- A memecoin frenzy on Base, an Ethereum layer 2 network, was jump-started by the recent Etherum Dencun upgrade, which lowered transaction fees.
- A group turned $1,824 into over $2.1 million by trading memecoin NORMIE on Base.
- Due to liquidity constraints, the group must sell its holdings gradually to avoid crashing the token's market price, even though the traders hold only about 2.2% of its total supply.
One group of wallets on Base, the Ethereum layer 2 network incubated by centralised exchange Coinbase, has turned $1,824 into over $2.1 million amid the memecoin trading frenzy.
The holders, however, can’t cash in all of their chips at once because of the small size of the coin’s liquidity pool.
The story starts with the Ethereum Dencun upgrade, an upgrade on the Ethereum blockchain that went live on March 13 and that caused transaction fees on layer 2 blockchains to drop by as much as 98%.
With the lower fees, traders rushed to Base, as the platform had an all-time high of 855,191 active users on March 16.
The total daily volume generated on Base hit an all-time high of $394 million on March 19, with a majority of the volume coming from memecoin traders, who tend to be price sensitive and who therefore were drawn in by the drastically lower transaction fees
One memecoin in particular, NORMIE, which is branded toward “normies,” or individuals entering crypto for the first time, rose 71,089% from its launch on March 6 to its peak on March 16.
On the day of its launch, wallet address 0xb3, received 0.299 Ether from a centralised exchange.
That wallet went on to send 0.1 Ether to wallet addresses, 0x6b and 0x57. All three of these wallets then purchased NORMIE on March 6 while the price per NORMIE was around $0.00007.
Collectively, the three wallets purchased 24.4 million NORMIE, or 2.4% of the total supply, across 11 transactions.
A fourth wallet, 0x45, which was also funded from a centralised exchange on March 6, is connected to wallet 0x6b because they sent 0.01 Ether to them on March 9.
The wallet had similar transaction history, purchasing 5.5 million NORMIE with three transactions from March 6 to March 9.
It is unknown whether this cluster of wallets is one individual or an entity.
So far, these wallets have sold a total of 2.4 million NORMIE, or around $59,000. They still hold about 22 million NORMIE, or $2.1 million.
The group, or individual, controlling these wallets cannot offload their entire NORMIE holdings in one go because the liquidity pools for the token have only about $2.2 million.
A sudden, large-scale sale would likely crash NORMIE’s market price. Consequently, it appears the holders are adopting a strategy of gradually selling their tokens to avoid drastically affecting the token’s value.
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