine months, and in the end, I calculated that I had over 100% annualized returns. From this process, I discovered that memes have the characteristic of high trading volume, so I started doing short-term LPs for these memes to earn transaction fees, which was my first contact with them. During this process, I realized that I actually had a bias against this. Although these memes are very volatile, they aren’t as extreme as I imagined; they are actually quite similar to some of our altcoins. If you look at Dogecoin and Shib now, their declines are comparable to those of AAVE and UNI. These AAVE and UNI are already recognized as good altcoins, with absolutely leading products and fundamentals, and they are similar to Shib. So, deeply ingrained memes do have investment value. That was when I started trying; the first one I traded was something called Harry Potter, with the ticker Bitcoin, which now has a market cap of about $200 million. At that time, I started doing LP when it had an $8 million market cap, but later the market cap dropped to $1 million, and I thought, this is trending towards zero, so I quickly cut my losses and sold one Ethereum. Now it has several million in market cap. In between, there was also Pepe, which I saw on the launch day, but I didn’t seize those opportunities; I did LP for them but only earned a little bit of transaction fees, missing out on the opportunity. Why did I miss it? It was still a matter of understanding. So later, I was determined to refine my investment strategy in memes, developing a set of strategies suitable for myself, and gradually participated, but I haven’t achieved particularly significant results yet. At the end of last year, Bonk and Wif coins emerged on Solana, especially when Wif broke the $1 mark, I was stimulated. Because I had also played Wif when it was very low, at a market cap of a few million. When Wif broke $1, I felt this was definitely a trend. So, I put in a larger position, and I also chased Pepe with a significant position, and later, just like Louie said, I got results and rewards. Then I felt that I needed to increase my allocation and spend more time researching it.

Lawrence: I mentioned before that I started paying attention to new things on-chain in the second half of 2020. In the first half of 2021, I was still playing with algorithmic stablecoins, so I was constantly researching and analyzing on-chain addresses. I discovered that some addresses were buying a meme coin that you might not have heard of, called Hoge, which is also a dog-themed coin, Hoge.finance. At that time, many memes still had to wear the cloak of finance, including Shib. Out of curiosity for new things on-chain, I bought a little bit of it, and later, from March to May, I noticed that it had risen a lot. I was able to keep following it because it initially gave me positive feedback. I started to think deeply about this because Shib had quickly sold off, and the multiples were very high, which was quite painful. Then I began to find ways to explain this, to see whether I was wrong or the market was wrong. So, I read books on attention economics and articles written by investment institutions or some KOLs. After that, I continued to pay attention to on-chain memes, and I participated in some newer projects as well.

Alex: Speaking of this, I remember there was something that left a deep impression on me during the last cycle. You seemed to have claimed a domestic meme called loser coin for free, right? What was its Chinese name?

Lawrence: Yes, it was called Lowb.

Alex: I remember you got it for free and initially didn’t sell. At that time, everyone thought it was a form of performance art because there was still a significant bias against domestic memes, believing that domestic projects, especially those with cultural attributes, could not compare to Western ones. As a result, this project was distributed for free, and its operational method was quite peculiar and down-to-earth. Later, this coin rose from a zero-cost project to a market cap of tens of thousands of U?

Lawrence: I can’t remember exactly, but at its peak, it seemed to reach several hundred thousand U.

Alex: Right, it seems you held onto it at first, then sold a portion, and the part you sold kept rising. That left a strong impression.

Essential Qualities of Excellent Meme Players

Alex: We just talked about the significant differences between this round and the last round of memes. In this round, when we invest in memes, we often see a keyword called PVP, which originally refers to player versus player in computer games, rather than player versus environment. However, here PVP is mainly used to describe a brutal zero-sum game situation, where it’s either you cutting me or me cutting you. In such an environment, what do you think are the comprehensive qualities that a skilled meme player should possess to succeed?

