Many people haven't truly understood the mechanism of @altdotfun. If you try to apply traditional meme leader strategies here, you could end up losing a lot! The memes launched on the altfun platform are based on @BounceTech's leveraged tokens (LTs). Taking the current top token $ALT as an example, its underlying asset is a 5x long $HYPE. This means $ALT's price equals the underlying LT's net asset value (NAV) plus the meme premium. These two components operate independently and carry completely different risk profiles. 1️⃣ When HYPE rises: If HYPE goes up by 10%, the NAV of the underlying 5x long LT surges by ~50%. This raises the "floor" of $ALT by 50%. When combined with meme narratives and FOMO sentiment, it's not unusual to see its secondary market price double. **The trap is here:** Many people think they've captured a meme leader, but 80% of their profit actually comes from the HYPE leveraged long beta, while less than 20% might truly belong to the meme alpha. 2️⃣ When HYPE falls: If HYPE drops by 10%, the underlying NAV drops directly by -50%. Even if the meme consensus is completely intact and there's no reason for selling, the secondary market price of $ALT will still be dragged down by the underlying asset to a 50% loss. 3️⃣ When HYPE is volatile: If HYPE rises 10% and then falls 10% (back to the starting point), the NAV of the 5x long LT becomes \(1.5 \times 0.5 = 0.75\), resulting in a net loss of 25%. This is volatility drag (vol drag). As long as HYPE doesn't move in a clear trend, the underlying NAV quietly decays every day, and the floor of your $ALT sinks daily. This loss is completely independent of your judgment on the meme but will gradually eat away your principal. Looking back at the current leader $ALT, its price increase includes two parts: one part is the premium from meme sentiment, and the most significant part is that $HYPE has risen by 10% over the past 24 hours. Combined with the 5x leverage, this has further amplified the sentiment premium. If you want to follow the traditional meme leader strategy, I suggest you consider the following actions: 1️⃣ **Hedge:** Directly open an equivalent notional value short position on HYPE on Hyperliquid to hedge. This strips away the directional exposure of the underlying asset, leaving only the meme attributes. However, achieving a 100% hedge is difficult (because BounceTech has a rebalancing mechanism, but your position on the perpetual contract won't rebalance). 2️⃣ **Take profits and run:** Monitor the secondary market price of $HYPE. When it shows signs of losing upward momentum or starting a downtrend, be ready to exit. 3️⃣ **Bet on the decline by buying another altfun meme** whose underlying asset is a 5x short HYPE. Note that this is not a hedge. You will suffer from volatility drag on both sides (both the 5x long and 5x short decay together in a choppy market), plus double the mint/redeem fees and double the carry fees.