TLDR: Meteora TGE is tomorrow 23 Oct, 13:00 GMT. IMO this is a short on Hyperliquid and Binance (more liquid) pre-launch perps, and onPolymarket NO shares (higher leverage).

The reason is because (i) the fully unlocked airdrop is massive at 40% of supply or ~$400M fully unlocked, including huge airdrops to legacy MER holders, (ii) the token has no use case, (iii) airdrop recipients have shown lack of interest to “provide liquidity” at TGE, (iv) pre-market perps generally priced above spot due to shorters being risk-takers, and (v) the market is generally weak with no appetite to bid new alts.

Token Distribution

• ◆48% circulating on Day 1, implying ~$500M MC on ~$1B FDV at pre-market prices
• ◆40% of total supply is airdropped in the following proportions (all fully unlocked):
  • ◆15% airdropped to Meteora points holders
  • ◆10% airdropped to JUP stakers, M3M3 stakeholders, off-chain contributors (they filled in a Google Form), and the Launchpad Eco
  • ◆9.7% to Mercurial Finance $MER stakeholders/retail
  • ◆5.3% to Mercurial Finance founders (Meow, Siong, Zhen hold ~3%, FULLY unlocked!)
• ◆The remaining 8% circulating on Day 1 is
  • ◆3% to CEX and MM
  • ◆5% Mercurial FTX Reserve (discretionary component for giving grants to MER stakeholders affected by FTX)
• ◆The 52% locked allocation undergoes a monthly vest for SIX (!) years

Bear Thesis

1. Lack of interest in receiving airdrop as a “Liquidity Distributor NFT”

• ◆To bootstrap initial liquidity, you can opt in for a “Liquidity Distributor NFT”, which means you provide liquidity immediately at TGE. Holding this NFT gives you a position in the DAMM v2 in the 500M - 7.5B range, plus high swap fees (50% swap fee decaying to ~1%) in the first 3mins to dissuade snipers. You can withdraw from the pool at anytime, so it makes economic sense to collect fees at launch before withdrawing and selling if the price isn’t moving up quickly enough.
• ◆There is a 10% cap for the above, which includes the entire 3% JUP staker airdrop allocation automatically given as an NFT. Yet, after 48h,only an additional 5% was filled, showing little confidence from the airdrop recipients

2. Huge airdrops to farmers and legacy MER holders

• ◆CT is full of people saying how much airdrop they got (eg.2m airdrop,1.1m airdrop,500k airdrop,300k airdrop,200k airdrop,100k airdrop), but only one guy comparing it to RAY and saying he would hold his airdrop (not even BUY!)
• ◆Even if you assume Meow, Siong and Zhen do not sell, there is still 12% of MET supply airdropped to random people from a 2023 project who probably do not care much anymore. During the MER snapshot,top 10 wallets held 58% of MER supply (though likely includes FTX, Foundation and Team) and top 100 wallets hold 86% of MER supply. What this means is that <100 wallets will be getting ~15% of MET supply or a $150M windfall from a dead project at current pre-market prices.

3. No reason to buy

• ◆The token has no utility or buybacks. Even if they announce 100% buybacks at MetDhabi in December, they make $800k-2m a week, insufficient to move a ~$500m token, let alone absorb the airdrop sell pressure
• ◆I imagine there is a soft “valuation cap” under JUP ($1.1b MC, $2.5b FDV) given it is an affiliated project, hence we are already at ~50% of the valuation cap.
• ◆The only other comp in the AMM space is RAY which trades at $470m MC, $980m FDV - almost exactly the same as MET pre-market. RAY holder revenues is ~$30m ARR though, which is half of MET’s total ARR, but obviously this depends on MET’s value capture.
• ◆The most bullish thesis I have heard is that this is a “crime team” (cf. TRUMP, LIBRA launches). I will not comment on the allegations, but purely from an incentives perspective, I would imagine that with a 6y vest, they’d only “crime it up” when they have more tokens to sell.
• ◆In any case, they’d also need +$100m in cash to absorb the sell pressure on Day 1, which is probably not a smart thing to do. Hence you’d have time to de-risk any shorts.

4. Market structure

• ◆The pre-market on Binance currently trades at $1.05b but I believe pre-market perps to be higher than actual spot price given shorters are also risk-takers, rather than people seeking safety (actual sellers)
• ◆Furthermore, hedging is greatly reduce given (i) there is insufficient liquidity to hedge with only ~1.5mm on hyperliquid and ~2.5mm on Binance, noting that one person already has a 2mm MET airdrop, plus (ii) XPL pre-markets spooked hedgers as they might get technorevenant’d.
• ◆Alas, MET is also TGE-ing into a slow market with limited alts liquidity (both due to market as a whole and due to thinning liquidity post-”black friday” of 10/10).

Execution

1. ◆Sell your airdrop. Not onchain in the first 3 minutes though. Bybit and OKX have opened deposits and will have spot markets. Binance has not though, as they usually list spot 5 days after.
2. ◆Short pre-launch markets on Binance and Hyperliquid (currently ~$1.05b FDV, max 3x leverage, isolated margin). Volumes are 15x larger and OI 50% larger on Binance.
3. ◆More interestingly explore thePolymarket bets on whether 24h after TGE, MET will be >$1B (50% odds ie 2x returns), >$750M (84% odds, 5x returns), >$500M FDV (95% odds, 20x!! returns). IMO, these are more attractive r/r-wise, but bare the risk of getting zero’d out or issues with market resolution. Hence, DYOR.