Trading Solana memecoins

The Solana blockchain has become a popular platform for launching and trading memecoins in recent years. From obscure joke tokens to community-driven sensations, these viral Solana-based tokens are attracting both seasoned investors and newcomers looking to capitalize on market trends.

But how do you trade Solana memecoins effectively? What are the risks, strategies, and key platforms to use? In this article, we’ll explore the ins and outs of trading Solana memecoins, helping you navigate the volatile yet exciting world of these speculative assets. 

Solana memecoins are cryptocurrencies inspired by popular internet trends such as images, videos, social media posts or people. In the overwhelming majority of cases, memecoins have little to no actual utility by design. Instead, they offer a playful, accessible entry point into the crypto world.

Successful Solana memecoins tend to have strong communities that rally round the coin and its underlying theme, acting as ambassadors for on social media. Memecoins that gain sufficient traction and trading volume may get listed on centralized trading platforms. 

One example of a meme that later inspired a coin was Popcat—a famous meme displaying a cat with an O-shaped mouth, originating in 2020. The popularity of this meme eventually resulted in the creation of Popcat the coin (POPCAT), which, at its all time high in November 2024, had a market capitalization of $2 billion.

Here are the top solana memecoins by market capitalization (at press time):

1. Official Trump (TRUMP), $3.74B market cap
2. Bonk (BONK), $1.43B market cap
3. Dogwifhat (WIF), $829M market cap
4. Pudgy Penguins (PUDGY), $827M market cap
5. Fartcoin (FARTCOIN), $699M market cap

Broadly speaking, you can trade memecoins in two ways:

1. Trading directly on the Solana blockchain—also known as trading “on-chain”. Here, traders use Web3 wallets such as Phantom to connect to Solana-based decentralized exchanges where they can swap assets or earn rewards. 
2. Some top Solana memecoins become large enough in terms of their traction and trading volume that they are listed on centralized exchanges, such as Kraken.

For many traders, using a centralized exchange (CEX) to buy and sell Solana memecoins is a more straightforward and user-friendly option compared to on-chain trading. 

Unlike decentralized exchanges (DEXs), which require setting up a Web3 wallet, managing private keys, and navigating blockchain transactions, centralized platforms streamline the process by offering a familiar, intuitive interface with fewer steps involved.

One such exchange where you can trade Solana memecoins easily is Kraken. The process is just like trading any other cryptocurrency:

1. Deposit Funds: Start by depositing either fiat currency or cryptocurrency into your Kraken account. The platform supports a variety of funding options, including bank transfers and crypto deposits.
2. Convert to a Quote Asset (If Needed): Depending on the trading pairs available, you may need to convert your deposit into a ‘quote asset’ that can be used to purchase Solana memecoins. Kraken offers trading pairs that include fiat currencies, stablecoins, and even Bitcoin (BTC), giving traders flexibility.
3. Choose Your Memecoin and Execute the Trade: Once you’ve identified the Solana memecoin you want to buy, you can execute a trade using one of two common order types:
   • Market Order: Buy instantly at the current market price.
   • Limit Order: Set a target price and wait for the market to reach it before your order executes automatically.

By using a centralized exchange like Kraken, traders may avoid the complexities of self-custody wallets, slippage from decentralized liquidity pools, and potential smart contract risks.

Trading memecoins on the Solana blockchain comes with many pitfalls. Here are some steps that traders can take to mitigate some of the inherent risks:

Memecoins backed by a strong community tend to fare better than those without one. Check to see if the memecoin you are interested in trading has a strong social media presence. Try searching for the ticker in question on X and see how many results it yields and the strength of the engagement. 

Beware of derivatives that are simple copies of pre-existing coins. To give readers some indication of how many memecoins come and go, of the 344,068 tokens launched on pump.fun by August 1, 2024 only 1.29% achieved the required capitalization to be listed on Raydium. The overwhelming majority of coins never gain any traction and many coins experienced one short-lived pump before disappearing into obscurity.

Avoid coins where the developer has allocated themselves a disproportionate amount of the supply, which can be sold onto the open market at any time and cause prices to crash. 

Use app.bubblemaps.io to check the distribution of the coin across multiple wallets. If the bubble map shows that many wallets holding the coin are connected, this could indicate foul play by the deployer.

Use the rugcheck.xyz site to check the memecoin in question. The site will highlight any red flags that increase the likelihood that it will be ‘rugged’. 

Always consider the available liquidity of the coin you want to buy before entering a position. If you enter a large position relative to the available liquidity, your average entry price may be significantly worse than you expect (on entry and exit) as a result of slippage. Check the impact on the price of your trade before proceeding.

Check the social media profiles of the coins in question to ensure that they are active and getting meaningful engagement. Also check the associated Telegram group for the coin; is it active? Is the developer responsive? Are those trading the coin actively engaging? Have traders made bespoke memes?

In this section, we explore tips for beginners and advanced traders seeking to trade memecoins on Solana.

For traders looking to buy and sell memecoins without the need for lightning-fast execution and perfect real-time price charts, there is a simple approach which doesn’t require the use of any specialist tooling. 

Some novice traders may find tools like Dexscreener useful when trading Solana memecoins.

These are free on-chain analytics platforms that allow users to search for, monitor, chart and trade several coins on a range of blockchains. Leveraging this data, some traders may find it easier to spot trending or higher risk memecoins, and adjust their strategies accordingly.

Platforms like Photon are generally aimed at more experienced Solana memecoin traders, and offer more advanced features for analyzing and trading tokens:

1. Using the “Memescope” feature, traders can search for suitable coins to trade using a highly customisable filter. For example, users can filter by liquidity, market cap or by the security features of a coin. This is important, as selecting the right coin to trade on Solana is critical, given the inherent volatility and general failure rate. Traders can therefore side step coins that have highly questionable security or insufficient liquidity to suit the trader’s needs. 
2. Compared to manually swapping trades on a DEX or on Dexscreener, executing trades on Photon offers more advanced functionality and is engineered to suit traders' needs. Perhaps the most valuable function here is the ability to set limit orders at predetermined levels as well as being able to Dollar Cost Average (DCA). Using a real-time chart, traders can monitor the order flow and move rapidly in and out of positions by presetting the priority and bribery fees at a favourable rate. Raising these fees increases the likelihood that the transaction will be processed immediately after it is broadcast. Because Solana memecoins are so volatile, the ability to get in and out of trades quickly is incredibly important, and Photon facilitates this with one-click trading. 
3. Photon’s price charts typically update more quickly than Dexscreener, making them more appropriate for active traders operating on lower time frames. 

Memecoin trading on Solana has exploded over the last year, with vast numbers of coins being created and trading volumes reaching new highs. This is in part due to the ease of which people can deploy new coins and trade them with comparatively low fees and reduced operational friction. By carefully screening which coins to trade and experimenting with the available tooling, investors may find it easier to trade Solana memecoins with confidence and avoid some of the associated risks.

Kraken makes it easy to buy and sell the most popular Solana memecoins, and over 250+ other cryptocurrencies.

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