DO NOT BUY STOCK PAIRED MEMECOINS BEFORE YOU READ THIS
One market maker is making millions on these launches without ever bidding the coin itself. Roughly 70% of the volume you are looking at is net profit to one entity, and it is more profitable than any bundle because it never needs the coin to go up
At first glance it looks like a normal onchain coin where traders are PVPing each other and price only moves on net buys and sells
The easiest way to see something is off is to pull up the top PNLs after one of these does hundreds of millions in volume
For the size of the move, almost nobody made anywhere near the money you would expect. That is because a large part of it was never transferred from one meme trader to another. It was extracted through the stock token the meme is paired against
The stock token is not a share. It is an IOU printed by a company that holds the real share somewhere else. You cannot redeem it and you cannot create one
Only approved market makers can. They buy the real stock during market hours, have matching stock tokens created, then sell those tokens onchain. Everyone else can only trade the supply already circulating
Now the memecoin launches against that stock token. You are not buying the meme with dollars, you are buying it with stock tokens, and in an AMM every stock token used to buy the meme stays inside the liquidity pool
As more people buy the memecoin, more of the stock token supply gets pulled out of the open market and locked inside that one pool, which makes the remaining stock token market thinner and easier to move
Then the US stock market closes. The real share stops trading, the market maker can no longer hedge or create fresh supply, but the onchain market keeps running
If enough stock tokens have already been sucked into the meme pool, even a small amount of demand can now push the stock token far above the real share price
This is where the chart is completely lying to you
Your memecoin's dollar price is its price against the stock token multiplied by the dollar price of that stock token
If the real share is worth $10 but the stock token gets squeezed to $20 because there is no supply, your memecoin's dollar market cap effectively doubles even if absolutely nothing changed in the memecoin itself
Same thing as bitcoin printing $1,000,000 if USDT crashed to ten cents. The asset did not change. What you are pricing it in did
Retail sees the dollar chart exploding and assumes more money is entering the meme. In reality a large part of the move is just the stock token underneath trading at a fake premium
Then the stock market opens
The market maker can buy the real shares again, create fresh stock tokens near the real share price and sell those tokens into the massive onchain premium
More supply comes in, the stock token falls back toward the real stock price, and all of this can happen within 5 minutes
Your memecoin can remain completely flat against the stock token while the dollar chart gets cut in half
That is where a lot of the missing PNL went. A big part of the run was never actual dollars entering the memecoin in the first place. Retail paid the stock token premium on the way up and then ate the collapse of that same premium on the way down
The market maker does not need to guess whether your meme goes up or down. It buys the real share near fair value, creates the stock token, sells that token above fair value and keeps the position hedged
Its trade is the gap between the real stock and what retail is willing to pay for the onchain wrapper
Now people think using a tiny penny stock fixes this, because the market maker cannot easily buy enough shares to create new stock tokens, so the premium supposedly cannot close and the memecoin can keep running
That actually makes it all worse
The market maker is not forced to create supply. If the underlying stock becomes too illiquid to hedge properly, it can simply stop minting
There is no permanent premium. You get an illiquid stock token with no depth, which means your memecoin is now priced against one
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