Solana DeFi Apps Rush to Introduce Leveraged Meme Trading - Will Shorting Coins End the Meta?

Meme coin shorting applications from MarginFi, Save (formerly Solend), and DeFiTuna race to launch. How will the rise of these tools change the way we trade meme coins?

Finn Miller

Published: Jul 25, 2024 at 17:00
Edited: Jul 25, 2024 at 17:09

Throughout 2024, meme coin markets have been one of the largest sources of trading volume and liquidity on the Solana network. However, the rise of shorting platforms might be about to reinvent meme coin trading strategies across the market.

MarginFi and Save (formerly Solend) have both announced the launch of meme coin shorting protocols, enabling traders to profit from the brutal dumps that often plague the meme coin economy.

With several protocols rushing to be first to market, when can we expect these protocols to launch fully functional apps to the public?

MarginFi Launches The Arena

After teasing an exciting new way of trading meme coins weeks ago, MarginFi has finally given beta access to a small group of traders. Dubbed ‘The Arena’, MarginFi’s latest product enables users to trade any meme coin with leverage.

Beyond longing and shorting meme coins, traders can also provide liquidity and earn yield. However, liquidity providers are encouraged to familiarize themselves with the associated risks. Currently, The Arena is managing the creation of trading pools, but the application is expected to be fully permissionless in the future.

Access to the application is currently password-gated, with access codes being periodically made available in the official ‘The Arena’ Telegram group. The platform is expected to launch to the general public on the 29th of July.

Is This The End of the Meme Coin Meta?

The ability to short meme coins and profit from their collapse dramatically changes the onchain landscape. For better or worse, traders now have better incentives to short or FUD tokens into oblivion.

The advent of these new strategies begs the question: Are meme coins finished?

Save (formerly Solend), one of Solana’s longest-standing DeFi projects, says otherwise. Creators of dumpy.fun, Save argues that meme coin shorting tools are helping to evolve the DeFi landscape.

In an exclusive interview with SolanaFloor, Save spokesman WizardofFloz contends that:

“The meta will grow. Dumpy.fun makes it easy to bet on a particular meme coin losing its value. A good bet if you ask me, given that 99% plummet to zero. Look at $BODEN! It reached 600m mcap and now it’s down by 99%. Imagine the flexing on 𝕏 by those that caught this and made a killing shorting.”

WizardofFloz argues that “the meme coin meta is just getting started”. Adding an extra layer of strategy and functionality to the platform, dumpy.fun has also teased a “Squeeze Explorer” feature. This is expected to act as a countermeasure against crowded shorts and result in more efficient markets.

According to the official dumpy.fun Telegram channel, the platform is scheduled for beta release on the 30th of July.

New Contenders Emerge

The rush to be first-to-market has also brought sleeper products into the spotlight. Another player in the leveraged meme coin field, DeFiTuna has been quietly developing a rival product for seven months.

Unlike dumpy.fun and MarginFi’s ‘The Arena’, DeFiTuna is leaning away from more ‘degen’ trading habits. The platform requires listed coins to meet certain requirements before having leverage activated, like securing over $200k in lending TVL.

The protocol also interacts directly with underlying CLMM liquidity pools, as opposed to oracle-linked price feeds and perpetual contracts.

Speaking exclusively with SolanaFloor, DeFiTuna posited that their product “creates a safer environment and more choice for users.” Instead of foreseeing the rise of shorting tools as a death sentence for the meme coin economy, DeFiTuna contends these applications are a “net positive for the entire meme coin meta.”

No official launch date has been given, but the DeFiTuna team has hinted that interested parties should await further updates in the second week of August.

While the birth of meme coin shorting tools might strike fear into what previously relied on being an ‘up-only’ asset class, the introduction of these applications helps widen the scope of the meme coin economy. With diversified products, the meme coin meta will only continue to expand and, ironically, mature.