Original Title: "Allegations of Market Manipulation Against Solana Launchpad, Solana's Most Controversial DEX Set to TGE"

Original Author: Eric, Foresight News

Set to formally launch its MET token on the 23rd of this month, the Solana DEX Meteora unveiled the tokenomics over the National Day holiday and dubbed the plan a "Phoenix Rebirth."

According to the MET tokenomics, 20% is allocated to Mercurial stakeholders; 15% is allocated to Meteora users through an LP incentive program; 2% is allocated to off-chain contributors who have contributed to Meteora's development; 3% is allocated to the Launchpad and Launchpool ecosystem; 3% is allocated to the Jupiter staking incentive program; 3% is allocated to centralized exchanges, market makers, etc.; and 2% is allocated to M3M3 stakeholders. Additionally, 18% of MET will be allocated to the team, and 34% of MET will serve as the Meteora reserve, with both unlocking linearly over 6 years.

In total, 48% of the tokens will be distributed and directly unlocked at the TGE, but MET will not be distributed in the usual form of airdrops to users; instead, 10% of the tokens will be distributed to users in the form of liquidity positions. According to Meteora, this mechanism allows the project team to no longer provide additional tokens for initial liquidity, and users can also receive fee income.

Many are unaware that Meteora's development journey has been full of ups and downs, making it apt to describe the project itself as a "Phoenix Rebirth." To understand the story behind it and what Mercurial and M3M3 in the token distribution plan are, we have to start from the beginning.

From "Golden Boys" to "Incarcerated"

Meteora, formerly known as Mercurial Finance, was founded in 2021 as a stablecoin asset management protocol in the Solana ecosystem. It is worth mentioning that another protocol developed by Mercurial's founding team is the undisputed leader in the Solana DEX space, Jupiter. Ben Zhow, one of the co-founders of both projects, has a background in product design and has been responsible for user experience and product development at two design consulting firms, IDEO and AKQA. He later co-founded social apps Friended and WishWell. Another anonymous co-founder using the pseudonym "meow" has advised on several DeFi/wallet projects such as Instadapp, Fluid, Kyber, and Blockfolio and was an early contributor to the decentralized domain protocol Handshake.

The core of Mercurial is to establish a platform that focuses on providing low slippage for on-chain stablecoin transactions and offers high returns to liquidity providers (LPs). In terms of reducing slippage, Mercurial does not require LPs to provide liquidity in a 1:1 token pair ratio. The flexible configuration allows LPs to mitigate slippage on subsequent trades after large transactions by adding one-sided liquidity for arbitrage. Additionally, Mercurial utilizes a special price curve to concentrate liquidity within the desired range. If a user's trade falls outside the price range, they will receive support from less liquidity.

Regarding increasing returns, Mercurial has implemented a dynamic fee mechanism. Simply put, when trading activity is high, Mercurial increases transaction fees to reduce LP impermanent loss; when trading is slow, Mercurial lowers transaction fees to stimulate trading. Furthermore, Mercurial, through DAO approval, will deploy pool assets to external protocols such as lending to further boost LP returns.

In the midst of the DeFi craze in 2021, protocols like Mercurial aiming to become the Curve on Solana were highly sought after. It received early investments from Alameda Research, Solana Ecosystem Fund, OKEx (now OKX), and Huobi, and conducted an IEO on FTX. At that time, FTX's founder Sam Bankman-Fried personally endorsed the project: "The team's strong technical, research, and operational capabilities demonstrate Solana's appeal. We look forward to collaborating with them to enhance the liquidity and usability of the Solana platform."

In early August 2021, at the peak of Mercurial's success, its TVL accounted for nearly 10% of Solana's total TVL. Even as Solana's TVL approached nearly $100 billion by the end of 2021, Mercurial's TVL still represented over 2%. While not a dominant force, it was considered one of the important DeFi infrastructures on Solana.

As for the subsequent events, it is a well-known fact that the Solana ecosystem experienced a major downturn in the 2022 bear market, plummeting to rock bottom following FTX's collapse. Mercurial, closely tied to FTX, suffered a significant blow, with its TVL plummeting and remaining in a slump. By October 2023, its TVL had dropped below $10 million, accounting for less than 5% of its peak period. Similar stories have unfolded with many DeFi projects that have since faded into obscurity, but the story of Mercurial did not end there.

