Inside crypto's $2 billion rug-pull era, where dogs, frogs and abandoned tokens trace a cycle that resets every few months.
In the 24 months ending December 2024, retail investors poured money into the cryptocurrency market at a pace not seen since 2021 — and watched roughly $2 billion of it disappear into so-called "rug pulls" on meme coins, the dog- and frog-themed tokens that have come to define the latest speculative cycle.
A Capital Ledger analysis of monthly market data scraped from Dune Analytics and DEXScreener found that while bitcoin tripled and ether more than doubled over the period, the meme-coin sector's market value surged by nearly 300% before collapsing in waves.
The wreckage left more than 4,100 abandoned projects.
The pattern, in the view of several analysts and investors, has hardened into a kind of cyclical machinery: hype begets liquidity, liquidity begets fraud, fraud begets headlines, and the cycle resets.
The contrast with the asset class's elder coins is stark.
Bitcoin, the original cryptocurrency designed by the pseudonymous Satoshi Nakamoto, runs on a network with a hard cap of 22 million coins. It has now climbed to nearly $93,000.
Ether, the native token of the Ethereum blockchain, transitioned in 2021 from energy-hungry "proof of work" mining to a "proof of stake" model that its co-founder, Vitalik Buterin, has long argued is essential to the network's long-term legitimacy.
Both assets have grown into the portfolios of pension funds, sovereign wealth managers and, increasingly, exchange-traded fund providers.
The "content," it turns out, has been lucrative — and treacherous.
Dogecoin, created in 2014 by software engineer Billy Markus as a parody of Bitcoin, kicked off the genre. It was repeatedly catapulted by tweets from Elon Musk, the chief executive of Tesla.
A second wave arrived in April 2023 with PEPE, a Solana-based token themed on the cartoon frog, followed by BONK, WIF and dozens of imitators on Anatoly Yakovenko's Solana network, which launched in 2019.
The economics of the genre are unforgiving. A handful of early holders capture nearly all of any rally, while latecomers — typically retail traders responding to social-media virality — are left holding tokens whose only utility is the meme itself.
"Memes are the only honest assets in crypto," said Murad Mahmudov, a longtime cryptocurrency strategist and self-described "memecoin supercycle" advocate, in a November conference appearance. "Everything else lies about its fundamentals."
What memes failed to disclose, instead, was who held the keys.
The Ledger's analysis identified 4,146 confirmed rug pulls — schemes in which a token's developers drain its liquidity pool and disappear — across the 24-month window. Reported retail losses peaked at $217 million in April 2024.
The pattern echoes the 2022 collapse of the Squid Game token, which cratered to zero overnight and whose developers were never identified.
"I sent $14,000 in USDC to a wallet I found on Telegram," said Daniel Reyes, a 31-year-old delivery driver in Phoenix who lost his savings to a Solana-based meme coin called "ElonRocket" in March 2024. "Twelve hours later the chart was a single red line."
A regression of monthly rug-pull losses against meme-coin market capitalization in the Ledger's dataset showed a correlation coefficient of 0.94, suggesting that fraud scales almost mechanically with hype rather than with prices.
Whether the cycle has crested is unclear.
Bitcoin's rally past $93,000 has restored institutional interest in the broader sector. Cathie Wood, the chief executive of ARK Invest, has reiterated her forecast that bitcoin will trade above $1 million within a decade.
But for the retail investors who chased frogs and dogs across blockchains, the lesson may be a familiar one.
Tether, the largest decentralized stablecoin and the dollar conduit through which most meme-coin trades flow, faces yet another round of regulatory scrutiny over the composition of its reserves.
"We mistake liquidity for legitimacy," said Priya Nanjiani, a behavioral economist at the University of Chicago. "Meme coins are simply the purest expression of that mistake."