Memecoin Market: 91% of Tokens Are Scams, Rug Pulls, or Have Vulnerabilities

Creating a token on Solana today is no harder than writing an email. Anyone can launch a new asset using no-code solutions in mere minutes.

The memecoin market on Solana is booming, with new tokens emerging every day. While this has the potential to be a positive development, it also comes with its own set of challenges.

One of the biggest problems is that many of these tokens are being created with very low quality. This can include vulnerable code, a weak strategy, and poor community engagement. Some of these projects are being created by fraudsters who are looking to make a quick profit.

There are several green flags that can help you identify projects that are less likely to be a scam. These include a strong community of several thousand people on Twitter and Discord, a well-written whitepaper that describes the tokenomics and token allocation, and a large number of token holders with tokens distributed evenly among them.

It’s also worth considering tokens that are already listed on exchanges, as these usually have to go through a due diligence process before being added. Finally, look for independent security audits by a credible organization, as this is one of the best ways to know that the developers can’t technically pull the rug.

One interesting development is the concept of celebrity tokens, where famous people are releasing crypto assets to strengthen connections with their fanbase. While this has the potential to be a positive development, it’s important to note that things don’t always work out this way in practice.

Some celebrities are creating assets just to make extra money and may engage in questionable methods of promoting them, while the tokens themselves might not have robust use cases. This can be counterproductive to the goal of strengthening cryptocurrencies’ reputation in the public's eyes.

The typical promotion of celebrity tokens involves advertising on social media and shilling in communities — similar to how other memecoins enter the market. Unfortunately, besides how they’re promoted, celebrity tokens often come with the same scams and controversies seen in the memecoin market. A star’s name in the token’s title doesn’t guarantee that it will be problem-free.

Recently, popular tokens launched by Caitlyn Jenner, an American media personality, and Iggy Azalea, an Australian rapper, were at the center of a controversy. Sahil Arora, an influencer, was accused of scamming the stars while launching and promoting their tokens.

A few years ago, the SEC fined Kim Kardashian for unlawfully advertising a shady project, EthereumMax, which quickly dropped to zero.

To avoid these problems, a more sustainable approach is needed. Professional launchpads with qualified technical and marketing support can help tokens become more than just a tool for short-term gains.

Assets with solid use cases and secure code can enhance a celebrity’s reputation and provide thousands of crypto novices with a smooth onboarding into Web3. Learning the ropes and building necessary connections takes years: elebrities may not have the time or expertise to delve deep into. Teaming up with a trusted partner can be a great way for them to navigate the complexities of developing and supporting a memecoin project.