Strategy description

This automated trading strategy buys and holds all quality memecoins on the Base blockchain. The picked memecoins satisfy minimum volume and TVL criteria.

Benefits

• Get directional exposure to exciting small-cap memecoin market
• No need to pick memecoins yourself; the strategy will buy all of them
• Small cap memecoins are often uncorrelated with the rest of cryptocurrency markets

Trading rules summary

• Rebalance every four hours
• Equally weight between opened positions
• Trade on Uniswap v2 and v3 on Base
• Use Coingecko as category labelling source for memecoins
• Use TokenSniffer as token quality source to filter scams
• Have minimum TVL and volume criteria to be included in the index
• Adjust position size based on lit Uniswap liquidity (TVL), to prevent takeing oversized positions on limited liquidity tokens

Due to low number of memecoins, the strategy does not yet have market cap criteria.

The strategy will run an open-ended index strategy: the source code is available. For further details, see the strategy source code.

Expected performance

The strategy is a memecoin index and reflects the performance of memecoin markets.

See backtesting page for historical estimated performance. Past performance is no guarantee of future results. Due to the young age of memecoin markets, being very recent phenomenom, there is no backtesting data about memecoin market downturns.

Risks

This strategy is ultra-high-risk. Only allocate small amounts of capital you may lose. Before investing large amounts of capital, speak with the strategy developers.

This strategy, paired with onchain execution, is the first of its kind in the world. Because of the novelty, multiple risks are involved. Consider it beta-quality software.

Trading risk: Small-cap tokens traded are highly volatile, may include rug pulls and other questionable activities. Despite the strategy of automated filtering for tokens, some of the tokens may go to zero. The whole memecoin market can go to zero, and is likely to do so at some point. There is little liquidity for these tokens and trading costs are high and may change abruptly.

Technical risk: The strategy relies on ERC-7540: Asynchronous ERC-4626 Tokenized Vaults standard. This standard is new and not yet time-proven. The onchain trade execution contains unaudited smart contracts. There are centralised price oracles. The redemption process relies on a centralised valuation committee.

The strategy includes risk mitigations like:

• Use third-party security services to check the reputation of traded tokens
• Strategy limits position sizes based on the available lit liquidity
• Strategy limits position sizes based on the overall maximum % of the portfolio
• DAO and/or security committee holding multisignature keys can take manual actions in the case of unexpected issues: the strategy can be halted and manually wind up

The technical risks will be mitigated in the future by working with other protocols, by increasing the quality onchain trading venues, data and decentralisation.

Further information

• Any questions are welcome in the Discord community chat