GoPlus: The High Cost of Risky Memecoins

Introduction

Recently, meme coins on BASE have gained significant attention. While social media often highlights stories of immense wealth gained through meme coins, the reality for most investors is far less glamorous. Without reliable statistical data, it’s easy to be misled by these success stories. This study aims to provide a detailed statistical analysis of meme coin investments, particularly focusing on risk tokens, which comprise over 65% of newly added ERC20 tokens on BASE. Let’s examine the consequences of trading these tokens and the actual profit situation. Existing research lacks in-depth analysis of trading returns on risk tokens, hence the need for this study.

Methodology

Data Sources

• GoPlus Security API: The GoPlus Security API is a service provided by the GoPlus team for Web3 developers and end-users. This service not only provides security guarantees for professional developers in the technical field but also focuses on the security needs of end users, aiming to build a safer and more trustworthy Web3.0 ecosystem
• Data from various chains, mainly counted and queried through DUNE
• The risk token classification standard comes from the Token Risk Classification developed by GoPlus

Analysis Methods

Using the GoPlus Security API, we classified newly added ERC20 tokens on BASE from February 27, 2024, to June 7, 2024, into Non-risk tokens and various Risky tokens. We analyzed these tokens’ data through the dex.trades database interface in DUNE and visualized it on an open-source dashboard. We pulled all swap events for each meme coin, summarized the dollar value of each trader’s transactions, and calculated the profit for each trader. Detailed statistics were then conducted.

For the specific definition of risk tokens, the proportion of newly added risk tokens, and the number of addresses involved in risk tokens, refer to another research report.

Data Analysis

Profitable Addresses Ratio

We are easily dazzled by the myths of getting rich from trading meme coins via social media or KOLs. Time to calm down and objectively look at the data. The data reveals that, on average, only about 6.6% of addresses trading meme coins make a profit. This low success rate indicates the significant risks involved in trading meme coins. The relationship between safety and Alpha is explored by combining safety data and on-chain profit data.

Average Profit of Each Address on Different Risk Tokens on BASE

The research sample is mainly based on tokens on the ever so hot BASE. According to our previous research report, most of the newly added meme coins on BASE are risky tokens. But how big is the harm of risky tokens? What will be the consequences of trading various types of risky tokens? What is potential profit? The statistical results are shown in the figure above.

Overall, the per capita income of people trading meme coins is negative, which means that most retail investors are losing money.

Specifically, the average loss of Non-risky tokens is the lowest, about 15 dollars. The most harmful ones are:

HiddenOwnership (hidden_owner)

The identity of the owners of these tokens is hidden, and the average loss of trading these tokens is about 137 dollars.

BlacklistFunction (is_blacklisted)

The contract of this type of token can set a blacklist, and specific users may not be able to freely transfer and trade. The average loss of trading these tokens is about 209 dollars.

TransferPausable (transfer_pausable)

The transfer of these tokens can be paused, and user funds may be maliciously frozen. The average loss of trading these tokens is about 221 dollars.

Honeypot (is_honeypot)

This type of token is a notorious “Honeypot”, with a “honeypot” mechanism, users can buy but cannot sell. The average loss of trading these tokens is about 266 dollars.

Conclusion

As can be seen, the risk of trading meme coins is extremely high, and only 6.6% of traders can make a profit. Going deeper, for all kinds of malicious tokens detected by the GoPlus Security API, their risks are higher than Non-risky tokens.

So, what to do?

First, be cautious when trading meme coins. The risk associated with trading meme coins is extremely high, and most retail investors are losing money.

Second, when trading meme coins, you should try to choose tokens without any risk for trading.

So the question is, how do we quickly determine the risk of a meme coin?

Use GoPlus to Protect Your Trading Safety!

Currently, many market websites such as DEX SCREENER and many wallets have integrated the security data of the GoPlus team. When we trade ERC20 and its derivative tokens, we can find the detection results of GoPlus on the specific market page. This result reports whether the token has fraud risk and marks its risk category.

Sometimes, we might impulsively neglect to check the risk status of a token and end up buying dangerous meme coins. To address this, GoPlus launched SecNet in May, built on the GoPlus Stack. SecNet can intercept dangerous token transactions based on users’ security configurations during on-chain transactions. This means that even if we authorize a transaction impulsively, our funds are protected from “Honeypot” scams.

Additionally, Web3 is rife with phishing attempts. SecNet not only intercepts Honeypot transactions but also prevents numerous phishing attempts by Wallet Drainers, safeguarding users from fraud. Here’s how to use SecNet effectively:

We can set up and open related protection functions in the SecHub interface of SecWareX, a personal security platform launched by GoPlus.

Specifically, Step one: Open SecHub

Step two: Turn on protection

Step three: Set related interception rules

Step four: Add the SecNet developed by GoPlus to ensure that our on-chain transactions are safe

Conclusion

On Not Getting REKT

In conclusion, our data clearly demonstrates the high risks associated with trading meme coins, with the majority of traders experiencing losses. It is crucial for investors to choose their investments carefully and steer clear of tokens with elevated risks. We strongly recommend consulting the security data provided by the GoPlus team before engaging in any transactions to understand the token’s risk profile and avoid making blind investments.

Additionally, utilizing security tools such as SecNet is essential for protecting your funds from potential scams and phishing attempts. By taking these precautions, traders can better navigate the volatile landscape of meme coins where malicious actors reign supreme and, in doing so, increase their chances of achieving desired returns. We hope that with careful consideration and the right tools, everyone can make more informed and secure investment decisions in the world of meme coins.