Memecoins have long been an integral part of the cryptocurrency market. When discussing memecoins, the focus often shifts from the underlying technology to their potential for rapid and substantial growth. Stories of individuals becoming millionaires overnight after investing just $1 and holding for a few days have elevated these “silly” coins to a higher status than those considered to have “core technology.”

However, FOMO (Fear of Missing Out) in the financial market often leads many to hastily invest, resulting in significant losses. While losses from legitimate tokens depreciating in value can be mitigated as market conditions improve, a greater danger lies in purchasing fake memecoins or those designed to rug pull users, trapping them indefinitely. This poses a larger pitfall, causing both financial and psychological distress.

Tools like the Blockscout explorers can be invaluable to avoid these unfortunate situations. This article will guide you through using Blockscout explorers to evaluate a memecoin effectively.

Since the creation of the first memecoin, Dogecoin ($DOGE), in 2013, numerous other memecoins have emerged. Most of these coins draw inspiration from popular memes or internet jokes.

Initially dismissed as frivolous and potentially scammy, these coins have gradually gained recognition as valuable investment opportunities in the crypto industry. They possess unique attributes that more technologically advanced coins often lack, such as:

• Strong Community Promotion: Small but dedicated user communities actively promote these coins across social media.

• Affordability: Extremely low prices create a perception of owning a substantial quantity.

• High Volatility: Significant price fluctuations offer the potential for extremely high profits.

Memecoins have indeed transformed many lives, as evidenced by numerous success stories. However, conducting thorough verification before investing is crucial to avoid financial losses from unreliable memecoins.

Blockscout is one of the most popular and effective blockchain explorers available today. This multi-functional tool not only allows you to look up transaction information on the blockchain but also offers a range of other capabilities, such as using APIs, interacting with dApps, and managing your assets.

Given its versatility, using Blockscout to explore memecoins is certainly feasible. The features that can assist you in evaluating memecoins include:

1. Contract Verification

If you interact with a malicious contract, you may be giving approval to a rogue contract that steals tokens from your wallet. Therefore, it is essential to check the authenticity of the contract.

Let’s say you want to invest in a memecoin called Pepe (https://www.coingecko.com/en/coins/pepe) that everyone is talking about. The buzz is that this memecoin is going to experience strong growth, potentially leading the growth of other memecoins. You want to buy it on a decentralized exchange (DEX), but first, you need to carefully check the token’s contract because you copied it from Twitter.

First, go to https://eth.blockscout.com to access the Blockscout interface for the Ethereum Mainnet.

Next, enter the smart contract address you want to investigate in the search box and click on the token to view more details.

Now, examine the Pepe memecoin page. This is the actual contract for the Pepe token you are searching for. If it is a legitimate token, it will have a verified token badge next to the name and ticker. Additionally, if the smart contract code is verified, you will see this information displayed next to the smart contract line.

If a token does not have a verified contract badge, exercise extreme caution. It’s best to avoid trading that token altogether to prevent potential asset loss.

2. Examine the Key Metrics

This is crucial. Start by checking the number of holders for the memecoin. A higher number of holders usually indicates strong community support, higher liquidity, and lower volatility. For example, Shiba Inu ($SHIB) is one of the most robust and decentralized memecoins, with 1.5 million holders at the time of writing. Newer tokens will typically have fewer holders.

To assess whether a memecoin might be susceptible to manipulation, check what percentage of the total tokens are held by the top holders. If the top 10 holders control 20% or more of the total supply, there’s a risk of market manipulation. Often, these major holders — typically the token’s creators — might eventually sell off their holdings, drain liquidity, and disappear, leaving you with tokens that could be difficult or impossible to sell. To view the top holders, click on the “Holders” tab. Note that tokens held by centralized exchanges, decentralized exchange liquidity pools, lending platforms, etc. should be excluded.

Price and market cap are crucial factors to consider when evaluating a memecoin. Investing in quality tokens with very low market capitalizations can potentially multiply your assets significantly. However, it’s important to use these factors in conjunction with other indicators to make well-informed investment decisions.

Besides , examine the transaction history of the memecoins closely. If you notice frequent transfers of large amounts of tokens between wallets, it could indicate manipulation or that hackers are moving stolen tokens to exchanges. If large wallets are selling their tokens simultaneously, it might be a warning sign to exit quickly. Additionally, review the transactions in the “Token transfers” tab. If you see only purchases with no sales, it could mean the tokens are “Honey Pot” tokens, which can only be bought but not sold.

3. Search and Compare

Blockscout explorers provide a robust token search feature. You can search by smart contract or by token name. To do so, click on the “Tokens” button in the left menu and enter the token name in the search box.

By accessing this interface, you can view all tokens associated with the keywords you entered and find the one you’re looking for. Additionally, you can easily copy their contract addresses and compare key metrics such as price, market capitalization, and number of holders.

4. Advanced Interaction

Suppose you’re proficient in querying on-chain data. In that case, you can track private wallets that hold significant amounts of altcoin or those that purchased them early and profitably directly within the Blockscout explorers. Utilize the private tag feature to mark and monitor these wallets.

Finally, you can view the source code of the memecoin on Blockscout. You can examine it directly or use specialized scanners and simulators to evaluate the memecoin. Check the token’s source code under the “Contract” section.

Memecoins offer enticing investment opportunities with significant growth potential, but they also come with substantial risks. To minimize potential losses, it’s crucial to use tools like Blockscout for thorough evaluation. With the detailed guidance provided in this article, you should be able to assess memecoins safely and effectively, leading to informed and strategic investment decisions. Wishing you success in your memecoin investments and exploration of the market!