Was thinking earlier today about the games we play onchain and was in awe of the system that is in place

(please don't take this as a cope signal, I've done ok last few days, even though not on size, but super nice to see the trenches printing again)

Launchcoin for example rn is at ~175M mc on maybe 2M liquidity total? could be a bit more, but around there

A lot of ppl are up astronomically on paper, but in reality, if they wanted to sell, not even 2% of that value could be realized

(btw this will all sound super basic, but sometimes I like to frame these situations in my head because it ties everything together)

Most onchain coins that ppl bid don't even get to 200M mc like Launchcoin just did, so the first way ppl lose is by betting on the wrong horse (of which there are many, especially in the last 2-3 months)

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But here's how this keeps the flywheel going (and oh is it a good flywheel)

low liquidity makes the price pump, getting ppl super excited about unrealized profits -> this feels everyone with dopamine (if they are in the trade) and with extreme fomo (if they are not in the trade)

very few ppl actually look at realized profits and understand they also have to sell at some point

the entire system relies on common belief that these coins will rally higher - and here we get into a lot of different elements that all need to allign (narrative, liquidity, volume, exchange listings, supply control, etc)

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survivorship bias you only need to see 1-2 screenshots to generate fomo "that could be me" and make you ape in

crypto attracts so much liquidity off this alone - you always see the success stories (And everyone always talks about them), but you rarely see how much ppl lose (or you learn about those stories when it's already too late)

because you don't see the entire picture, your view is skewed and you're much more likely to gamble

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very few winners - there's a reason most coins ultimately are PvP, there are very few winners; if we think about the liquidity of a pool, essentially the bet you are making when you buy onchain coins is that you will

a) be early enough to the narrative to have great ROI and a good cushion if your execution is not perfect and

b) you will hit a coin that draws so much attention that you can ultimately exit either by volume, by the LP getting very thick or by more liquidity coming via CEXs

if you think of it as a pyramid (I really need a graphics person to help me illustrate this in a fun way) there is maybe the peak of the pyramid that includes 0.001% of coins that actually make it far enough to where they become somewhat more PvE

otherwise, you can have a situation like Launchcoin, where currently 95% of ppl cannot exit

or you sell into volume (that's why they call it exit liquidity, because the holders always shuffle around and marginal buy volume offers you your exit)

the happy case (which is extremely rare) would be smth like Fartcoin, where there has been so much trading volume that all those fees add up to the LP and it actually becomes thick (but that takes time and a lot of things to go the right way, so it's very much the exception and not the rule)

all of the above is also the reason why coins are so reflexive in this environment - on the way up, new buy volume keeps coming in to overcome the sellers; but once the bubble pops and ppl look for the exits, it's impossible for them to exit without tanking the price

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why am I writing all of this?

tbh simply had this realization as I was leaving the gym today and I was laughing - what a fucking brilliant system we have going on here

I dunno if pump fun guys were lucky or they thought out the liquidity ratios like this, or if it's just collective onchain iterations that got us here

but here we are - the perfect casino

as soon as the market looks good, narratives will form created by our collective consciousness onchain and ppl will start to gamble

but once you have this reality in mind, I think it helps a lot to control your emotions and not go crazy when you see or hear of insane returns