Scope data on July 31 shows that 29 meme coins were launched over the weekend on Base to capitalize on the recent frenzy surrounding BaldBaseBald (BALD), a meme coin inspired by Coinbase CEO Brian Armstrong.
However, all 29 meme coins have since been rugged, with the deployer exiting with over $1 million after seeding roughly $105,000 of ETH as liquidity. Base is an Ethereum layer-2 platform based on Optimism roll-up technology.
Rug Pulls On Base
On July 29 and 30, there was excitement about the meme coin, BALD, as its prices exploded by as much as 4,000X, pushing the token’s market cap to over $100 million. This was great news for those who invested early as some exited as the wave rise, profiting.
Some builders took advantage of the hype and created meme coins to deceive investors eager to join the BALD trend, eventually resulting in losses for some meme coin token holders.
While BALD has already been rug-pulled, Scope notes that the address behind the 29 meme coins also has a history of rug-pulling in other platforms, including the BNB Chain and Arbitrum, a popular Ethereum layer-2 platform. In platforms where meme coins are traded, liquidity, provided by the community, is essential due to the decentralized nature of trading.
Rug pullers typically supply liquidity to their meme coins, which attracts more users to buy the coin and increases liquidity as prices rise. However, the creator then deliberately withdraws liquidity at this point, converting their meme coins to a more liquid coin like Ethereum, causing their token prices to drop to zero.
As of July 31, hours after the rug pull, the address primarily held USDC and a small portion of ETH in their portfolio, with no meme coins. This potentially highlights the rug puller’s risk-averseness and his concerns about the risks involved in this asset class.
Meme Coins Are Volatile
Meme coins are popular in crypto, especially Ethereum, where they are minted as fungible ERC-20 tokens in their trillions. Dogecoin, endorsed by Elon Musk, is the most liquid and widely recognized.
Despite rising popularity, there are concerns about their volatility and lack of utility, with some critics labeling them as “casinos” that undermine the true vision of crypto as an alternative financial system.
For example, the collapse of BALD, which commanded billions in market cap on Base over the weekend, has drawn widespread condemnation. Besides BALD, other like PEPE and LADYS are struggling, dropping by over 70% from their all-time peaks registered in H1 2023.
Feature image from Canva, chart from TradingView