Transition Focused DEX, Earning Fame Through TRUMP

On December 27, 2022, Mercurial published an article on Medium announcing the Meteora plan, including launching Dynamic Vaults and AMM under the Meteora platform, introducing new tokens to replace the original MER, completing a rebranding, and transitioning to Meteora.org.

At that time, Mercurial was focusing on Dynamic Vaults, aiming to build Meteora as a yield layer on Solana. In the team's vision, Meteora is envisioned as a new platform composed of Dynamic Vaults, AMM pools, and Guardians. Guardians are responsible for monitoring and rebalancing the treasury assets of various lending protocols every few minutes to provide LPs with the highest yield.

In February 2023, the new Meteora platform was officially launched. However, as mentioned earlier, the low point of TVL occurred in October of the same year, and Meteora did not emerge from the gloom despite its "change of identity." After going through a period of confusion for 10 months, a turning point appeared at the end of 2023.

In early December of that year, Meteora announced that it would implement a liquidity incentive plan starting on January 1, 2024, allocating 10% of the new tokens to users providing liquidity. The incentive was not only for stablecoin liquidity pools but also began to include liquidity pools for non-stablecoin assets. It was precisely at this moment that Meteora shifted its strategic focus to DEX, and TVL increased from less than $20 million in December to over $50 million.

Launched concurrently with the incentive plan was a new AMM model called DLMM (Dynamic Liquidity Market Maker), which was inspired by Trader Joe. In simple terms, in the new AMM model, liquidity is not continuous but is divided into individual "Bins." Each Bin represents a fixed price, and within that Bin, the liquidity is consumed before the price for trading the asset through Meteora remains unchanged and has 0 slippage.

For example, suppose the current price of SOL is $200, and there are two SOL/USDC liquidity Bins on Meteora with prices of 200 USDC and 201 USDC, respectively. If at a certain moment the market price of SOL rises from $200 to $201, but there are still 10 SOL in liquidity at the 200 USDC price on Meteora that have not been traded, then at this point, buying SOL through Meteora for 10 or less SOL will still be at a price of 200 USDC. Only when the total buy quantity exceeds 10 SOL will the liquidity move to the 201 USDC price Bin.

For users, there are three ways to add liquidity: Spot, Curve, and Bid Ask. Spot and Curve both represent an "average" distribution of added liquidity, with the former being a linear average and the latter being a curve average. The Bid Ask mode allows for adding one-sided liquidity, for example, only adding liquidity for SOL or USDC in the SOL/USDC pool.

Despite introducing a new mechanism, Meteora did not abandon its existing AMM+ yield aggregator product but instead renamed it DAMM v1 and kept it in the protocol. The Vault, which was once pitifully worth only a few million dollars at its lowest point, now has a TVL of over $90 million at the time of writing. Subsequently, Meteora also launched DAMM v2 independent of v1, which features a highly customizable AMM mechanism that can provide various tools for newly listed token projects, such as native liquidity mining, one-sided liquidity provision, etc., for early-stage price discovery. With a variety of liquidity provision options, Meteora has become the go-to choice for many new projects to establish initial liquidity, particularly in the 3% token allocation Launchpad and Launchpool ecosystem.

With this combination of moves, Meteora has not exactly turned the tide but has stabilized its position. Meteora has begun to carve out its territory in the Solana DEX competition. Although TVL continues to fluctuate between $2 to $3 billion, trading volume and its share of the total DEX trading volume on Solana are gradually increasing. In January 2025, a year after the transition, the emergence of the TRUMP token has taken Meteora's development a big step forward.

At that time, the TRUMP team selected Jupiter, Meteora, and Moonshot as partners. On the evening of January 17 and the morning of January 18, the TRUMP token issuance team established TRUMP's initial liquidity on Meteora, leading to several days of celebration. According to DefiLlama data, on the 18th, Meteora's daily trading volume reached $7.6 billion, while the total DEX trading volume on Solana that day was $37.945 billion, with Meteora's TRUMP accounting for 20% of the total volume. By the 20th, Meteora's TVL had reached $1.688 billion, accounting for 14.7% of Solana's TVL that day, a significant increase from less than $470 million just three days prior.

