99% of Meme transactions are destined to lose blood, and the dealer is the big winner

And you won’t know who the dealer is until it’s too late.

Author:Foxi (DeFi / AI)

Compiled by: Shenchao TechFlow

My Meme trading account is currently losing-60%. Am I a bad trader? Yes, I am. But it’s not just because of bad decision-making. I prefer to believe that I’m not worse than the average gambler. So, what is the problem? Inspired by@0xngmi’s data (who pointed out that playing Memecoin makes even worse than casinos), I decided to delve deeper into what the root cause of the problem was.

First of all, let me admit it: I am a terrible Meme trader

Like many novices, I was led by the hype and emotions of the market,Chasing gains and killing losses, buying high and selling low, frequent trading leads to slippage, and even unknowingly hands over money to insider traders in the market.

Although this is not my first time participating in the cryptocurrency market, this experience makes me feel like I am playing an unfair game. To make matters worse, the rules of the game seem to change all the time and always favor those who have more information.

@0xngmi calculates the expected return (EV) of playing roulette at the casino versus the expected return of Meme’s speculation (based only on fees paid).

(Original picture comes from @0xngmi, compiled by Shenzhen TechFlow)

* The fee for small transactions is 2.5%, and the fee for Raydium is 0.25%. One speculation requires two transactions, so the fee needs to be multiplied by 2.

** Moonshot’s default slide point is set to 5%, and half of this is used as the average sandwich attack estimate.

*** It is difficult to estimate accurately because of the large differences between different tokens, assuming a cost of 2.5% per transaction.

This got me thinking: How does Meme speculation compare to actual gambling? Are their odds equally bad? Or worse? More importantly, are Meme traders just casino gamblers dressed as investors, or are there more complex and covert mechanisms behind them? According to@0xngmi’s analysis,Putting money into a casino seems like a better way Meme Smarter.

Real odds: Memecoin vs. casinos

we need to talkExpected value (EV）This is a core concept in gambling and trading. It tells us, on average, how much money you can expect to win or lose with each bet over time.

Casino games have a mathematical fairness and unfairness. In the long run, you can always predict how much you will lose. Let’s take a specific look:

(Original picture comes from Foxi (DeFi / AI), compiled by Shenzhen TechFlow)

In traditional gambling, casinos useSlow and predictableWays to extract profits. Whether it is every spin of the roulette wheel or every pull of the slot machine, it follows a known probability model. For example, in American roulette, if you bet on red, you have a 47.37% chance of winning and a 52.63% chance of losing. Over time, the casino will always win, but it does notnot cheat——Just use probability to give yourself an advantage. However, in order to protect gamblers, some jurisdictions impose minimum return rates. For example, in Ontario, slot machines must have an RTP (player return) of at least 85%, which means that the casino’s advantage (i.e., the dealer’s cut) is at most 15%.

Why 99% of people lose money on Memecoin transactions

Unlike casinos, Memecoin trading may seem like a game of chance, but the problem is that you don’t even know who the real players are. Although the Memecoin market does not have a clear House Edge, your funds will still be slowly swallowed up through trading fees, slippage, insider trading and market manipulation. Moreover, this loss is often implicit and difficult to quantify.

Here are the three main reasons for the general losses of Memecoin investors:

• handling fee

• slippage

• market manipulation

1. Trading fee: Hidden dealer’s commission”

Fees will be incurred for every transaction. Whether you are on a centralized exchange (CEX, such as @bitgetglobal or @MEXC_Official), a decentralized exchange (DEX, such as @RaydiumProtocol), or using a trading robot (such as @gmgnai, which most people use), these fees will gradually eat into your profits.

• CEX Fees: Approximately 0.1% per trade (Buy + Sell = 0.2% round-trip fee)

• DEX Fees: Approximately 0.3% per transaction, plus Gas fees (may be $5-$50+ per transaction)

• Trading robot fees: Approximately 1% per transaction, plus a priority fee (which may be 4 times the normal DEX fee)

• Memecoin tax: Some projects draw 5%-10% of each transaction as part of a redistribution or destruction mechanism. For example,@aipool_tee charges a 10% fee for sell transactions.

