Author: Coinspire
TL;DR
1. With the US election dust settled, Bitcoin has successfully broken through $100,000, and Meme is welcoming the Summer season;
2. The initial purpose of Memecoins was not primarily speculation, the birth of DOGE was the essence of Meme: straightforward, humorous and grassroots, and most of them are involved in charitable causes;
3. A new trend is that Memecoins are gradually becoming a carrier for expressing support and beliefs;
4. At the current stage, with the continuous improvement of infrastructure, Memecoins have not only increased in number, but also presented a new two-sided nature;
5. Memecoins are an investment that requires comprehensive consideration of narratives, communities, marketing, risks, market performance and smart money.
Introduction
An animal image, a meme image, an ICON, although Memes have been ubiquitous in the Internet era, turning popularity into currency and assets, and leveraging huge increases of hundreds, thousands or even tens of thousands of times, is a unique landscape of Web3. In the year that Bitcoin unlocked $100,000, Memecoins have sparked a grand symbolic carnival in the cryptocurrency market.
According to Artemis Terminal data, Memecoins have performed excellently from the beginning of 2024 to the present, with the Benchmark index rising from 1.2% at the beginning of the year to 372.9% on December 8, significantly outperforming other crypto tracks such as DeFi, BTC, and AI tokens; at the same time, the total market value of the Memecoin track has also increased from hundreds of billions at the beginning of the year to over $139 billion currently, with the number of Memecoins with a market value of over $1 billion increasing to 10, and the upside of the leading projects seems to have no limit, with Dogecoin taking 1,487 days to reach $1 billion, and PNUT released in November 2024 achieving this in just 11 days.
The Web3 cornerstone - the public chain ecosystem has also undergone changes due to Memecoins.
According to Coingecko research data, from January to November 2024, Solana and Base occupied half of the public chain ecosystem investors' interest, surpassing Ethereum as the only two public chains, and this is inseparable from the outbreak of the Memecoin ecosystem. Base has even become a new rising star in the Layer2 public chain ecosystem in just a few months due to its Meme features, with the number of weekly active addresses increasing 20-fold from the beginning of the year, and leading other L2 projects in terms of TVL, transaction volume and user activity.
Source: growthepie.xyz
Nevertheless, the controversy over Memecoins has never ceased. It seems to represent the two extremes of the Web3 world coordinate axis, on the one hand the simple and brutal yet highly seductive narrative of wealth, and the totem of the crypto culture's rebellious spirit; on the other hand, the reinforcement of the stereotypical impression of the outside world: technological uselessness and a bubble that can be burst with a prick.
In this regard, this article will make a simple review of the development stages of Memecoins and try to deconstruct its two-sided nature.
Part.1 Stages of Memecoin Development
By definition, Memecoins are tokenized descriptions of Internet Memes or other humorous events or concepts. They are native assets of the blockchain, transferable, and can be used in blockchain-based applications, as well as traded on secondary markets such as DEXs. Reviewing the development history of Memecoins, the speed of popular project replacement is extremely fast, and there have been changes in terms of quantity, themes, and on-chain positions, which can be divided into three development stages according to this:
Stage 1: Black Humor Represented by DOGE
To talk about Meme, one must not forget the earliest and currently the highest market value Memecoin - DOGE, which can be said to have laid the cultural foundation of Memecoins - straightforward, humorous and grassroots.
In 2013, Jackson Palmer, who worked in the marketing department of Adobe Systems, and Billy Markus, a software engineer at IBM, combined the two hottest topics on the Internet at the time: a Shiba Inu network meme "doge" and cryptocurrency, and created DOGE, which is affectionately called "Dogecoin" in the Chinese context.
Unlike the projects in other crypto ecosystems, Dogecoin did not rely on grand declarations about the future or major technological breakthroughs to attract attention, on the contrary, it had no new meaning in network topology and was very fragile, but it was straightforward and real: it became the most interesting token in the world. This manifesto also went viral on the English forum Reddit community, and its tipping bot became an early way of spreading, with Reddit users sharing and receiving Dogecoin.
