Memecoins have recently been noted to be surging in the middle of the banking-related concerns that have substantially impacted the crypto market. Despite going through a hard patch over the last few months, most memecoins have been on a tear during the last week.
In light of this, a crypto investor allegedly exchanged 0.125 ETH, which was then worth $250, for 5.9 trillion PEPE tokens four days ago. Those tokens are currently worth $1.02 million at the time of writing.
PEPE Experiences Massive Pump Despite Liquidity Issues
Despite the significant pump, the PEPE holder warned that liquidity problems with the token would prevent them from swiftly realizing their gains. Despite the fact that a memecoin investor currently owns $1.02 million in PEPE tokens, it is important to note that following closer study, it is evident that the value of assets “on paper” and actual currency possessed differ.
This situation is somewhat comparable to that of Gurgavin Chandhoke, who created the Pump Coin memecoin, which surged to a market cap of $4.8 billion with him controlling “99%” of the tokens. Chandhoke was unable to sell, nevertheless, because there was little market demand.
According to Adrian Hetman, the tech lead trainer at Web3 bug bounty platform ImmuneFi, “The issue with low liquidity tokens is not only the lack of buyers but also the fact that liquidity is typically concentrated in automated market maker pools.”
He continued by saying that rather than the availability of buyers, the problem may be caused by a lack of adequate liquidity in the pool. Hetman stated that the sale amount represents a sizable share of the pool’s overall liquidity for the PEPE holder, which led to a lot of slippages during the trade. As a result, the earnings won’t come close to what one would typically anticipate when selling at the spot price.
Recent Pumps on Memecoins Results to Spike on Ethereum Gas
The current surge in memecoins is said to have begun to affect other Ethereum blockchain users. This argument is based on the observed increase in gas fees – the amount of ETH required to complete a transaction.
According to the dashboard created by pseudonymous analyst Hildobby, gas prices have risen to their second-highest level in the last six months. This meant that Ethereum users had to pay more than $30 to trade a token on a decentralized market such as Uniswap or Balancer.
In addition to the increase in the price of Ethereum gas, information source SeaLaunch asserted that one entity operating a MEV bot under the Ethereum domain jaredfromsubway.eth was at one time using 7% of the network’s gas.