Louie: I’ve summarized four dimensions. First, I think the most important and fundamental thing is to choose a wealthy place to play before entering. For example, at this stage, you definitely need to choose the Solana chain, right? You can’t choose the Ethereum chain. Last year, you had to choose the BTC ecosystem; you couldn’t choose other ecosystems to play in. Just like everyone wants to select a wealthy ecosystem in DeFi to gain certain returns, the logic for playing memes is the same; first, you need to choose a wealthy place. The second point is that playing memes requires ample time, and you need to continuously accumulate experience throughout the process because time is a hard requirement. If you don’t have time to pay attention to the information about this asset or to perceive the market sentiment, then buying meme coins is no different from gambling, in my opinion. As you practice and research, understanding this information and continuously feeling the market changes, you will also accumulate experience. This is actually very important; experience is something that no one can teach you; you can only feel and consolidate it yourself to grasp what belongs to you in this process. The third point is a more pragmatic aspect—your tools and trading logic must continuously iterate. The market changes very rapidly; perhaps the only constant is change. A strategy that works this month may not be effective next month. Many memes in the current market reflect this issue quite strongly. Previously, when people played memes, they focused more on the irony of the meme, its cultural attributes, and even some cultural points from foreigners. But now, looking at these memes, they are entirely a reflection of attention and hot topics. Wherever there is a hot topic, that coin is bound to rise. Whether it’s the hippo from the zoo recently or the recent shift in trends, like A16Z getting involved, everyone feels that memes are starting to combine with VC again. Therefore, the market changes very quickly, and your tools and trading logic must keep pace with the times. The fourth dimension I think is that everyone has different ways of making profits in this ecosystem; you need to find a comfortable zone that suits your way of making money. For example, some people are naturally suited to be diamond hands, buying a coin and holding it without moving. Others, due to their personality or other reasons, prefer to trade back and forth after buying. So, regardless of the method, you must find your comfortable range. For a particular asset, some will eat the fish head, some will eat the fish body, and some will eat the fish tail. Your traits or resources can support you in achieving better profit experiences in a certain range, so firmly find your comfort zone. Don’t think about eating from head to tail of an asset; I think that’s unrealistic.

Lawrence: First of all, I personally feel that PVP is very difficult because during this year’s not-so-good market phase, from May to July, I did a lot of meme trading on-chain, and my feeling was that it was very challenging. Later, I basically gave up on this high-frequency meme trading strategy. My feeling is that I need to find opportunities for PVE instead. Because PVP is roughly about having no incremental funds; it’s just a few people in the market transferring money from your pocket to mine or from my pocket to yours. So, based on my recent experiences, I think I need to find opportunities that are not PVP, but rather PVE opportunities, looking for chances where the entire market is still growing. For example, AI a week ago, or A16Z’s AI fund three days ago. I can only say that timing needs to be better, trying to judge whether this small trend could become a larger trend. So, I think this is perhaps the most important quality: to judge whether new things can attract more attention in the future based on personal comprehensive feelings. Then there are some cultural or culturally attributed memes. I feel that these might be easier to pursue. Because the problem with chasing hot topics is that they pass quickly. Recently, I prefer things that have a Lindy effect, meaning that the longer something has survived in the past, the longer I believe it can survive in the future. Of course, this may be a difference in personal perception. So, the qualities that a good meme player should possess, as Louie mentioned, are already quite comprehensive. I think familiarity and mastery of tools, as well as a significant amount of time, are very necessary. Additionally, on this basis, there may also be a need for judgment on culture or some trending micro-trends.

