Every weekend, I spend some quiet time thinking about which tokens sit at the intersection of a strong narrative yet remain undervalued and underappreciated by the market. These often precede a strong rally as more participants become aware of the thesis and one on my radar is Meteora. Meteora has become a hub for memecoin liquidity and volume on Solana and a major beneficiary of rising Fomo volume, yet it trades at a fraction of PUMP's and RAY's valuations, making the setup compelling.
We can all agree that Fomo has been the breakout consumer app this cycle. It crossed 100K in daily active traders just on Solana last week and weekly Fomo volume on Solana has been on a steady uptrend despite the shifting meme volumes between Robinhood chain and Solana since August. Breaking down Fomo’s volumes further, 31% comes from SOL-USD trades which is currently being won by prop AMMs such as BisonFi and as expected the largest share comes from memecoins at 42%. But who is winning these volumes?
As expected, PumpSwap is a major beneficiary of Fomo meme volume, while Meteora ranks second with 31% of the volumes and is far ahead of Raydium at 14%.
Using fees as a proxy for volumes, Solana accounts for 58% of Fomo’s activity. So my thesis is that Fomo’s volumes will continue to increase, and if Solana continues to dominate activity on Fomo which I believe it will and a big chunk of it comes from meme trading, then both Meteora and Pump are the two best liquid ways to gain exposure to Fomo.
While Raydium and Pump will continue to be the venues where meme PvP volumes take place, the memes that emerge from these and find some legitimacy have seen a good percentage of their volumes come from Meteora.
Looking at some of the recent prominent names on Pump such as ANSEM, PAID and CATE, above 40% of their volumes are coming from Meteora pools.
This is even more pronounced compared to Raydium pools where even STONK and some of its top graduates see more volume on Meteora than Raydium.
The reason for this likely comes down to the AMM design on Meteora pools where certain features on DLMM may be better for traders and more lucrative for LPs but that is a topic that I could spend a whole report writing on (I will cover it in an upcoming report, so keep a lookout), but the data clearly shows that Meteora’s model has been successful in winning a substantial amount of DEX volumes on Solana.
As meme volumes have picked up so have Meteora’s revenue numbers from September lows with daily figures crossing $200K. Annualizing Meteora's last 30 days of revenue gives it a $77.7M run rate.
From a relative valuation perspective, Meteora trades at a fraction of what its comps trade at.
Some of this gap may reflect Meteora's lack of direct value accrual relative to its peers, but I think that criticism is overstated. Currently, 10% of DLMM revenue goes to MET token stakers with stakers earning an APY of up to 30%. Close to 18% of the circulating supply of MET has already been staked with numbers increasing daily.
The protocol has also conducted discretionary buybacks totaling close to 6.5% of circulating supply, showing that it is prioritizing the token. The set-up looks attractive. I don’t think the market is aware of how much of Fomo’s meme volumes are being routed to Meteora and the valuation looks cheap compared to competitors. If value accrual is the concern, a single announcement making buybacks programmatic could be all it takes to spark a rerating. If the protocol continues to be a liquidity hub for Solana, I can see it flipping Raydium by the end of the cycle.
That’s all from me today and for those at Token 2049 this week have a blast and I am sure we will be getting many bullish announcements from protocols this week so keep a tab on those while enjoying the evening festivities these conferences bring.
— Kunal
Activity on competing launchpads such as Pons, Long and StonkFun, which were in the spotlight in recent months, has continued to fall since September's highs, and Pump.fun has been consolidating market share ever since.
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Everyone is talking about the @Agency__Solana launchpad and talks of a repeat of the 2024 AI season so I decided to track the numbers. The launchpad did $65M in volume yesterday and generated around $760K in fees. But of this only $47K went to Agency buybacks with $340K to PUMP Show more
More than one in three ETH is on security duty. No surprise, as it can be a cushy job that pays well. I expect that share to keep climbing as staking ETFs gain traction, LSTs rise and DATs deploy more capital.
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