Background
Recently, meme coins on the base chain are very popular. We often see myths of getting rich through meme coins. However, on average, how many people have made money? Without statistics, we are easily overwhelmed by the myths of getting rich quickly in social media. Therefore, we need detailed statistics. The meme coins on the Base chain are all ERC20 tokens, and more than 65% of the newly added tokens are risk tokens. So, what are the consequences of trading various types of risk tokens? What is the profit situation? Existing research has not conducted a more in-depth study on the trading returns of risk tokens. So in the same way, we need more accurate statistics to establish a more objective understanding.
Method Description
Data Sources
GoPlus Security API。
GoPlus Security API is an open, permission-free Web3.0 security data API service provided by the GoPlus team for Web3.0 developers and end users. This service not only provides security for professional developers in the technology field, but also focuses on the security needs of C-end users, aiming to build a safer and more reliable Web3.0 ecosystem.
The data on each chain is mainly counted and queried through DUNE.
The classification standard for risk tokens comes from the Token Risk Classification developed by GoPlus.
Analytical method
Based on the GoPlus Security API, we classified the newly added ERC20 tokens on the Base chain from this bull market to date (February 27, 2024 to June 7, 2024), mainly into Non-risk tokens and various risky tokens.
We analyzed and visualized the data of the above tokens based on the dex.trades database interface in DUNE, and formed an open source dashboard. Specifically, we first retrieved all swap events on each meme coin, and then summarized the dollar value of each trader's purchase and sale. The profit of a trader on a meme coin can be calculated by subtracting the dollars spent on purchase from the dollars earned from sales. Then we can conduct more detailed statistics.
For the specific definition of risk tokens, the proportion of newly added risk tokens, and the number of addresses involved in risk tokens, please refer to our other research report.
Profitable address ratio
We are usually easily dazzled by the myth of getting rich by trading meme coins on social media or the orders of KOLs. In this regard, we need to calm down and look at the real profit of trading meme coins objectively. As shown in the above figure, on average, only about 6.6% of the addresses trading meme coins are profitable! This statistic tells us that the profit winning rate of trading meme coins is actually relatively low, so what exactly affects the low winning rate? In this article, we mainly explore the influence relationship between security and Alpha by combining security data and real profit data on the chain.
We are usually easily dazzled by the myth of getting rich by trading meme coins on social media or the orders of KOLs. In this regard, we need to calm down and look at the real profit of trading meme coins objectively. As shown in the above figure, on average, only about 6.6% of the addresses trading meme coins are profitable! This statistic tells us that the profit winning rate of trading meme coins is actually relatively low, so what exactly affects the low winning rate? In this article, we mainly explore the influence relationship between security and Alpha by combining security data and real profit data on the chain.
The research samples are mainly tokens on the Base chain, which has been very popular recently. According to our previous research report, most of the newly added meme coins on the Base chain are risk tokens. However, how harmful are risk tokens? What are the consequences of trading various types of risk tokens? What is the profit situation? The statistical results are shown in the figure above.
Overall, the average return on investment from trading meme coins is negative, which means that most retail investors are losing money.
Specifically, non-risk tokens have the lowest average loss per person, about 15 dollars. The most harmful categories are:
HiddenOwnership (hidden_owner)
The identities of the owners of these tokens are hidden, and the average loss per trader of these tokens is about $137.
BlacklistFunction (is_blacklisted)
This type of token contract can be blacklisted, and specific users may not be able to transfer and trade freely. The average loss per person trading this type of token is about 209 dollars.
TransferPausable (transfer_pausable)
Token transfers for this type of tokens can be suspended and user funds can be frozen maliciously. The average loss per person trading this type of tokens is about 221 dollars.
Honeypot (is_honeypot)
This type of token is the notorious **“Pixiu Plate”**, which has a “honeypot” mechanism where users can buy but not sell. The average loss per person trading this type of token is about $266.
Summarize
It can be seen that the risk of trading meme coins is extremely high. Only 6.6% of traders can make a profit, and the average income per person is negative (loss). The loss of risky tokens detected by the GoPlus security API is far greater than that of risk-free tokens. Among them, the average loss of tokens with blacklist risk is 209 US dollars, the average loss of tokens with suspension risk is 221 US dollars, and the average loss of Pixiu tokens is 266 US dollars.
So, what does this teach us?
First of all, be cautious when trading meme coins, as the vast majority of retail traders are losing money.
Secondly, when trading meme coins, you should try to choose tokens without risk items for trading.
So the question is, how can we quickly determine the risk of a meme coin?
Use GoPlus to protect your transactions!
At present, many market websites and wallets such as DEX SCREENER have been connected to the security data of the GoPlus team. When we trade ERC20 and its derivative tokens, we can find the GoPlus detection results on the specific market page. The results report whether the token has fraud risks and mark its risk category.
In addition, sometimes we are easily impulsive and have no time to check the risk of tokens, and often blindly buy dangerous meme coins. Therefore, GoPlus launched SecNet, a secure RPC based on GoPlus Stack, in May. When we initiate on-chain transactions, this RPC can intercept dangerous token transactions according to our security configuration. Then, even if we authorize transactions on impulse at some point, we can ensure that our funds will not be defrauded by the "Pixiu Plate".
In addition, there are a lot of phishing activities on the Internet. In addition to blocking Pixiu transactions, this function can also block a large number of phishing transactions from Wallet Drainer to prevent fraud or phishing. So, how to use SecNet specifically?
We can set up and enable relevant protection functions in the SecHub interface of SecWareX, a personal security platform launched by GoPlus.
Specifically, the first step: open SecHub
Step 2: Enable protection
Step 3: Set relevant interception rules
Step 4: Add the secure RPC developed by GoPlus - SecNet to ensure that our on-chain transactions are secure
Finally, we can see that meme coin trading is extremely risky and most traders are losing money. Therefore, we need to choose our investments carefully and avoid investing in tokens with too high risks. In addition, we recommend that you check the security data provided by the GoPlus team before trading to understand the risk of the tokens and avoid blind investment. At the same time, we also recommend that you use security tools such as SecNet to protect your funds. I hope everyone can get the expected benefits in meme coin pvp!
