Organized & Compiled: TechFlow
Guest: Murad Madhov
Podcast Source: Decypher Podcast
Original Title: The Memecoin Supercycle Will Mint Billionaires - Murad | Ep 14, Murad | Memecoin
Release Date: October 2, 2024
Background Information
Murad Madhov is an entrepreneur and investor who has proposed a unique theory: the next best-performing asset will be Memecoins, which are cryptocurrency assets based on internet Memes. He believes that these assets will create millionaires, multi-millionaires, and even billionaires.
Reality: Why Altcoins Are Heading Towards Demise
Murad discussed the current state and future of Altcoins. He mentioned that since 2016, his focus on cryptocurrencies has gradually shifted towards Altcoins, trying to understand their essence. Murad pointed out that currently, all Altcoins listed on Binance are performing poorly, with almost all of them declining, with only two exceptions.
Murad emphasized that the cryptocurrency industry is not a technology-first industry, but rather an industry of asset production and speculation. He believes that building a community takes time, at least a year. The success or failure of Altcoins depends on their ability to make ordinary people wealthy. He also mentioned that the relationship between Altcoins and cryptocurrency technology tokens is more like opposition, rather than simple competition.
The Importance of Meme Coins
Murad further elaborated on his views on Altcoins, believing that they are not just products of popular culture, but also symbols of the community. He pointed out that the success of Altcoins lies in how they evolve and adapt to market demands. He reviewed the development of the cryptocurrency industry, mentioning the first Oscar wave in 2014 and the ICO boom in 2017, which he believes have driven the rise of Altcoins.
He analyzed the current market changes, noting that many DeFi projects are now listing at high valuations, making it difficult for ordinary investors to access truly promising projects. Murad emphasized that ordinary investors are gradually realizing that the token itself is the product, not the software. He believes that the current cryptocurrency industry is still primarily an asset production industry, with technology being only a subsidiary.
Future Trends
Murad believes that the future trend will be the close integration of Altcoins and communities. He believes that only those Altcoins that can continuously evolve and adapt to market changes will succeed in the competition. He mentioned that market changes and trends are not just internal factors in the industry, but also include the influence of the outside world, and the two need to be analyzed together.
The Rise of Memecoins: Ushering in a New Era of Crypto
Murad further discussed the rise of Memecoins, which he referred to as a "post-software" phenomenon. He pointed out that the market has witnessed Memecoins such as Doge, Pepe, and SafeMoon reaching astronomical market capitalizations, proving that the value of these tokens does not depend on actual products. Murad believes that this shows that the software or platform itself has never been the core product of cryptocurrency projects.
He mentioned that many projects currently favored by venture capitalists, despite generating only $500 in daily revenue, are still trading at a valuation of $7 billion, further demonstrating that their value is not based on cash flow, but on a "mimetic premium".
Murad proposed a controversial view: that all Altcoins are essentially Memecoins, just more complex versions. He explained that if a token is neither a store of value nor distributes income, then it is a Memecoin.
Community and Token Value
Murad emphasized that the real product is the community and the token, not the software itself. He believes that this concept can help people analyze the entire cryptocurrency universe from a new perspective, not just Memecoins or technical projects. He mentioned that many project founders and venture capitalists claim they cannot distribute income due to regulatory reasons, but he believes this is often due to their own interests.
He warned that once income distribution begins, investment bankers will use Excel to estimate the fair value of the project, which may be significantly lower than the current market valuation. Therefore, Murad stressed that any project without cash flow or income distribution can be considered a Memecoin, providing a new perspective for understanding the cryptocurrency market.
Outlook on the Industry's Future
In the conversation, the host mentioned that his father's interest in DeFi stemmed from its seemingly legitimate financial infrastructure, implying that DeFi has brought some value proposition to the cryptocurrency industry.
Murad responded that although he believes Memecoins are the new wave, this does not mean that the flow of funds into the industry will decrease. His view is that the rise of Memecoins may attract more investors and capital inflows, and the cryptocurrency industry still has the potential to achieve growth and innovation.
