Token Creation Hits 600k In January, Raising Market Liquidity Concerns

The cryptocurrency market saw a surge in new token creation throughout January, according to CoinGecko co-founder Bobby Ong.

According to Ong, 600,000 new tokens were minted. That’s a twelve-fold increase from the 50,000 monthly tokens created from 2022 to 2023.

The acceleration in token creation began in the fourth quarter of 2024; monthly numbers reached 400,000 before jumping to January’s record levels.

Ong attributes this growth to several factors, including the rise of token incubator platforms like Pump.fun, a startup that operates on Solana and enables users to create meme coins without requiring technical expertise.

SunPump, a rival, which operates on Tron.

“If it can be tokenized, it will be tokenized,” Ong noted, pointing to the immediate tokenization of memes and attention-based assets.

Blockchain networks and decentralized exchanges (DEXs) also multiplying quickly. Data shows roughly five to 10 new chains launching monthly, with a peak of 17 new chains in May 2024. Additionally, 89 new DEXs were tracked in March 2024 alone.

‘Too many tokens…’

Market analysts warn this proliferation could lead to liquidity fragmentation. Responding to concerns about market impact, Ong acknowledged the potential drawbacks: “Too many tokens, each spreading the limited attention and liquidity of traders even thinner. That’s why we don’t see the great alt pumps of previous cycles.”

At the current growth rate, CoinGecko projects the total number of tokens could reach one billion within five years.

This growth raises questions about market sustainability and the ability of the cryptocurrency ecosystem to support such diversity while maintaining healthy trading volumes and price discovery.

The trend shows the overall changes in the cryptocurrency market structure, where lowered technical barriers and automated creation tools have democratized issuance.

This could potentially affect the cost of market efficiency and concentrated liquidity that defined previous market cycles.

The increasingly crowded crypto landscape is starting to raise concerns. While Pump.fun and SunPump have made it easier than ever to launch tokens, the subsequent flood of meme coins increases the risk of market dilution and scams.

With investors spreading their funds across an overwhelming number of assets, liquidity becomes fragmented, and attention shifts away from more legitimate projects.

Currently, tokens with no real use case are gaining traction through hype, rather than substance, which leads to value erosion. Critics blamed President Donald Trump for trying to capitalize on this trend with the launch of his meme coin, Official Trump (TRUMP), days before his swearing-in.

This trend has also paved the way for rug pulls—fraudulent schemes where the creators abandon a project after raising funds.

Aggrieved investors recently filed a lawsuit against viral star Haliey Welch (aka Hawk Tuah Girl) after her HAWK coin crashed. These investors accused her of promoting an unregistered security.

Another incident from 2024 involved rapper Curtis James Jackson III (aka 50 Cent), who said that his website and X account were compromised to advertise a fake cryptocurrency coin called “GUNIT.” Hackers used his large fan base to inflate the token’s value before it crashed to $0.00016. 

The meme coin boom often attracts speculative traders, focused on short-term profits rather than long-term development. This speculation leads to unsustainable pumps and subsequent crashes, which erode investor confidence. And with too many coins to track, investors are increasingly prone to falling for poorly constructed schemes.

Blockchain networks are also feeling the strain. In particular, Solana faced significant network congestion during its meme coin explosion, with rising transaction fees and slower speeds impacting the overall user experience.

As meme coins flood the market, the risk of regulatory scrutiny grows. Increased concern over scams and fraud could trigger a clampdown from governments, which would only make compliance harder for legitimate projects.