Author: David, Deep Tide TechFlow
Original Title: 20x in 2 Days, A Quick Look at the Automated Market-Making Mechanism of the New Golden Dog Snowball
The crypto market in December is as cold as the weather.
On-chain transactions have been dormant for a long time, and new narratives are hard to come by. Just look at the drama and gossip in the Chinese CT (Crypto Twitter) these past few days, and you'll know hardly anyone is playing in this market anymore.
But the English-speaking community has been discussing something new.
A Meme coin called Snowball launched on pump.fun on December 18th. In four days, its market cap surged to $10 million and is still hitting new highs; meanwhile, it's barely mentioned in the Chinese crypto circle.
In the current environment where there are few new narratives and even Meme coins are considered unplayable, this is one of the few things that catches the eye and shows some localized wealth effect.
And the name Snowball itself, referring to the snowball effect, is the story it wants to tell:
A mechanism that allows the token to "roll and grow bigger by itself".
Turning Transaction Fees into Buy Pressure, Rolling the Snowball for Market Making
To understand what Snowball is doing, you need to first know how pump.fun tokens typically make money.
On pump.fun, anyone can create a token in minutes. Token creators can set a "creator fee," essentially taking a cut of every transaction into their own wallet, usually between 0.5% and 1%.
This money is theoretically meant for community building and marketing, but in practice, most Devs choose to: accumulate enough and then run.
This is part of the typical life cycle of a shitcoin. Launch, pump, harvest fees, rug. Investors aren't betting on the token itself, but on the developer's conscience.
Snowball's approach is to not take this creator fee money.
To be precise, 100% of the creator fees do not go into anyone's wallet but are automatically transferred to an on-chain market-making bot.
This bot performs three actions at regular intervals:
First, it uses the accumulated funds to buy tokens on the market, creating buy-side support;
Second, it adds the bought tokens and the corresponding SOL to the liquidity pool, improving trading depth;
Third, it burns 0.1% of the tokens with each operation, creating deflation.
Simultaneously, the percentage of creator fees this coin charges is not fixed; it fluctuates between 0.05% and 0.95% based on market cap.
It takes a higher percentage when the market cap is low, allowing the bot to accumulate ammunition faster; it reduces the fee when the market cap is high, decreasing transaction friction.
To summarize the logic of this mechanism in one sentence: every time you trade, a portion of the money automatically becomes buy pressure and liquidity, instead of going into the developer's pocket.
Therefore, it's easy to understand this snowball effect:
Trading generates fees → Fees become buy pressure → Buy pressure pushes the price up → Higher price attracts more trading → More fees... theoretically, it can roll on its own.
On-Chain Data Situation
Now that the mechanism is explained, let's look at the on-chain data.
Snowball launched on December 18th, so it's been four days now. The market cap grew from zero to $10 million, with a 24-hour trading volume exceeding $11 million.
For a shitcoin on pump.fun, this performance is considered relatively long-lasting in the current environment.
In terms of token distribution, there are currently 7,270 holder addresses. The top ten holders together account for about 20% of the total supply, with the largest single holder holding 4.65%.
Data source: surf.ai
There's no address holding 20-30% of the supply; the distribution is relatively decentralized.
Regarding trading data, there have been over 58,000 transactions since launch, with 33,000 buys and 24,000 sells. The total buy volume is $4.4 million, and the total sell volume is $4.3 million, resulting in a net inflow of about $100,000. Buying and selling are basically balanced, with no one-sided selling pressure.
The liquidity pool holds about $380,000, half in tokens and half in SOL. For a market cap of this size, the depth isn't very thick, and large orders would still experience significant slippage.
Another noteworthy point is that Bybit Alpha announced listing the token less than 96 hours after launch, which to some extent confirms the short-term hype.
Perpetual Motion Meets a Cold Market
After browsing around, you can see that the English community's discussion about Snowball mainly focuses on the mechanism itself. Supporters' logic is straightforward:
This is the first Meme coin that locks 100% of creator fees into the protocol; developers can't run away with the money, making it structurally safer than other shitcoins, at least.
The development Dev is also playing into this narrative. The developer wallet, market-making bot wallet, and transaction logs are all public, emphasizing "verifiable on-chain."
@bschizojew labels himself as "on-chain schizophrenia, 4chan special forces, first-generation Meme coin veteran," radiating a self-deprecating degen vibe that appeals to the crypto-native community.
But mechanism safety and making money are two different things.
The snowball effect relies on the premise that there is sufficient trading volume to continuously generate fees to feed the bot for buybacks. More trading means more ammunition for the bot, stronger buy pressure, higher prices, attracting more people to trade...
This is the ideal state where any Meme coin's so-called buyback flywheel spins up in a bull market.
The problem is, the flywheel needs external momentum to start.
What is the current crypto market environment? On-chain activity is sluggish, the overall heat around Meme coins has declined, and there's simply less capital willing to chase shitcoins. In this context, if new buy-side pressure doesn't keep up and trading volume shrinks, the fees the bot receives will become less and less, buyback strength will weaken, price support will diminish, and trading willingness will decline further.
The flywheel can spin forward, but it can also spin in reverse.
A more realistic problem is that the mechanism solves only one risk point—"developers taking the money and running"—but Meme coins face far more risks than that.
Whales dumping, insufficient liquidity, narratives going out of style—if any of these happen, 100% fee-based buybacks can only do so much.
Everyone is tired of being rugged. A Chinese community member summarized it quite well:
Play if you want, but don't get in over your head.
More Than One Snowball Rolling
Snowball isn't the only project telling this automated market-making story.
Within the pump.fun ecosystem, a token called FIREBALL is doing something similar: automatic buybacks and burns, packaging it as a protocol other tokens can plug into. But its market cap is much smaller than Snowball's.
This shows the market is currently reacting to the direction of "mechanism-based Meme coins."
The traditional玩法 of shilling, pumping, and community hype is finding it harder to attract capital. Using mechanism design to tell a "structurally safe" story might be one of Meme coins' recent strategies.
However, talking about artificially creating a mechanism isn't a new玩法 either.
OlympusDAO's (3,3) in 2021 was the most typical case, using game theory to package a staking mechanism and telling the story of "everyone profits if no one sells." It reached a peak market cap of billions of dollars. The ending, as everyone knows, was a death spiral, dropping over 90%.
Earlier, there was Safemoon's玩法 of "taxing every transaction and distributing it to holders," also a narrative of mechanism innovation, which ended with the SEC suing and charging the founder with fraud.
Mechanisms can be great narrative hooks, gathering capital and attention in the short term, but mechanisms themselves do not create value.
When external capital stops flowing in, even the most精巧designed flywheel will stop.
Finally, let's recap what this little golden dog is actually doing:
Turning Meme coin creator fees into an "automated market-making bot." The mechanism itself isn't complicated, and the problem it solves is very clear: preventing developers from directly taking the money and running.
Developers can't run away, but that doesn't mean you'll make money.
If after reading this you find the mechanism interesting and want to participate, remember one thing: it's first and foremost a Meme coin, and only secondly an experiment with a new mechanism.
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