Memecoin Infrastructure 2.0

Memecoins have become an essential pillar of DeFi. They serve as the single best tool for on-boarding new users. The explosive growth both on Solana and Base were in large part due to their recent meme frenzies. However, many aspects of “The Memecoin Experience” are still missing or lacking maturity.

The fascinating and alluring world of Memecoins

Despite the ever-growing Memecoin demand, to date there hasn’t been a single decentralized exchange (DEX) that’s been built with memes in mind. The 2 most frequently used AMM architectures remain Uniswap V3, although with significant drawbacks, and Uniswap V2. The latter comes closest to fulfilling the requirements of Memecoins as it automatically covers the full price range, supports tax-on-transfer tokens and allows a large degree of composability with its ERC-20 LP tokens (such as locking or lending). Uniswap Labs even went as far as “retrofitting” various new chains with their 2020-released AMM as recently as February 2024, underlining its continued relevance.

The Blueprint of a Memecoin

What qualities would the ideal DEX need to optimally support Memecoins? Your run-off-the-mill ERC-20 Memecoin could be summarized as follows:

• Speculation and price discovery as its primary utility (requires a market maker like Uniswap V2)
• Security, as in anti-rug / locking mechanisms (requires third-party services like UNCX or Guacamole)
• Virality, which requires time, effort & money — usually done with tax mechanisms, team allocations or hidden wallets.

We believe the underlying constant product formula (xy ≥ k) is the perfect fit as an AMM for Memecoins; however large improvements of the 2 latter areas (security & funding) are needed. The team at Uniswap couldn’t foresee the popular demand for Memecoins years down the road, as such, the whole ordeal has become a fragmented experience.

Each chain usually has a different main DEX, different locking services and so on, making it even harder to navigate than it already is.

Security: Locking & Burning

With the strong rise in Memecoin activity on BSC back in 2020/2021, demands for a better investment framework were made. Many tools and methods sprung out of this and still serve as the rock-solid foundation today:

• Locking services
• LP token burning
• Railguarded IDOs and Fair Launches
• Automated smart contract scanners/sniffers

For teams to earn the trust of prospective communities, those became a necessity — an area where investors have to navigate a minefield of rugs and scams. Thanks to these tools, the risk becomes somewhat more calculable.

However, these security measures come with big financial downsides for projects, which brings us to the next point:

Funding

If a team locks or burns all of their liquidity tokens, they lack a source of funding. Salaries, social media, ad campaigns, and many more things quickly add to the running costs. Developers once again came up with a clever solution (at first glace at least):

• Tax-on-transfer tokens

With all liquidity locked and unavailable, tax-on-transfer tokens offer the advantage of providing teams with a steady revenue stream to support their projects. The drawback of this approach is that it’s an additional burden on investors and the income is earned exclusively in the project’s tokens, which then need to be sold. This creates downwards price pressure and negative community sentiment, which is why most tokens launched these days are flashing a “0 tax, 0 bullshit” sign.

With the original Uniswap V2 implementation, fees are earned in both base assets of a pair (e.g $ETH + $MEME), which accumulate in the LP tokens. In order to access those fees the LP tokens need to be withdrawn, which is not possible when they’re locked or burned — nor desirable.

Unfortunately the problem is very hard to solve, which is why until today we haven’t seen a single locking service that is able to forward fees to liquidity providers on V2-style AMMs.

The Solution

The ideal Meme DEX would be one where a project could launch a token on an UniV2-style AMM, with vertically integrated locks & burns, and with the rewards being paid to teams in both project and native gas tokens (e.g. $ETH, $FTM, $SOL etc), providing a continuous stream in non-project-token funding.

With that, desperate community fundraisers would be a thing of the past.

You guessed it right, Solidly Labs has solved this fundamental issue once and for all — bells & whistles included.

Memebox by Solidly Labs

We’re excited to announce that we managed to tackle all of the above problems and elegantly unified everything into a single V2-style AMM contract — Solidly V2 Memecore, the engine of Memebox.

The V2 Memecore contracts are a modern interpretation of xy>=k. They’re written from ground-up in Solidity 8, with utmost security and a gas-conscious approach in mind. Despite the spectacular increase in on-chain features, we still managed to achieve 12% swap gas savings compared to Uniswap V2, this time just as a side note, though.

Let’s get to the juicy stuff!

Feature list:

• Extension of the ERC-20 standard for liquidity (LP) tokens, which we call ERC-42069
• Fee abstraction: fees are accounted separately from the pool balances. This is achieved without any transfers to external contracts, nor does it depend on external distribution logic.
• Vertically integrated locking mechanism, the user retains the ability to earn fees in real time
• ERC-42069 specific transferZero function that burns LP tokens to 0x0000000000000000000000000000000000000000, the user retains the ability to earn fees in perpetuity
• Locks can be split and extended, both locks and burns can also be transferred
• Adjustable pool, lock and protocol fees
• Optional “Copilot” role for pool fees, the ability for projects to manage their own pool fee within safe and programmatic boundaries; replaces the need for complex tax-on-transfer tokens
• Fully on-chain, zero reliance on off-chain scripts or oracles

A Real Example

To demonstrate the power of solving the fundamental funding problem for Memecoins, let’s go through an example of a fairly basic Memecoin launch earlier today:

A project on Solana has launched 8 hours ago with a total of $314k in liquidity and $15.2M in volume. Nearly all of the liquidity is locked, meaning that the creators earn close to zero fees.