Stakeholder: Actually, after listening to Louie, I feel that there are a thousand ways to fail, but the ways to succeed are converging. I’ve noticed that those who play well have similar methods, and our methodologies are quite close. I believe that the qualities involved include having a macro management perspective, which is still a cognitive level. Macro management actually has two aspects: one is mindset management, not feeling bad about selling off, being able to cut losses, and moving on. The other is capital management. It’s important to determine how much to invest and in what kind of assets. The capacity and size of the pool determine how much you invest. Another point is that if we subdivide memes, we can categorize them into many types: early-stage, matured, and temporary hot spots. I think this is a kind of lottery. For example, if you see a concept emerging and think it’s viable, you can evaluate the narrative and then make a fixed investment, like 0.1 Ethereum or one Solana, and then it’s like a lottery. I accept the possibility of it going to zero; after putting it in, I won’t care about it, and I’ll check back after a month or some time later. Another thing you need is technical knowledge, which the previous two mentioned. You need tools; there are now many mature tools available. First, you need to find these tools and become proficient in using them. There are many technical indicators or other tools; the key is to find what works for you, something that suits you personally. Also, there’s the circle; your circle is actually your source of information. How many friends do you have who are into memes? Are you alone in a room trading, or are you in a room with a group of people trading together? I think both must be combined. I can trade alone in a room, but I must regularly be with a group of people to exchange ideas, which allows me to hear different perspectives and gain more insights. Another aspect is time; this relies on volume. The more you observe, the more intuitive you become. This involves deliberate practice, and you need to spend a lot of time. I remember a meme trading expert said, “You don’t need to say anything; if you’ve seen enough pools, you’ll be able to see it accurately.” That’s exactly it. A newcomer might say they can catch a golden dog; that’s luck, but the probability of enhancing that luck relies on accumulation and summarization. Of course, there are many changes in between, and we must continuously adapt to new changes.

Alex: Understood. I’ve observed both professional investors who play memes and those who choose not to, as well as ordinary retail investors around me. I feel that their personality traits are quite different. Generally, those who are willing to play memes have a significant characteristic: they are young. Youth represents many derivative factors, including their abundant energy, better physical condition, and sharper thinking. Additionally, their mindset is often more open to some cutting-edge topics; for example, they are sensitive to what is currently trending. Another aspect is their attitude towards trading. Some people really enjoy trading; they would love to have 100 trading opportunities every day to watch and track. Others are very averse to trading; they don’t like to look at more short-term information every day; they prefer to focus on longer-term things and don’t like to analyze K-lines. Therefore, investors who are more enthusiastic about trading and can derive more pure pleasure and enjoyment from it are more suited to participate in meme trading. This is my basic observation of the people around me.

Investment Strategies for Memes

Alex: We just discussed what qualities a meme player should possess. Now, regarding investment strategies, we mentioned that the meme trend is constantly changing, and their asset characteristics are also continuously evolving. Since you started investing in memes, what changes have your investment strategies undergone? What were the contents and backgrounds of these changes? And in the current market, what strategies are you using to participate in buying various memes?

Stakeholder: The changes are indeed happening. As Alex mentioned, I am no longer young, which means I don’t have complete autonomy over my time. I have to balance many things. In terms of time management, I can set aside some time when I have it. Additionally, meme trends also have their seasons. I believe there will be a wave before the market starts to rally, and when I feel that wave is coming, I need to allocate time specifically to observe and participate. As for what to do during the fragmented time in between, I will no longer engage in those very short-term hot spots; instead, I will look for more long-term opportunities and identify the leading assets in each wave. For example, regarding the hippo, I think it has stirred up a series of ocean animal trends, and I want to wait for it. I previously sold too early, and now I want to wait for it to drop to a certain level before buying back, as I believe there will definitely be a second wave. For this kind of trading, I don’t have that much time to participate. When it comes to meme trading, Louie is likely more professional; my strategy mainly revolves around lottery-style investments. Initially, I was somewhat reluctant to engage with Solana until recently, when I realized that Solana has completely outpaced Ethereum in these meme projects. So, I gave up on Ethereum. I used to think that Solana was dominated by PVP experts, and I felt I couldn’t compete, which diminished my advantages, so I returned to Ethereum. Using this lottery approach, I set a fixed amount to buy, without needing to monitor it constantly, and I calmly accept the possibility of it going to zero. Recently, what prompted my change was realizing that I wasn’t making money anymore; the previous methods weren’t profitable, which indicated that the approach might be flawed and needed adjustment. The flow of money is changing; all the funds have moved to Solana. Ethereum now feels like a ghost town, with top memes having no trading volume, while new projects on Solana can have millions or tens of millions in trading volume within just ten minutes of launch. In contrast, those very mature old memes on Ethereum, which are popular and have large market caps, don’t have that volume at all; it’s completely one-sided. Therefore, I must shift to Solana and readjust to the trading methods there. For these new projects, I mainly focus on the leading ones. Additionally, since I am involved in DeFi, I have an advantage in this area. Many meme traders may not research DeFi-related aspects or pay attention to them. Now, I also help a couple of institutions create hedging tools to earn some returns. For example, Wif and PePe, I engage in on-chain LP and add some hedging orders on exchanges to capture the benefits of large trading volumes, and I’ve found it quite good. That’s mainly what I’m doing now. I believe that meme trading doesn’t only represent small funds; I think large funds can participate as well. I believe that a scale of 10 million dollars is completely feasible.