The Importance of Memecoins and Cultural Communities in the Crypto Realm
Murad emphasized the impact of Memecoins on cryptocurrency technology tokens, believing that they are not an attack on cryptocurrency technology, but a "vampire attack" on cryptocurrency technology tokens. He pointed out that many DeFi projects can function normally without tokens, such as Uniswap, indicating that the best products do not necessarily require tokens, and the best tokens do not necessarily require actual products.
Murad believes that ordinary investors are gradually realizing that all tokens, whether backed by technology or just Meme images, are essentially gambling tables in a casino. He mentioned that ordinary investors are starting to think about why they should bid for a gambling table worth $10 billion, rather than building a real community that makes ordinary people wealthy and achieves wealth growth. He believes that Memecoins are recreating the scenario of the 2016 and 2017 ICO boom, with the key being human motivation and needs.
The Power of Community and Cultural Building
Murad emphasized that a strong community is the key factor driving the performance of tokens. He believes that a strong community is like a "cult", where members' loyalty and enthusiasm for the token will lead to supply constraints, forming a "diamond hands" effect. Even if the token price rises, community members will not easily sell because their sense of identity and belonging to the token makes them more willing to hold it.
He pointed out that the establishment of a community requires allowing ordinary people to achieve wealth growth. Historically, many successful cryptocurrency projects have built strong communities by allowing investors to profit from them. For example, Bitcoin, Ethereum, Solana, and some Meme tokens like Shiba Inu and Dogecoin have attracted a large number of ordinary investors who have gained significant returns by holding the tokens, which has tightly connected their identity to these tokens.
Token Distribution and Wealth Effect
When discussing airdrops, Murad pointed out that airdrops are one-time events, and most people will ultimately sell them to obtain ETH or stablecoins. He believes that unlike the wealth effect of Memecoins, the success of Memecoins lies in their dynamic token distribution, where the proportion of core holders will increase over time. As small tokens develop into medium-sized tokens, the vast majority of the supply will be concentrated in the hands of those steadfast believers, giving these tokens tremendous potential for future demand growth.
Murad also mentioned that a true "cult" community needs to go through market fluctuations and tests, and only after experiencing several significant declines can the community's steadfastness and longevity be proven. This experience makes the holders in the community more resolute, enabling them to drive rapid price increases when demand arises.
Trends in the Altcoin Crypto Market
Murad emphasized his investment philosophy in the current crypto market, particularly his focus on Memecoins. He believes that Memecoins have outperformed other tokens in the market, especially in the context of Bitcoin.
Murad mentioned that although Bitcoin has attracted a significant amount of institutional investment, only 42 tokens have outperformed Bitcoin in the past year, with 13 of them being Memecoins, which clearly indicates the market trend.
Performance of Memecoins
Murad pointed out that Memecoins have performed exceptionally well in the market, with many Memecoins generating returns far exceeding other types of tokens. He mentioned that during the past 40 weeks, when Bitcoin prices have pulled back, Memecoins have typically been the strongest rebounding tokens. This trend suggests that retail investors' enthusiasm for Memecoins remains high.
Future Market Trends
Murad believes that if future market cycles are similar to the past, the tokens that perform well in 2024 will continue to perform well in 2025. He mentioned that historically, in the third year of each cycle, certain industries or tokens have experienced strong performance. For example, Ethereum and Ripple in 2016, and DeFi and Non-Fungible Tokens in 2020, have all achieved significant gains in the later stages of the cycle.
Social Psychology and Investment Behavior
Murad emphasized that investor behavior is often influenced by social psychology. He pointed out that many retail investors tend to mimic the investment behavior of successful people around them, such as stories of friends or family members profiting from Memecoins. This mimicry effect can lead to more investors entering the Memecoins market, driving up prices.