If the project had launched on Memebox, the creators would’ve earned $106.4k in fees in just 8 hours, around 51% in $SOL and 49% in their project token. That is $54.26k in SOL, which could be used for buybacks, marketing and growing their community. It would also reassure investors as the team wouldn’t have a reason to have hidden wallets, dump on investors and fund themselves that way.

This means that projects launching on Memebox will have a more favorable standing with the degen community at large, as incentives for insider dumping are significantly reduced.

Did anyone say Pendle for Memes?

We’re not done yet. What might seem like a little bullet point in the feature list above, is a ground-breaking feature which allows what many haven’t even dared dreaming of.

Tokenizing Memecoin Yields.

This feature won’t be available at launch but we’re already wrapping up the work on the contracts. After which they will go through our rigorous multi-step auditing process (as has Memebox).

The yield swap platform will allow creators of Memecoins to use the yield receipt of their locked or burned liquidity tokens as collateral. The flow is as follows:

1. Creator launches Memecoin
2. Creator locks or burns their liquidity
3. Creator needs an upfront cash payment for their yield
4. Creator can list their yield for auction, fixed price sale or rent

This also allows creators to hedge the volatility of their Memecoin and speculators to profit from it.

Safe Token Launcher

To round everything off and to truly become the one-stop-shop for memes, we have also worked on an intuitive and user friendly token launcher.

The user simply needs to fill in a couple fields in a form and hit the launch button, what happens in the background is usually a multi-hour process but with Memebox it’s 1 click:

• A Minimalistic and ownerless ERC-20 token is launched
• A new Solidly V2 Memecore pool is created
• Pool tokens are paired to exactly reflect the desired initial market cap. The native network token (ETH, FTM, SOL etc.) is pulled from the user in the same transaction.
• The user can choose to burn, lock or keep the LP tokens

When a token is launched through SolidlyV2TokenFactory, it will emit specific on-chain events in accordance to their basic safety levels. A coin that launches with relatively little team shares and burned liquidity will be dubbed as “reasonably safe”, one that launches with 90% team shares and no locked tokens will be considered dangerous. All of that data can be read directly on-chain and will also be listed in our token launcher dashboard.

Philosophy

Generally speaking, our philosophy is not to restrict or force a certain behavior, the market will figure itself out. We’re merely providing the tooling and transparent on-chain reporting. Memebox is a permissionless and immutable on-chain infrastructure and serves as a breeding ground for unlimited growth — we’re not here to restrict or police.

Safety

The engine behind Memebox — Solidly V2 Memecore — has already completed 2 audits with highly respected auditing companies, namely Cyfrin and PAG (Pashov Audit Group). Both companies are regularly booked by industry giants such as Wormhole, 1inch, Uniswap, Synthetix and other billion dollar protocols. So our codebase has been in very good hands and has stood against the focused stares of the most talented security researchers.

The audits can be found here:

https://github.com/SolidlyLabs/Solidly-Audits

Let’s Talk Numbers

With Memebox, the traditionally known “fee switch” is activated from the start, meaning that 30% of all trading fees will go to to the protocol, while 70% remains with liquidity providers, which is a dramatic improvement over the 0% that liquidity providers are currently earning with other V2-style AMMs (because locked or burned liquidity earns nothing).

Of the 30% that go to the protocol:

• 25% go to our new $SOLID staking contract (yield token: $SOLID)
• 25% go to max-locked veSOLID positions (yield token: $SOLID)
• 50% go to the Solidly Labs treasury until a treasury of $5m is reached

After our treasury has been bolstered, which will be used for expanding our team, development, marketing, listings, legal expenses and brand-building, the ratio will switch to:

• 40% $SOLID staking (yield token: $SOLID)
• 40% veSOLID (yield token: $SOLID)
• 20% Treasury (yield token: $SOLID)

In addition to swap fees, locking & burning (with ability to continue earning fees) incurs a 1% lock fee, which will be distributed at the same ratio as the swap fees.

Memebox will launch on all EVM-compatible chains (and Solana), irrespective of our SolidSync omnichain deployments via our V3 product suite. This allows us to be able to provide this essential public good to every corner of DeFi as quickly as possible.

We’ll soon unveil an attractive promo for the first 10 memecoin projects to launch on Memebox, so follow us on our socials, including Twitter and Discord to stay up to date!

It goes without saying that all information within this article is provided “as-is”, on a best-effort basis and is non-binding.