Alex: When you say large funds can participate, are you referring to the market-making strategy for meme LP that you just mentioned?

Stakeholder: Exactly. Look at Wif and PopCat; they have tens of millions in trading volume daily, and the on-chain pools also have tens of millions. So, if you invest 1 million dollars in ten such assets, it won’t have a significant impact.

Alex: Can you elaborate on your specific strategy for market-making LP? For instance, how do you allocate the funds for market-making, and what intervals do you consider?

Stakeholder: Sure, this took a lot of trial and error to stabilize. Initially, I wanted to create a fully automated hedging tool that didn’t require human intervention, allowing it to run quantitative strategies automatically. Later, I found that manual management was more effective, and the intervals needed to be a bit quicker. Initially, I set a range of ±50%, based on the historical volatility of memes, mainly avoiding non-stable coins and focusing on USDC. The positive and negative ranges are generally set at 50%, 40%, and 35%. I would break it down into three tiers, where narrower ranges can be rebalanced frequently, while wider ones can run for longer periods. In terms of fund allocation, I keep 2/3 on-chain and 1/3 in exchanges for hedging short positions. However, I can’t do full hedging because that requires constant balancing to keep both sides of the position equal. Since we are investing in memes, we are optimistic about their long-term appreciation. You know that when doing LP, your risk mainly arises if the asset keeps declining. If it rises, it’s just a matter of earning a bit less. Therefore, I aim for a 70% or 80% hedge, not a full hedge. When it rises, rebalancing becomes easier, preventing extreme imbalances. If your net position decreases, you could end up with a net short position, which is quite dangerous. In fact, during the LP process, we are not afraid of a crash; we are more concerned about a surge. I worry more about that situation. Recently, I’ve also tried a strategy involving PopCat and Wif, two non-stable coins with significant trading volumes. If I do LP with them, the APR, or yield, won’t be low, and it’s easier to control. Why? Because they are relatively in sync; when one rises, the other usually does too, as they belong to the same sector. When they drop, it’s similar, just with different magnitudes, but they remain relatively in sync. This way, opening a short position can actually enhance your capital efficiency. Originally, one side had USDC, which effectively increases the APR. I’ve been running this for about three weeks now, and it seems this strategy is slightly better. Moreover, on Solana, we can create various new combination pools ourselves. You can find new projects that suddenly emerge with significant trading volumes and are leading, and quickly pair them with something you are familiar with and confident in, then create a new pool and test it separately for a while.

