Memecoins and social trading: who earns from the activity?

Why memecoins are a weak investment foundation

Memecoins can turn attention into a rapidly moving price. Social trading apps make those moves easy to discover, follow, and trade. Neither feature creates a dependable foundation for savings. Our view is that everyday investors should avoid building their financial future around the hope of selling a fashionable token to someone else at a higher price.

A typical memecoin does not give you a claim on a company’s earnings or assets. SEC staff described the category in February 2025 as driven mainly by demand and speculation, often with little functionality. That description is not an endorsement, and the staff statement is not a binding rule covering every token.

People can make money in these markets, especially when they buy early and find later buyers. The problem is turning that possibility into a repeatable plan. A popular token can lose its audience quickly, and a quoted price is useful only if you can actually sell the amount you hold.

Do most participants lose money?

CoinGecko’s Pump.fun/PumpSwap study reported losses for 69.92% of wallets in June 2025, but gains for 73.28% in April 2026. Its monthly flow measure excludes unsold losses and retains bots and wash trades. Wallets are not people. These dated snapshots do not establish a universal or lifetime investor loss rate.

The sources cited here do not establish a platform-wide Fomo loss percentage. We should not turn a viral statistic or a ranking of visible traders into that claim. The narrower, supported point is that majority-loss periods have occurred on Pump.fun, while social trading’s fees and execution risks apply regardless of how prominently winning traders are displayed.

Before trusting any profitability chart, ask whether it measures complete returns or merely money entering and leaving trades. An unsold token may still have value, or may be effectively worthless. A sale this month might realize a purchase from an earlier month. Without cost basis, remaining holdings, and fees, a cash-flow total is not a complete investment return.

A social feed cannot give you another trader’s entry price

Fomo’s public product page promotes trader feeds, alerts, and leaderboards. These features can make market activity easier to follow. They do not give a follower the original trader’s purchase price, information, risk capacity, or full portfolio. Seeing a trade is different from being able to reproduce its economics.

Imagine someone buys before a token becomes popular. By the time an alert reaches you, other followers may already have raised its price. You then buy at a worse level, while the original trader can sell into that demand. This timing problem does not require fraud; even an honest public record can be a poor guide to your own execution.

Rankings also select for visible success over a chosen period. A short streak can reflect luck or extreme risk. You may not see abandoned wallets, losses elsewhere, or a position that has not yet been sold. A gain measured from a very early entry says little about the return available at today’s price.

Copying a trade should therefore start with a question about the asset and its valuation. If the only answer is that a prominent account bought it, you have information about someone’s behavior, not a complete investment case.

Platforms can earn while traders lose

Fomo’s terms say it charges transaction fees, including on purchases and sales, alongside separate third-party costs. Pump.fun’s fee page, checked September 23, 2026, lists a 1.25% bonding-curve trading fee: 0.95% for the protocol and 0.30% for the creator. Graduated pools use a different schedule.

Those charges depend on executing trades, not on your final profit. Buying a token and later selling it at a loss can still generate revenue. Frequent turnover means more opportunities to collect fees. This is a difference in incentives, not proof that every platform transaction is abusive or that every fee is unreasonable.

Separate platform revenue from total fees. Some charges go to token creators, liquidity providers, or network participants. Likewise, revenue is not the company’s profit after its own expenses. The consumer point is simpler: the service can collect its charge even when your trade leaves you poorer. Check the actual quote because fee schedules can change.

A US$200 trade with a falling price

Consider an illustrative token purchase worth US$200 before fees, using a hypothetical 1% fee on each side. You pay US$202 to enter. The market value then falls 20%, leaving tokens worth US$160. Selling incurs another US$1.60 fee, so you receive US$158.40. Your total loss is US$43.60, while the two fees total US$3.60.

This is deliberately simplified and is not a Fomo or Pump.fun quote. It ignores network charges, spreads, and price impact. In a thin market, selling your position can push the price down further, so the amount received may be lower than the value displayed before you sell.

A small trade is not automatically cheap. Minimum charges can be large relative to the amount invested, and repeated buy-and-sell cycles accumulate costs. A discount reduces a fee; it does not repair an overpriced entry or make the token productive. Compare the final proceeds with the complete amount paid, rather than celebrating the number of successful trades.

Protect the plan from the feed

Separate entertainment spending from investing. If you choose to speculate, decide in advance how much you can lose without affecting bills, emergency reserves, or regular savings. Avoid borrowing or using leverage to make a small balance feel more consequential. That adds a second source of risk to an already unstable price.

Before buying, identify what you own, who holds a large supply, and how you could sell at a realistic size. A rising market capitalization does not mean that much cash is available for exits. It usually multiplies a marginal price by supply; many holders trying to sell together can get very different results.

You also do not owe a market constant participation. Turning off alerts, reducing turnover, and allowing time to review a decision can support a longer-term plan. Missing one spectacular token rally is easier to recover from than losing money reserved for a real financial obligation.

Apply the same standard to Lex

Lex’s focus is on understandable assets, supported transfers, and a wallet the user controls. That is not a claim that everything available in Lex is low risk. Stock tokens carry issuer and market risks, stablecoins depend on their arrangements and backing, and DeFi positions can lose value. Each choice still needs a reason beyond recent popularity.

Use Lex’s review step to compare the asset, quantity, quote, and expected proceeds. Self-custody gives you transaction control; it cannot manufacture liquidity, prevent a bad purchase, or guarantee that a token holds its value. A convenient interface should make a decision easier to understand, not make every available trade worth doing.

For long-term investing, diversified exposure to productive businesses without leverage is a more defensible starting point than chasing social momentum. That may involve a suitable fund or account outside Lex. Judge the outcome by progress toward your goals after costs, not by your ranking or the amount of activity on a platform.