29 meme coins, including BALD, rugged on Base

29 meme coins, including BALD, rugged on Base

The Volatile World of Meme Coins

Introduction

In the fast-paced and ever-evolving world of cryptocurrencies, the rise of meme coins has garnered significant attention. Meme coins, often minted as fungible ERC-20 tokens on the Ethereum blockchain, have seen a surge in popularity in recent times. However, this newfound fame comes with inherent risks and concerns related to their volatility and lack of utility. This article will explore the recent phenomenon of meme coins and shed light on the dangers that lurk within this asset class.

The Rug Pulls on Base

On July 29 and 30, a meme coin called BALD became the center of attention in the cryptocurrency community. Inspired by Coinbase CEO Brian Armstrong, it witnessed an astonishing price surge of up to 4,000 times, propelling its market cap to over $100 million. Early investors capitalized on this wave and made substantial profits. However, this success also attracted opportunistic builders who sought to take advantage of the hype.

In an unfortunate turn of events, these builders created 29 additional meme coins on Base, an Ethereum layer-2 platform based on Optimism roll-up technology. These meme coins were designed to entice investors looking to join the BALD trend. Tragically, these 29 meme coins turned out to be rugs pulls, leaving token holders with losses. The deployer behind these coins exited with over $1 million, leaving behind a meager initial investment of around $105,000 worth of ETH as liquidity.

Rug pulls are a recurring issue in the world of meme coins. This act involves the creator of a meme coin providing liquidity to attract users and increase prices. Once the price reaches a desirable level, the creator deliberately withdraws the liquidity, converting their meme coins into more liquid cryptocurrencies like Ethereum. This causes the price of the rug-pulled tokens to plummet to zero, leaving unsuspecting investors with worthless holdings.

The rug puller behind the 29 meme coins on Base has a history of engaging in similar activities on other platforms, such as the BNB Chain and Arbitrum. These rug pulls serve as a stark reminder of the risks involved in trading meme coins. The liquidity provided by the community is crucial, especially in the decentralized nature of meme coin trading platforms.

As of July 31, the address associated with the rug pull primarily held USDC and a small portion of ETH, indicating a preference for less volatile assets. This risk-averseness is understandable given the rampant rug pulls that have plagued the meme coin space.

Meme Coins and their Volatility

Meme coins have gained immense popularity within the cryptocurrency market, particularly on the Ethereum blockchain. These coins often take the form of ERC-20 tokens and are traded in their trillions. One of the most well-known meme coins is Dogecoin, which gained Elon Musk’s endorsement and has become widely recognized.

However, despite their popularity, meme coins face criticism due to their extreme volatility and lack of utility. Critics argue that meme coins can be likened to “casinos” within the crypto ecosystem, undermining the true vision of cryptocurrencies as an alternative financial system. These concerns are further exemplified by the recent collapse of BALD on Base.

Notably, other meme coins like PEPE and LADYS, which hit all-time peaks in the first half of 2023, have also experienced significant drops. PEPE and LADYS have plummeted by over 70% since their peak values, underscoring the highly volatile nature of meme coins.

The chart below displays the price of Dogecoin on July 31, showcasing the fluctuating nature of meme coin values.

Dogecoin price on July 31

Conclusion

The blockchain industry continually witnesses the rise and fall of various assets, and meme coins have emerged as a prominent phenomenon. While they offer an opportunity for quick profits, investing in meme coins comes with substantial risks. The recent rug pulls on Base serve as a reminder that due diligence and caution are vital when navigating this volatile asset class.

As meme coins continue to captivate the crypto community, it is crucial to approach them with awareness and understanding. It is only through educating ourselves about the risks and considering the long-term potential of cryptocurrencies that we can make informed investment decisions in this ever-changing landscape.

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