Louie: I’m also very interested in the LP strategy that the previous speaker mentioned, but I haven’t mastered this skill yet. I believe that for primary players, LP is an essential skill. My trading strategy has also undergone some phased changes. Initially, it was purely faith-based; I was a faith player. At that time, I was involved in inscriptions and had a very grand belief. Many people thought ordi could reach a market cap of 10 billion, with Bitcoin being the big pie and ordi being the small pie, so a 10 billion market cap seemed guaranteed. However, the market later doused us with cold water, reminding us that trends are constantly shifting. From this faith phase, I gradually transitioned to PVP, adapting to market trends, predicting where the hot spots are, and possibly achieving my expected returns, then moving on to the next battlefield. Currently, my strategy is roughly as follows. First, I believe that memes can bring significant returns to ordinary people. I have always thought that it is a track that can transition from 10,000 to 100 million. Memes can support you in evolving from an A3 player to an A9 player. However, the meme ecosystem may be even more exaggerated than the 80/20 rule. It might not be 20% to 80%; it could be 1% to 99%. The opportunities that truly lead to significant asset growth often come from that 1% chance. But how do you seize that 1% opportunity? This requires you to spend 99% of your time on tokens that may not seem so attractive, with less impressive market cap expectations. It demands that you maintain daily attention in this market and on this chain. I currently refer to my state as a “jungle” state. What does “jungle” mean? It means I require myself to keep an eye on the market daily while maintaining my state and feel to engage in some small trades. However, I won’t heavily invest unless I find particularly good opportunities. Through these small trades and daily “jungle” activities, I maintain my feel and state. When I discover a good opportunity, one worth a significant investment, I push myself to be precise and go all in. For instance, recently with Neiro, the hippo, and Goat, their windows of opportunity were relatively long, accommodating large amounts of capital, and the yields were quite good. This is roughly the rhythm and state I’m in now.

Lawrence: Initially, up until around the end of 2023, before the beginning of this year, there weren’t many memes in the market. It wouldn’t take long to search for new memes daily and scan the chain for new things. So, previously, my strategy was to check for new items on the chain at least every two to three days. However, since the emergence of pumpfun, meme coins have exploded, and that strategy is no longer sustainable. Additionally, personal matters have increased, as I mentioned earlier, during the period from April to May, after losing some money on-chain, my strategy has shifted to the current state. This is also related to personal circumstances; I may not have enough time to chase every hot spot, so I can only focus on opportunities that aren’t hot. From an investment strategy perspective, I look for memes with relatively good fundamentals. If I believe it won’t die, I will make some low buys at lower levels. If it rises significantly and then drops again, I will buy some at a lower position because I believe it won’t die. For example, as Stakeholder mentioned, I believe that Bitcoin as a meme won’t die. It may not be the current market hot spot, but its characteristic is that because it’s not a hot spot, it also won’t die. After losing a lot of money on-chain in April and May, I decided to buy Mog on the base chain and PopCat entirely on Solana. Looking back, this strategy has proven to be much better than my previous one. So, my current strategy focuses more on relatively large market cap memes, at least on projects that I can see won’t die within the current cycle, targeting projects with market caps of at least several tens of millions.

Long and Short Term Allocation

Alex: The question Lawrence just raised is related to our previous discussion. We talked about the qualities of a good meme trader, and everyone mentioned time. For various reasons, including personal, family, and professional factors, or simply feeling older and having less energy and trading desire, we often consider shifting from short-term to long-term strategies. Lawrence just mentioned that he might now allocate some of his capital to long-term meme investments. When you select these long-term meme tokens, what is your underlying logic and thought process, or what criteria do you use to filter them? You mentioned market capitalization, for example, that it might be in the tens of millions. Of course, we now often see new memes emerging on-chain with market caps of over ten million, twenty to thirty million, or even forty to fifty million in a single day. How do you identify them? What conditions do they need to meet in your view to be included in your long-term asset allocation? How do you think about this question?