He mentioned that as more retail investors enter the market, they will tend to seek investment opportunities similar to the successful cases they have witnessed, further fueling the Memecoins hype. He believes that 2025 will be a year when Memecoins and AI tokens will stand out, potentially experiencing parabolic growth.
Ethereum and Solana: Casinos of the New Era
Murad discussed why he is particularly focused on Ethereum and Solana platforms for Memecoins. He pointed out that the ecosystems of these two platforms have made them the "casinos" of the crypto market, and they have accumulated a significant amount of wealth and users over the past few cycles.
Ethereum and Solana's Ecosystems
Murad emphasized that the success of Ethereum and Solana lies in their ability to attract a large number of users and investors. He described Ethereum as a "big casino" because it became the primary trading medium during the ICO boom in 2016 and 2017, and later played a crucial role in the rise of DeFi and Non-Fungible Tokens. This has made Ethereum not just a blockchain platform, but an entire economy where users engage in various transactions and investments.
Solana's case is similar, as it is building its ecosystem by attracting Memecoins and DeFi activities. Murad believes that other emerging blockchain platforms, such as Aptos and Sui, are hoping to emulate the success of Ethereum and Solana and become new choices for "value storage".
Meme Coins as a User Acquisition Tool
Murad pointed out that many emerging blockchain platforms are using Memecoins as a tool to attract users. He believes that Memecoins can incentivize users to participate in these platforms, thereby increasing transaction activity and liquidity. He mentioned that while the teams of these new platforms hope to increase the value of their tokens through Memecoins, in most cases, these Memecoins are driven by the teams or venture capital firms, rather than by genuine community support.
The Importance of "Idle Wealth"
Murad further explained the concept of "idle wealth", which refers to the large amount of assets held by investors on Ethereum and Solana that can be transferred to Memecoins. He believes that if these investors can be convinced to allocate 5% or 10% of their assets to Memecoins, it would bring a significant influx of capital to these tokens.
In comparison, Murad is less focused on other chains (such as TRON and Aptos) because he believes they lack sufficient "idle wealth" and Total Value Locked (TVL). This makes it more challenging for them to attract capital, as they rely on exchange listings or user cross-chain transfers, which can increase friction.
Murad's perspective highlights the unique position of Ethereum and Solana in the crypto market, and how they are able to attract users and capital through Memecoins. He believes that the ecosystems of these two platforms have made them the "casinos" of the crypto market, and future market trends will continue to benefit from their strong user base and idle wealth. At the same time, he is cautious about the potential of other emerging blockchain platforms, believing they need more user and capital support to achieve similar success.
The Evolution of Memecoins: From Banks to Memes in an Instant
In this conversation, Murad discussed the value and future trends of Memecoins, emphasizing the transformation between traditional finance and the crypto market, and how it affects the development of Memecoins.
Valuation of Memecoins and Their Relationship with Blockchains
Murad mentioned that while the valuation of Memecoins may exceed that of certain blockchains, this is often a coincidence. He believes that the choice of blockchain is important in the initial valuation (e.g., below $300 million) because the "idle wealth" on these chains can drive rapid growth of Memecoins. However, as the market evolves, the value of Memecoins may become less dependent on the underlying blockchain.
The Impact of Centralized Exchanges
Murad predicts that by the middle of 2025, many excellent Memecoins will be listed on centralized exchanges, further driving their circulation and acceptance. He mentioned that platforms like Robinhood are on the rise, allowing users to quickly purchase Memecoins through traditional bank accounts, bypassing the complexity and fees of blockchain transactions. This simplified buying experience may attract more retail investors to the Memecoins market.
The Best Risk-Reward Range
Murad discussed the market capitalization range he is focused on, which is between $5 million and $200 million for Memecoins. He believes this range offers a better risk-reward ratio. While some large Memecoins may continue to rise, he sees better investment opportunities in mid-cap Memecoins. He does not recommend investing in low-market-cap Memecoins, as they are riskier and more volatile.
