Warning Signs in Meme Coin Trading: Concentrated Holders, Shady Influencers, and Unlimited Token Issuance Risks

Trading in cute and funny meme coins can be a lot of fun. However, the platforms where these coins are traded often come with serious risks. Webacy, a blockchain analytics firm, focuses on spotting scams in the meme coin space. Here are three important warning signs to look out for:

Concentrated Holders

If the top 10 wallets of a meme coin hold more than 20% of its total supply, watch out! The chances of a rug pull are very high, according to Maika Isogawa, the CEO of Webacy. There have been several cases where tokens crashed just hours after being listed on major decentralized exchanges like Raydium. A recent example is Pong, which went from a market cap of over $80,000 in early November to zero almost instantly after it started trading.

It’s not just small tokens that have this issue. For instance, Neiro, a meme coin with a market cap of $1.1 billion on Solana, has its top 10 wallets controlling 70.82% of its total tokens.

Shady Influencers

The meme coin market is full of questionable promoters. These influencers often get paid to hype up tokens. Isogawa points out that people like @CryptoGodJohn, @TheCryptoKazi, @crypto_TomTom, and @cryptostasher have a history of pumping up tokens and then selling their holdings during the price spikes.

Special Powers

Meme coins on platforms like Pump.fun have a cap of around 800 million tokens. But other platforms let issuers create an unlimited number of tokens after launch. This can dilute the value for investors. This issue is common on the $12 billion market cap TON blockchain. Isogawa advises investors to check if the issuer has completed a process called “renouncing the contract.” This means they no longer control the code that allows them to issue more tokens. There are also other risks with smart contracts. For example, Bananacat (BCAT) and Tamadoge (TAMA) have creators who can lock holders out from selling their tokens.

Do Your Own Research

To protect yourself from meme coin risks, use safety screens and risk scores on analytics sites like Webacy, Rugcheck, GoPlus, and DEXSCREENER. As Isogawa puts it, “memecoin markets are easy to manipulate and hard to assess.” It’s a playground for scammers.