These trading robots are making a lot of money from lower-level users. Although fewer people are trading Meme now (February 17), daily income can still reach more than $700,000.

On the surface, a transaction fee of 0.2%-1% may not seem high, but when you trade frequently every day, these fees accumulate quickly. Making 10 transactions in one day may consume 2%-6% of your principal, which is even more serious than the loss of playing European roulette.

2. Slip point (MEV cost)

A slip point is when you place an order at a price, the actual execution price is worse than expected due to market fluctuations. Slippage issues are particularly serious in Memecoin trading, especially when there is insufficient liquidity or high market volatility.

• Example: You try to buy a Memecoin for $100, but due to lack of liquidity, you can only get $95 worth of tokens, losing 5%.

• A similar situation occurs when selling. You planned to sell for $200, but the slip caused you to only get $190.

• Total slip point loss: approximately 10% of round-trip transaction costs.

@0xngmi mentioned that about 2.5% of transaction fees will be consumed by MEV (sandwich attack cost), while on BNB Chain, this cost can be as high as more than 5% due to its poor infrastructure.

A better blockchain infrastructure could significantly reduce MEV costs. This is why many people think Solana is superior to BNB Chain (I completely agree with this). If @cz_binance wants to promote Meme culture on BNB Chain, the top priority should be to reduce MEV costs and thereby increase the expectations (EV) of Memecoin players.

However, even on Solana, the 2.5%-5% MEV cost is still more serious than the loss of casino games. If you discover on a slot machine that the dealer draws as high as 10%, you may be furious. But in the Memecoin market, that’s not even the worst part.

3. Insider trading and market manipulation

There is little need to be said about this. Unlike casinos, casinos have clear rules, and Meme The market is completely biased towards insiders。No regulation can stop team wallets, developers or Internet celebrities from harvesting retail traders by Pump and Dump. For example, the following cases:

• $LIBRA: Swept away more than $107 million worth of tokens

• $MELANIA: Is it related to Meteroa?

• $CAR: Rugged Incident in Africa

• $CUBA: Rugged incident in another country

• $GANG: @mrpunkdoteth cashed out $10 million through fans

• $Broccoli: Manipulated to profit by scammers and insiders

These are just the tip of the iceberg. It can be said that if you are not an insider like @frankdegods, you have almost no advantage in participating in these Memecoins. In casinos, you at least know what the dealer’s draw is, and in the Memecoin market, you don’t even know who the dealer is, but they are definitely taking your money.

Final comparison: Expectations (EV) of Memecoin speculation versus gambling

Casino games will slowly draw your money away over time, while Memecoin speculation is much more brutal. A wrong trade can erase weeks of your earnings in an instant. The only motivation for people to continue to participate is the occasional 100-fold gain. But in reality,The probability of achieving a 100-fold gain is about 1/25,000, which is even lower than the probability of winning the lottery.

People tend to believe they are special or skilled (yes, I am the self-righteous guy), but they end up being harvested.

The reason why Memecoin is not like gambling is that it gives people an illusory sense of control——The illusion that you can make money through research, timing and skill。It’s true that some traders can make money, but they are only a minority, just like professional poker players. And most traders, like most gamblers, end up losing money.

Advice on the chain

If you want to attract users and increase trading volume on the chain, make sure that traders ‘MEV costs are low enough and try to reduce transaction fees through partnerships or fund subsidies. The reason why casinos can operate for a long time is that gamblers are willing to continue to participate.

Advice for investors

If you are participating in speculation in Memecoin, remember thatThe dealer always wins。And you won’t know who the dealer is until it’s too late. If you realize you can’t get out, you may have fallen into a gambling addiction.

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