Classification of Memecoins
Murad categorizes Memecoins into two types: "PvP" (Player vs. Player), similar to rapid trading and speculation, and "PvE" (Player vs. Environment), which are Memecoins focused on building communities and long-term investment. He expressed a preference for the latter, focusing on long-term community building rather than short-term trading.
Holding Strategy and Future Outlook
Murad plans to hold almost all of his Memecoins for the next 14 months, until October or November 2025, for evaluation. He believes this will be a Memecoins "super cycle" and emphasizes the concept of a "belief super cycle", encouraging investors to stop short-term trading and focus on community building and long-term holding.
Accelerationism and the Dynamics of Memecoins
Murad delved into the rapid production of Memecoins, the importance of community building, and his views on investment strategies. He believes that the current market environment is driving the rapid growth of Memecoins, while also changing the risk-reward dynamics for investors seeking potential winners.
The Accelerated Production of Memecoins
Murad proposed the concept of "Memecoin Accelerationism", emphasizing that the number of new Memecoins appearing every day is increasing rapidly. He predicted that in the future, there may be hundreds of thousands of new Memecoins created per day. This phenomenon makes it more difficult to find true winners in this market, as the large number of new projects dilutes the attention and capital of investors.
The Importance of Community
Murad emphasized that building a strong community usually takes at least a year. He believes that established communities (or "cults") have an advantage in future competition, as these communities can provide higher levels of support and loyalty. He is more inclined to invest in Memecoins that already have a solid community foundation, rather than chasing new emerging projects.
The Changing Risk-Return
Murad pointed out that as the market changes, the risk-return of investing in small Memecoins is declining, while the risk-return of investing in mature Memecoin communities is rising. He mentioned that in the past, the upside potential of low-market-cap Memecoins was greater, but now the upside opportunities of large-market-cap Memecoins are higher. He is more willing to choose Memecoins that are priced lower but have an active community.
Avoiding Cabals
Murad discussed the cabal phenomenon in the Memecoin market, referring to small groups that manipulate the market to influence the prices of Memecoins. He expressed his opposition to this centralized manipulation and prefers to choose Memecoins that are decentralized and naturally growing. He hopes the projects he invests in can undergo price discovery without human intervention, maintaining fairness and transparency.
Navigating the Memecoin Industry
Murad discussed the future development trends of the Memecoin industry, especially how to find investment opportunities in an increasingly competitive environment. He mentioned that with more and more participants entering the market, ordinary investors may face more challenges, but he believes that by focusing on genuine communities and "cultures", a path to success can be found.
Challenges for Retail Investors
Murad believes that many retail investors may suffer losses when attempting to speculate on Memecoins, and will ultimately realize that Memecoins built on a strong community foundation (or "cults") are better investment choices. He suggests that investors skip small-market-cap projects, as their chances of success are extremely low, with about a 95% chance of not making a profit.
Identifying Genuine Communities
Murad emphasized that there is a lot of fraud in the Memecoin industry, especially that many influencers are not truly acting in the best interests of investors. He mentioned that 99% of influencers may be manipulating the market, using their influence to manipulate Memecoin prices. He advises investors to establish a checklist to identify genuine communities, looking for projects that perform well across multiple dimensions, including fair token distribution and active community support.
Future Trends of Memecoins
Murad predicts that future Memecoins will move from simple humorous images and animal themes to more complex and serious themes. He believes that Memecoins are actually "tokenized communities", and in the future, Memecoins related to various concepts, including every word, number, and sentence, will emerge. He believes that in such an environment, only a few truly valuable Memecoins will stand out.
The Rise of Movement Coins
Murad proposed a new category - "Movement Coins", which are not just representatives of a community, but also tokens that carry a certain philosophy or belief. He believes that the successful Memecoins of the future will be those that can evoke a strong emotional response. He calls this the "Belief Supercycle" and believes these tokens will become representatives of higher-level culture and movements.