Lawrence: As I mentioned, one factor is market capitalization, and another is time. For instance, if a token can maintain a market cap of over fifty million for more than a month, I currently believe that it is unlikely to fail. Take the current AI trend, for example; from the perspective I just mentioned, it’s not particularly suitable for buying right now because it’s still relatively new, and many projects may not have good quality. However, I am looking for tokens that, say, in ten days, if the market does not rebound significantly and there isn’t a strong surge, if some AI tokens can maintain a decent market cap and have good holder data, I might consider investing in them. Long-term meme allocations are more about the trading logic. Since February or March of this year, I have maintained a certain percentage of my position in Doge. Although the returns haven’t been particularly good compared to other memes, my overall trading logic is that if I had to choose one coin to represent memes, it would still be Doge. Recently, there’s also a logic where people will use Doge to "bite" Musk, and in turn, "bite" Trump. This logic has a time cycle; I believe that if Trump comes to power and Musk indeed leads the Department of Government Efficiency, the long-term narrative and promotion aspects will certainly benefit Doge on-chain, as it has a larger capital capacity and is more favorable for Doge. Additionally, I prefer the logic of tokens like Mog and PopCat, which can be explained clearly in about ten seconds. For example, with Mog and PopCat, the reasoning is that if dogs can do it, why can’t cats? I believe I can explain to anyone in just a couple of sentences why I want to buy this. So, these are the main points: first is market cap, second is time, and third is whether there’s any special long-term logic driven by time behind it. I actually see quite a few political memes currently, including Harris, Vance, and Tim Walz, who is the Vice President of the Democratic Party. My logic at the time was that this concept might be continuously hyped before the election. It’s been almost half a year now, and I’ve been holding onto them.

Alex: According to the logic you just mentioned, it’s a long-term narrative. This narrative is something that can repeatedly appear in the public eye and be discussed, like Musk’s previous mention of Mars City, which was quite popular for a while. Does this category of meme also belong to that concept?

Lawrence: Yes, but specifically regarding Mars City, there was a recent debate about capitalization. Another issue is that Mars City’s market cap on Solana isn’t very high, and the two on the Ethereum chain are still in fierce competition.

Alex: I’d like to add some information because some listeners may not be familiar with the U.S. elections, the relationship between Musk and Trump, and their connections to Doge. Let me briefly explain. As mentioned, Doge is a relatively long-lasting coin that is closely related to current political hotspots and prominent political figures like Musk. Doge, known as Dogecoin in English, is linked to this election primarily because Musk often promotes it. Another aspect is Trump’s political agenda, which involves cutting government budgets and improving the efficiency of the federal government. A few days ago, he mentioned cutting about two trillion dollars from the federal budget, and the department responsible for this budget-cutting and efficiency improvement is the Efficiency Committee, which he hopes Musk will lead. Musk has also gladly accepted this role. So, if Trump comes to power, it’s highly likely that Musk will be a member of Trump’s cabinet, leading government reforms and working on efficiency improvements. This is undoubtedly a long-term task, and the term Doge is an abbreviation for the Department of Government Efficiency. Therefore, from this narrative perspective, it seems to be a narrative that will be repeatedly mentioned and has vitality. I wanted to provide this additional context.

Louie: I don’t have much faith in memes; I might just hold Bitcoin, and for other memes like Ethereum and Solana, I only keep a position for new investments. This is how I allocate my positions because I tend to lean towards primary investments, while the previous speaker might be more skilled in 1.5-level meme allocations. I usually try to accumulate 1% of the tokens during the early stages, and as their prices rise, I take some profits and costs, leaving 0.2%, which I call my "dream position." When that asset rises to 500 million, 0.2% of the tokens would be worth 1 million U.S. dollars. Of course, you need to monitor the changes in that asset, whether it’s market sentiment or fundamental changes. It’s possible to sell too early, but even if you do, that’s still profit outside your expectations, which you wouldn’t have earned otherwise. Through this allocation, I can meet my short-term profit needs while also satisfying my desire to earn long-term returns from some assets. However, I don’t hold very long-term expectations for meme tokens; I wouldn’t hold them for several months. Based on the market’s reactions during this period, narratives like the zoo or AI narratives typically have a survival cycle; for S-level, very high-quality narratives, they usually last about ten days in the market before shifting to the next narrative. Therefore, I prefer this kind of allocation and wouldn’t take a very heavy position in meme tokens.

