Original Title: “20x in 2 Days: A Quick Look at the Automated Market-Making Mechanism of the New Meme Coin Snowball”
Original Author: David, Shenchao TechFlow
The crypto market in December is as cold as the weather.
On-chain trading has been dormant for a long time, and new narratives are hard to come by. Looking at the drama and gossip circulating in Chinese CT these days, it’s clear that not many people are playing in this market anymore.
But the English-speaking community has been discussing something new recently.
A meme coin called Snowball launched on pump.fun on December 18th, and within four days, its market cap surged to $10 million, still hitting new highs. Yet, it’s hardly mentioned in the Chinese community.
In an environment with few new narratives and even memes failing to attract interest, this is one of the few things that stands out, offering some localized wealth effect.
The name Snowball translates to the snowball effect, which is exactly the story it aims to tell:
A mechanism that allows the token to “roll bigger on its own.”
Turning Transaction Fees into Buy Pressure: Rolling Snowball Market-Making
To understand what Snowball is doing, you first need to know how tokens on pump.fun typically make money.
On pump.fun, anyone can create a token in just a few minutes. Token creators can set a “creator fee,” essentially taking a percentage of each 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 developers choose to accumulate enough and then exit.
This is part of the typical lifecycle of a meme coin. Launch, pump, collect fees, exit. Investors aren’t betting on the token itself but on the developer’s integrity.
Snowball’s approach is to forgo this creator fee.
To be precise, 100% of the creator fee doesn’t go into anyone’s wallet but is automatically transferred to an on-chain market-making bot.
This bot periodically performs three tasks:
First, use the accumulated funds to buy tokens on the market, creating buy pressure.
Second, add the purchased tokens and corresponding SOL to the liquidity pool to improve trading depth.
Third, burn 0.1% of the tokens with each operation, creating deflation.
Additionally, the creator fee percentage for this token is not fixed but fluctuates between 0.05% and 0.95% based on market cap.
When the market cap is low, the fee is higher to allow the bot to accumulate ammunition faster. When the market cap is high, the fee decreases to reduce trading friction.
In short, the logic of this mechanism is: every time you trade, a portion of the fee automatically becomes buy pressure and liquidity instead of going into the developer’s pocket.
Thus, it’s easy to understand the snowball effect:
Trading generates fees → fees become buy pressure → buy pressure drives up prices → higher prices attract more trading → more fees… theoretically, it can roll on its own.
On-Chain Data Overview
Now that we’ve covered the mechanism, let’s look at the on-chain data.
Snowball launched on December 18th, and it’s been four days since then. Its market cap has surged from zero to $10 million, with a 24-hour trading volume exceeding $11 million.
For a meme coin on pump.fun, this performance is already considered long-lasting in the current environment.
In terms of token distribution, there are currently 7,270 holder addresses. The top ten holders combined account for about 20% of the total supply, with the largest single holder holding 4.65%.
(Data source: surf.ai)
No single address holds 20-30% of the tokens, making the distribution relatively decentralized.
In terms of 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 roughly balanced, with no overwhelming selling pressure.
The liquidity pool holds about $380,000, split evenly between tokens and SOL. For a market cap of this size, the depth isn’t particularly thick, and large orders will still experience noticeable slippage.
Another noteworthy point is that Bybit Alpha announced the listing of this token less than 96 hours after its launch, which to some extent confirms its short-term popularity.
Perpetual Motion Meets a Cold Market
After browsing around, it’s clear that the English-speaking community’s discussion of Snowball mainly focuses on the mechanism itself. Supporters’ logic is straightforward:
This is the first meme coin to lock 100% of the creator fee into the protocol, preventing developers from taking the money and running. At least structurally, it’s safer than other meme coins.
The developer is also aligning with this narrative. The developer’s wallet, market-making bot wallet, and transaction logs are all publicly available, emphasizing “on-chain transparency.”
@bschizojew labels himself as “on-chain schizophrenic, 4chan special forces, first-generation meme coin veteran,” exuding a self-deprecating degen vibe that resonates with the crypto-native community.
But mechanism safety and profitability are two different things.
The snowball effect relies on sufficient trading volume to continuously generate fees for the bot to execute buybacks. More trading means more ammunition for the bot, stronger buy pressure, higher prices, and more trading…
This is the ideal state for any meme coin’s so-called buyback flywheel to spin during a bull market.
The problem is, the flywheel needs external momentum to start.
What is the current state of the crypto market? On-chain activity is low, meme coin popularity is declining overall, and there’s already little capital willing to chase meme coins. In this context, if new buy pressure doesn’t keep up and trading volume shrinks, the fees the bot can collect will decrease, buyback strength will weaken, price support will diminish, and trading willingness will decline further.
The flywheel can spin positively, but it can also spin negatively.
A more realistic issue is that the mechanism addresses only one risk point—”developers taking the money and running”—but meme coins face far more risks than that.
Whales dumping, insufficient liquidity, and narratives going out of style—any of these can happen, and 100% fee buybacks can only do so much.
Everyone is wary of being rugged, and someone in the Chinese community summed it up well:
Play if you want, but don’t get carried away.
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: automated buybacks and burns, packaged as a protocol that other tokens can integrate. However, its market cap is much smaller than Snowball’s.
This shows that the market is currently responding to the direction of “mechanism-driven meme coins.”
The traditional playbook of shilling, pumping, and community hype is becoming less effective at attracting capital. Using mechanism design to tell a story of “structural safety” might be one of the recent trends for meme coins.
However, artificially creating mechanisms isn’t a new play.
In 2021, OlympusDAO’s (3,3) was the most classic case, packaging staking mechanisms with game theory and telling a story of “if no one sells, everyone profits.” At its peak, its market cap surged to tens of billions of dollars. The outcome, as we know, was a spiral decline, losing over 90% of its value.
Even earlier, Safemoon’s model of “taxing every transaction and distributing it to holders” was also a narrative of mechanism innovation, which ended with the SEC suing and charging the founder with fraud.
Mechanisms can be great narrative hooks, attracting capital and attention in the short term, but mechanisms themselves don’t create value.
When external capital stops flowing in, even the most ingenious flywheel will stop spinning.
Finally, let’s recap what this little meme coin 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 clear: preventing developers from directly taking the money and running.
Developers not being able to run doesn’t mean you’ll make money.
If you find this mechanism interesting and want to participate, remember one thing: it’s first and foremost a meme coin, and only secondarily an experiment with a new mechanism.
