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What is a memecoin?

5 minute read

A memecoin is a token someone created on Solana, usually in about thirty seconds, for about two dollars. It has no company behind it, no revenue, and no promise to pay you anything. Its price is set purely by what the next person will pay.

That sounds like an insult. It isn’t. It’s the actual mechanism, and knowing it is the difference between gambling on purpose and gambling by accident.

Where the price comes from

There is no exchange matching buyers to sellers. Instead each coin has a liquidity pool: a pile of the coin sitting next to a pile of SOL. When you buy, you add SOL and take coins out. Fewer coins left means the next buyer pays more. That is the whole price mechanism.

Deep pool$2M liquiditysell $1k → ~$1kThin pool$8k liquiditysell $1k → ~$620That gap is slippage. It is why liquidity is on the header of every coin page.
Liquidity is the pool you sell back into. Thin pool, big sell, terrible price.
This is why big sells hurt
If a pool only holds $8,000 and you try to sell $1,000 of coin into it, you are taking a huge slice of the pool. You get a much worse price than the screen showed. The gap is called slippage, and it is why the Liquidity number sits at the top of every coin page here.

Market cap, and the cheapest trap in crypto

People see a coin priced at $0.000001 and think “it only has to reach a cent.” That reasoning is backwards. The price per coin is meaningless on its own, because the number of coins is arbitrary, the creator picked it.

$1M$0.001 Ă— 1B coins$1M$1.00 Ă— 1M coins$100M$0.10 Ă— 1B coinsThe first two are the same size. The third is 100Ă— bigger.
Market cap = price Ă— how many coins exist. A low price alone means nothing.

Market cap is price × supply, and it’s the number that tells you how big something already is. A coin at $100M market cap doing another 10× needs a billion dollars to flow in. That’s why our charts default to market cap rather than price.

Be honest about the odds

The overwhelming majority of memecoins end near zero. Not most, the overwhelming majority. A handful run enormously, which is exactly what makes the rest look reasonable in hindsight.

The only rule that matters
Never put in money you need. Not rent, not savings, not borrowed money. Decide the number you are willing to lose entirely before you open the buy panel, and treat it as already spent.

If that feels harsh for a page trying to get you to trade, good. Everything else here is easier to learn than this one habit.