After this battle, Meteora rose to fame. As two projects unified under the same founding team, Jupiter continued to firmly hold the Solana Aggregator throne and widened its moat, while Meteora also gained the ability to compete with Raydium and Orca, in addition to earning tens of millions of dollars in fees through TRUMP. Meteora and Jupiter both achieved fame and fortune.

Market Manipulation Scandal Unveiled, Co-founders Resign

The financial impact brought by TRUMP inexplicably sparked a "Celebrity Meme Token Craze," including tokens such as MELANIA, issued in the name of Trump's wife, and LIBRA, promoted by the President of Argentina, which all saw a brief surge followed by a continuous decline. This led to significant losses for many investors. Especially after the crash of LIBRA, President Milea adamantly denied his involvement in the token's issuance, claiming he only retweeted the related information. This revealed the true creators of LIBRA, Hayden Davis and Kelsier Ventures, with Hayden serving as the CEO.

Following this, DefiTuna founder Moty exposed that Meteora and Kelsier Ventures were the masterminds behind all this, and the number of involved tokens was far more than just MELANIA and LIBRA. Kelsier manipulated the launch and pricing of meme tokens through the Meme token Launchpad M3M3 (purportedly a community-launched platform) for profit, including the subsequent launch of MELANIA and LIBRA, totaling gains of up to $200 million.

Meteora co-founder Ben was the first to step up to clarify the relationship with Kelsier Ventures, stating that they only asked Kelsier if they were willing to launch a token on the platform to help with testing during the M3M3 launch. Ben expressed that Kelsier Ventures appeared "trustworthy" in this collaboration, so he recommended them to the MELANIA team. In the launches of MELANIA and LIBRA, Meteora and Ben provided only technical support and did not engage in price manipulation.

However, just the day after Ben's clarification, Moty released a video that essentially "confirmed" Meteora's collaboration with Kelsier Ventures in manipulating the prices of numerous meme tokens, leading to Ben resigning under pressure. Another Meteora co-founder, meow, also posted on X expressing belief in the Meteora team and Ben's innocence regarding insider trading and market manipulation, stating that they would hire the law firm Fenwick & West to investigate the matter and produce a report. Nevertheless, the market did not buy into this statement, mainly due to the fact that this lawyer was formerly the general counsel of FTX and was sued for allegedly aiding FTX in fraud.

In the clarification statement, Ben also mentioned that Kelsier Ventures independently launched the M3M3 token during testing on the M3M3 platform. However, Meteora later redesigned the tokenomics and provided funding for the so-called community to continue operating M3M3. However, at that time, the M3M3 token experienced a brief surge followed by a sustained decline. In April, law firms Burwick Law and Hoppin Grinsell LPP assisted investors who suffered losses in filing a collective lawsuit against Meteora and its founders, alleging that they caused investors a total of $69 million in losses by manipulating the issuance and price of the M3M3 token.

As early as March, Burwick Law accused Meteora and Kelsier Ventures of participating in the LIBRA issuance, causing investors to suffer significant losses and filed a lawsuit. Currently, there is no further information on these two lawsuits.

Many believe that TRUMP's issuance tolled the bell for meme tokens on Solana, but in reality, what truly caused the market to freeze instantly and made investors hesitant was the scandals related to Meteora. Even now, trading of meme tokens on Solana is still not quiet, but it is indeed much less vibrant compared to those fervent days.

The MET Token, Nearly Two Years Late

The first mention of issuing a new token can be traced back to when Mercurial first announced its plan to rebrand as Meteora in December 2023. Over nearly two years, Meteora has mentioned multiple times that the token is about to be launched but to no avail. This "difficult birth" project's token finally seems to have found a solution.

However, such a "difficult birth" is understandable. On the one hand, in its early days of transformation, Meteora focused more on "growing bigger and stronger," risking not outweighing the benefits of hastily issuing the token. On the other hand, Meteora needs to consider various groups, including early Mercurial token holders, early liquidity incentive participants, a large number of new users after the TRUMP token launch, and users who suffered serious losses due to holding M3M3. For each group, how to distribute and how much to distribute are questions worth careful consideration.

Now, it seems that Meteora has found a solution to the token issue, but controversies surrounding the project still exist, and issuing the token may be just the beginning of a new journey for the team.

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