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In a recent investigation, blockchain analyst ZachXBT revealed that 12 Solana-based meme coin projects have been abandoned, resulting in a significant loss of $26.7 million for investors.
These meme coins were initially marketed through presales, promising substantial returns.
However, they ultimately left investors with tokens that became nearly worthless.
Meme Coin Projects Ditched After Just One Month
One particularly infamous project was "I like this coin," with the ticker symbol– LIKE.
It attracted approximately $7.8 million in Solana (SOL) from investors.
The project's pseudonymous founder, @Pokeepandaa, raised a staggering 52,220 SOL tokens ($7.7 million at current prices) for the meme coin and launched the coin on 17 March with a market capitalisation of $577 million.
However, the meme coin's value plummeted rapidly, dropping more than 90% in the first eight hours.
According to data from DEXTools, the coin's value declined by over 50% since the launch.
The second-largest purportedly abandoned presale involved a token named MOONKE.
Introduced by another anonymous founder, @RockyXBT, on 20 March, it initially boasted a valuation of nearly $500 million.
However, MOONKE quickly followed a trajectory akin to LIKE, experiencing a drop of over 99% from its launch price within hours.
On RockyXBT's X account, it was stated that @solmoonke is its official account but upon clicking in, it shows that the account has been suspended.
Third on ZachXBT's list is @Pepecasso1 whose last post is on 22 March expressing that he "did not anticipate the launch to go as bad as it did.”
One user accused @Pepecasso1 of seeing this as "an opportunity for a quick cash grab.”
On 21 March, blockchain security firm SlowMist pointed out that @TemplePharmacy_ seemed like a rugpull.
Is FOMO Causing People to Fall for Scams?
A recent study conducted by cybersecurity firm Blockaid has uncovered alarming findings about presale tokens on the Solana blockchain.
According to their research, at least 50% of presale tokens launched between November 2023 and February 2024 were identified as malicious.
Blockaid's co-founder, Ido Ben-Natan, attributes this surge in fraudulent activities to the soaring popularity of presale tokens.
Scammers have exploited investors' FOMO (fear of missing out) by deploying tactics such as mimicking legitimate transactions and creating sophisticated fake websites.
Ido Ben-Natan explained:
"Firstly, the exponential increase in pre-sale token uptake in February and March, fuelled by the popularity of legitimate meme coins, has provided fertile ground for scammers. Additionally, scammers are adept at capitalising on users’ fear of missing out (FOMO), employing sophisticated tactics such as mimicking legitimate transactions and creating deceptive websites."
Moreover, the Solana blockchain has witnessed the emergence of meme coins featuring offensive and racist themes, triggering significant backlash within the crypto community.
He went on to underscore the urgency for heightened security measures within the Solana ecosystem in light of these findings.
This study arrives at a critical juncture when Solana's transaction processing capabilities have faced challenges due to escalating trading volumes fuelled by meme coin interest and the intensified presence of programmatic trading bots inundating the blockchain network.
This trend bears striking resemblance to the Ethereum ICO boom of 2017, during which numerous projects failed to deliver on promises despite raising substantial funds from investors.
In light of these developments, there is growing momentum for stricter regulations and heightened security measures to protect investors from the increasingly intricate nature of these scams.
One of Solana's Presale Debacle
In a notable incident within the Solana presale landscape, a significant mishap unfolded in March involving the developer of a meme coin named Slerf (SLERF).
The developer purportedly made an inadvertent "fat finger" burn error, resulting in the entire presale allocation of SLERF being destroyed.
Despite this astonishing setback, with a total of 535,000 SOL (equivalent to roughly $10 million at the time) incinerated, the coin swiftly gained traction among meme coin enthusiasts.
Investors rallied around Slerf, propelling it to reach a peak market capitalisation of approximately $750 million, establishing itself as a cult favourite in the meme coin sphere.
Memecoin Popularity: Is it Simply Just a Fad?
The dual nature of meme coins sparks ongoing debates about their place in the cryptocurrency landscape.
Renowned for their volatile swings and community-driven dynamics, meme coins often surge in value propelled by online endorsements or influencer backing, only to plummet just as swiftly.
With typically vast or unrestricted supplies, these coins maintain low individual token prices, enabling investors to acquire substantial quantities with minimal investment.
Despite the allure of rapid returns, meme coin investments carry considerable risks.
Many lack solid economic frameworks, practical use cases, or technological foundations, rendering them more speculative and volatile compared to established cryptocurrencies like Bitcoin.
Their market susceptibility to manipulation is evident in events such as the Squid Game token's rug pull, where developers abandoned the project entirely, resulting in significant losses for investors.
At current, it would seem like Solana has emerged as a favoured playground for fraudulent activities within the crypto space.
So should investors and entrepreneurs revert to the Ethereum blockchain?
Then again, the Ethereum ICO boom of 2017 witnessed numerous projects failing to deliver on promises despite raising substantial funds from investors.
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