# 1.2 Problems of the Current Meme Market

The structural problems of the current meme market can be categorized into four axes, which amplify each other to form an unstable fixed point.

#### 1.2.1 Liquidity Fragmentation and Execution Inelasticity

Liquidity fragmentation across chains, pools, and exchanges causes order routing inefficiency.

When large orders are biased towards a specific pool, local price impact expands excessively, resulting in abnormally high Market Impact (MI) costs for the same execution size.

This implies execution inelasticity, where large executions inevitably occur at disadvantageous prices.

#### 1.2.2 Distortion of Price Discovery and Lack of Reference Price

Pump-and-dumps, excessive leverage, and position reflux effects accelerate reflexivity, resulting in noise-driven trends effectively replacing the reference price.

As baselines based on basic statistics like TWAP and VPIN fail to prevail across the market, the predictability of hedge and LP strategies drops sharply.

In other words, while prices exist, a reference price is virtually absent.

#### 1.2.3 Non-accumulative Cashflows

Cash flows generated from fees, spreads, interest, and reserve operation profits are distributed and accounted for across multiple protocols, pools, and chains, failing to gather in a unified accumulation device.

Consequently, the capital retention ratio is structurally fixed at a low level, and incentives for long-term liquidity providers are diluted.

The loss of long-term liquidity incentives returns as retail fatigue and reduced interest, creating a vicious cycle of shallow market depth and shorter half-lives.

#### 1.2.4 Misaligned Incentives and Cultural Isolation

As the reward vectors of traders, LPs, builders, and creators conflict, the participation structure converges to a zero-sum game.

Within the closed structure of individual memes and communities, interoperability between memes is low, and network externalities do not accumulate.

As a result, each meme remains isolated like an island, failing to create cultural and economic synergy.

These four axes are not independent problems but constitute an unstable fixed point leading from fragmentation → volatility → non-accumulative cash flows → short-lived narratives.

Once the meme market is trapped in this fixed point, self-sustaining structural improvement is difficult without massive exogenous capital inflows or the emergence of new narratives.

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