Stakeholder: I’m focused on long-term allocations because I believe memes are a distinct sector. If we view Web3 as a large investment ecosystem, memes play a crucial role in attracting traffic. They hold a certain proportion within the total market capitalization of crypto. For instance, Murad, which has been quite popular recently, still has significant room for growth in its market share because many VC tokens are still inflated. Overall, from an investment perspective, since it’s a sector, we also have the "80/20" rule. In previous years, it might have accounted for a certain market cap share within the entire sector. From this perspective, we can calculate how much market cap it can potentially have, how much it accounted for in previous years, what it is worth now, and what the potential returns are, which is why I would allocate to it. My strategy isn’t just to hold and wait for it to rise; I also want to engage in yield-generating activities on-chain. For long-term investments, I would place them in V2 pools to ensure that when the price drops, I won’t accumulate more tokens and can continuously increase my holdings in terms of coin position. Additionally, I believe that every bull market has its so-called newcomers or rising stars, and I try to identify them for long-term holding. For example, at the end of last year, I invested in Wif and PopCat; they were quite prominent at that time. If I had that awareness back then and had allocated a portion for the long term, it would have been very beneficial today. Since we are using this time machine principle, I believe there’s a small cycle every year, with different market conditions in the first and second quarters compared to the third and fourth quarters, or there might be a market in the fourth quarter while the second and third quarters are quiet. At the end of the year, new rising stars tend to emerge. If the golden dog drops to a low point, I can invest in a basket of them. Why do I invest in so many? Because I don’t know which one will succeed, so my best approach is to buy a little of each after filtering them out and wait for a miracle to happen. This is primarily based on such thinking. This is purely alpha return; whether it’s Bitcoin, Solana, or even Ethereum, I believe the beta returns are relatively certain. For example, with Ethereum and Solana, I don’t worry about buying now and potentially losing money in the future or being stuck indefinitely. I don’t have concerns about this because we are generally optimistic about the industry. However, these memes might multiply in value significantly, while the ones mentioned earlier don’t have such potential returns.

Alex: You just mentioned that you would buy the filtered tokens; what criteria do you use for filtering? After all, there are so many in the market, and many have similar market caps, with dozens in the tens of millions range.

Stakeholder: We need to categorize them; for instance, memes should be divided into sectors like animal memes, AI memes, and narratives like the recently discussed space sector, such as Mars City, which is also a category. Ground-promotion projects also need to be allocated. I think it’s important to identify them and also overlay other dimensions for filtering. Market cap is one aspect; anything above five million is acceptable, and those between five million and two hundred million are suitable for small funds seeking large returns. We also look at their survival duration, trading volume, and pool ratios online. If some tokens have consistently low trading volumes, they are definitely not viable. Additionally, even though it’s an attention economy, we should also consider the so-called "long-term builders," which refers to a small group of people who, while not necessarily having faith, may have a strong interest or vested interests and will do many things to develop the project. These individuals, driven by their interests, might suddenly trigger a point that attracts attention, causing that token to rise significantly. Therefore, I would also spend some time observing it. I also look at derivative creations; I believe good projects resonate with people. When assessing their derivative creations, I consider whether they are poorly made or high-quality, whether they have aesthetic value, and whether they can evoke a knowing smile or connection. I think this aspect is very important. If there’s a solid grassroots foundation, I will definitely allocate to it, considering a comprehensive evaluation. I might also differentiate the amounts; for instance, I might invest 100 in one and 200 in another.

Daily Life of Meme Traders

Alex: As experienced meme players, how do you spend your day? For those who might want to play with memes or try trading memes for a longer time, how do you spend your day?

Louie: I actually don’t spend that much time on it because I currently have about 95% of my position in Bitcoin. My main source of income comes from the overall market changes. However, the overall rhythm is quite monotonous. Since the market is doing well, I don’t stay up late to watch the market; I usually turn off my computer by 11 PM. I go to bed around 1 AM because I can’t sleep too early, and staying up too late isn’t good either. If I turn off my computer at midnight, it takes me at least until 2 AM to fall asleep because my brain needs some time to wind down and shift focus. So, I generally turn off my computer before 11 PM, and I have a fixed exercise routine at home with a treadmill, exercising for about half an hour to an hour every day. That’s about the rhythm of my day; the rest of the time is mostly spent monitoring the blockchain.

