97% of memecoins are dead. 11.6 million tokens collapsed in 2025 alone. And somewhere on Telegram right now, a group of strangers is pooling money into a token that launched three minutes ago. Welcome to degen territory.
What "degen" actually means#
Degen is short for degenerate. The term comes from gambling, where it describes someone who bets recklessly and keeps going regardless of losses. In crypto, it took on a life of its own.
A DeFi degen is a trader or investor who deliberately chases high risk opportunities in decentralized finance. We are talking about unaudited smart contracts, brand new tokens with no track record, yield farming strategies with triple digit APYs that could vanish overnight. The degen knows the odds are bad. That is part of the appeal.
The term started as an insult. By 2020, during DeFi Summer, it became a badge of honor. Projects like YAM went from zero to $700 million in total value locked, then crashed within 48 hours because of a rebase bug. The people who rode that wave and came back for more started calling themselves degens with pride.
How degens operate#
Degen activity follows a pattern. A new token or protocol launches. Word spreads through private Telegram groups and Discord channels. Early participants buy in, provide liquidity, and start farming rewards. If enough people pile in, the price spikes. Then it either stabilizes into a real project or collapses. Most of the time, it collapses.
The core activities include:
- Buying tokens within minutes of launch, often through sniper bots
- Providing liquidity to pools on decentralized exchanges like Uniswap or Raydium
- Yield farming with leveraged positions across multiple protocols
- Airdrop farming by interacting with new protocols before they distribute tokens
- Trading memecoins on launchpads like Pump.fun, which has processed over 12.5 million token launches since early 2024
Degens move fast. In traditional finance, due diligence takes weeks. In degen DeFi, waiting an hour can mean missing the entire move. One trader on crypto Twitter put it bluntly: "The longer your due diligence takes, the lower your alpha."
The numbers behind degen trading#
Consider the numbers. Pump.fun, the Solana memecoin launchpad that controls roughly 80% of all token launches on the chain, has generated over $800 million in cumulative revenue. Its DEX hit $1.28 billion in 24 hour trading volume in January 2026. One platform. One chain.
But the losses match the volume. Crypto investors lost over $500 million to memecoin rug pulls and scams in 2024 alone, according to CoinDesk. In 2025, rug pull losses spiked to nearly $6 billion, though 92% of that came from a single event: the Mantra (OM) collapse, where insiders moved $227 million worth of tokens to exchanges, triggering a 94% price crash.
Then there was LIBRA. Argentine President Javier Milei promoted the $LIBRA Solana token in February 2025. Market cap hit $4.5 billion. Hours later it crashed 80%, wiping out an estimated $251 million in investor funds. Criminal investigations followed.
The pattern repeats. Average rug pull timeline shortened from 21 days in 2023 to 12 days in 2024. Scammers move faster because degens move faster.
Why degens matter to the DeFi ecosystem#
It is easy to dismiss degen behavior as pure gambling. But degens serve a function in decentralized finance that is hard to replace.
New protocols need early liquidity. Someone has to be the first person to lock capital into an unproven smart contract. Degens do this voluntarily, sometimes eagerly. Without them, new DeFi projects would struggle to bootstrap their liquidity pools and decentralized exchanges would sit empty.
That early aggression also surfaces bugs. YAM's rebase flaw was discovered within hours because thousands of traders swarmed the protocol. A slower, more cautious rollout might have delayed that discovery for weeks, potentially causing more damage.
And then there is the adoption effect. The memecoin frenzy on Solana brought millions of new users to blockchain technology and self custody wallets. Plenty of those users eventually moved on to more traditional DeFi activities like lending, borrowing, and staking.
The risks you need to understand#
Academic research published in 2025 found that cryptocurrency trading mirrors gambling behavior. A SEBI report found that 91% of retail traders lose money. Degen trading amplifies this.
The biggest risk is rug pulls. The team drains the liquidity pool and disappears. With 97% of memecoins failing, this is the default outcome, not the exception.
Smart contract exploits are next. Unaudited code can have vulnerabilities that drain user funds in seconds. Total crypto hack losses reached $3.4 billion in 2025, according to Chainalysis.
Then there is plain volatility. A token can lose 90% of its value in minutes. No stop loss saves you when liquidity evaporates.
What gets talked about less is the psychological toll. The cycle of big wins followed by bigger losses creates compulsive behavior. A 2025 study in Springer Nature found that FOMO and problem gambling scores are reliable predictors of financial harm from cryptocurrency trading.
How to spot a scam before it spots you#
No checklist is foolproof, but these red flags catch most rug pulls:
- Liquidity is not locked or lock period is suspiciously short
- Token contract has a mint function or hidden fee mechanisms
- Team is anonymous with no verifiable history
- The token launched minutes ago and is already being shilled in dozens of groups simultaneously
- Top wallets hold a disproportionate share of supply. With $HAWK, only 3-4% of tokens were available for public sale.
Check the contract on a blockchain explorer. Look at holder distribution. If it smells off, it probably is.
So what do you do with this#
DeFi degen culture is not going anywhere. Pump.fun turned memecoin creation into a one click process. Base, Solana, and BNB Chain together account for 95% of new meme token launches, and the tools keep getting easier.
Degens provide liquidity, surface bugs, and pull new users into the DeFi ecosystem. But the math for individual participants is brutal. Most lose money. A few win big. The platforms always profit.
If you are going to play this game, at least understand the rules. Size your positions so that losing everything in a single trade does not end your run. Never put money into a contract you have not read. And keep in mind that the person shilling a token in your group chat probably bought it before you did.