Alex: What does your monitoring work involve? Is it about constantly scanning activities on the blockchain, or is it more about communicating with friends in the community? What does it include?

Louie: There’s quite a bit to it. First, I need to look at the on-chain activities. I mainly participate in two active communities: one is a 24-hour chat room where people can discuss their views on memes or new hot topics. The other focuses more on data and cognitive discussions, where we might conduct in-depth analyses of certain tokens. Additionally, I monitor on-chain Twitter and KOLs, filtering and absorbing information. So, it’s roughly these three parts: on-chain activities, deeply engaged groups, and my own monitored information sources.

Alex: Do you have a regular schedule for meals and waking up?

Louie: Yes, it’s regular. I used to have an irregular schedule, so now I keep it regular. I think being a pure first-level player in memes is quite against human nature; it’s very monotonous. You’re dealing with K-lines and letters, with no communication. How can it not be boring? Without external communication, it’s not a normal human life. A normal human life involves eating, drinking, having fun, and chatting. Although the returns can be considerable—when the market is good, even non-top first-level players can earn tens of thousands of RMB a day—sometimes you just want to watch TV or play games and not keep an eye on the market. It’s a very anti-human work process.

Lawrence: This question actually troubled me for a while. Back in April and May, when I was spending a lot of time on-chain, I had to set aside some time for family, especially for my daughter. However, her bedtime usually coincides with U.S. trading hours, which is actually when the most new projects appear and the market is most volatile in the meme space. After that, I reflected on my schedule. If I have time, I’ll check out new projects on the Solana chain before bed, around 11 PM, midnight, or even 1 AM, because the Ethereum chain isn’t active enough. I also look at addresses I’m interested in, including new projects promoted by KOLs. For those very new projects that might have just launched within a day, I’ll do a quick scan. During my free time without work tasks, I’ll check on some memes I’ve previously added to my watchlist, like whether their holder data has changed and try to analyze the reasons behind those changes. It seems like that’s the time I dedicate to meme trading. The rest is like what Louie just mentioned—keeping an eye on various Twitter information streams, the channels I follow on Telegram, and messages from WeChat.

Stakeholder: I spend about half my time at home and half not at home. When I’m at home, I have to pick up my child every day. He wakes up at 7 AM, so I get up around 6:30 AM. I go through all my lists to cultivate my sensitivity to data. If any news pops up with significant trading volume, I’ll add it back to my watchlist. The main meme trading groups I quickly skim through usually take about twenty to thirty minutes. I might have a little extra time to check Twitter. As for trading, I no longer have opportunities to participate in those short-term, very early projects, so I just go with the flow. If I happen to have some free time in the next few days, I’ll focus on that. When I’m at home, I generally have a regular schedule, usually going to bed at midnight. If I’m not at home, like Lawrence mentioned regarding U.S. time, I think it’s around 4 AM to 7 AM, which is when I feel very sleepy. Sometimes I’ll play cards all night with friends, and in the early hours, I’ll check the blockchain to see if there’s a chance to encounter a golden dog. I might do that without deliberately spending a lot of energy. One day, I felt guilty, thinking about how I was wasting good time doing such things. Life can become meaningless; after all, we’re in this to make money. To put it more directly, it’s a speculative activity, and it doesn’t hold much significance in itself. Since that’s the case, why not make it a bit more fun and casual? For example, if I accidentally come across a golden dog today and make some money, I’d be quite happy and could share it with my friends and my wife. That’s about it.

Alex: Listening to everyone, it seems that after spending a long time playing memes, you still seek a lifestyle that balances better with life and is more beneficial for mental and physical health. This way, you can engage in investment activities more sustainably and healthily. Thank you to the three guests, and I hope there will be more opportunities to communicate with you all in the future.

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