What really made Dogecoin famous was the CEO of Tesla and SpaceX, Musk, who in 2021 tweeted "Dogecoin may be my favorite cryptocurrency" and frequently mentioned it, and under his huge influence, Dogecoin became the best performing asset that year and became deeply linked to it, indirectly extending the life of Dogecoin, and every time Musk tweeted, the price of Dogecoin would rise accordingly.
Source: Crowthepie.ch
In the early days of the Memecoin track before it took shape, most Memecoins followed the lead of the original hit DOGE, with the following common features:
1. Animal-themed, mostly dogs and cats.
2. Charity is the original intention of most Memecoins. In the first two years of its development, the Dogecoin community sponsored dozens of charitable activities, including sponsoring the Jamaican bobsled team to participate in the Winter Olympics; Shiba Inu (SHIB) also donated 10% of its supply to the India COVID-crypto relief fund when it was created.
3. Abandoned the difficult blockchain terminology, focusing on its biggest advantage feature - black humor, and relying on the widespread dissemination of the community.
4. The main battlefield is Ethereum.
Source: CoinGecko
Stage 2: Carriers of Web3 Culture
If the Memecoins in the initial stage were just doing a lot of work on animals, then the Memecoins in the second stage have become more diverse in type, from the original animal coins to Memes of all kinds, such as celebrity coins, political coins, emoji coins, etc.
A new trend is that Memecoins are gradually becoming a carrier for expressing support and beliefs, whether for a certain spirit or ICON-like figures.
At the same time, Solana, with its high throughput and lower gas fees, has become the main battlefield for Memecoins.
▎Spiritual Memecoins
BONK, a Memecoin with a dog theme, was launched on Solana shortly after the FTX cryptocurrency exchange collapse in late 2022, with the initial intention of reigniting people's interest in Solana and catalyzing on-chain activity by airdropping free Memecoins to Solana developers, SAGA phone users and NFT holders. And it has indeed played a role, in addition to a significant price increase, since its launch, BONK has been integrated into the Solana ecosystem, including decentralized exchanges BonkSwap, BonkDex, non-custodial wallet BonkVault, and the gamified fitness app Moonwalk, further enhancing the utility of BONK.
BOME, with the image of a sad frog, was created on Solana in March 2024, and its founders have a vision to make Memecoins immortal, claiming to use decentralized storage solutions like Arweave and IPFS to preserve Meme culture permanently on the blockchain, exploring the intersection of Meme culture, blockchain technology and decentralized finance, and is seen as an important step in blockchain's cultural preservation and digital expression.
▎ICON Memecoins
The majority of current Memecoins include political coins and celebrity coins, which are collectively referred to as ICON Memes here.
Here is the English translation of the text, with the specified terms preserved and not translated:In 2024, as the United States gears up for its 60th quadrennial presidential election, political figures have also given rise to Memecoins, which have attracted attention. In particular, Memecoins themed around Doland Tremp have emerged in multiple versions: TRUMP, MAGA, TREMP, STRUMP, FIGHT, MVP, and more. These Memecoins have been actively traded in the cryptocurrency market, leveraging the heat of related political events and the controversy surrounding them on social media.
Memecoins inspired by US Vice President Kamala Harris have also appeared in different versions: KAMA, MAWA. As of the time of writing, CoinGecko has listed 83 PolitiFi tokens on its platform, with a total market capitalization of $500 million (significantly reduced from the election period). These political Memecoins, through their thematic figures, are increasingly seen as a means to support political movements, crowdfunding activities, and attract voters through DeFi mechanisms.
Other representative ICON figures are the meme stock trader Roaring Kitty and the crypto KOL Murad. The former led the "retail investors vs. Wall Street" myth, causing the stock of the long-struggling American video game retailer GameStop (GME) to surge dozens of times, destroying almost all the short-sellers. Merely by posting on a platform for the first time in three years, the Memecoins KITTY and GME related to him saw triple-digit gains within 24 hours. The latter, due to the popularity of his speech video at Token2049, caused the Memecoins he recommended to surge across the board.
Stage Three: New Modalities of Memecoins
As the value of Memecoins in the capital market has further increased, and the emergence of token launch platforms like Pump.fun, Memecoins have experienced an explosive growth in quantity, leading to two distinct yet converging paths: the extremely downward-trending Memecoin "vegetable market," and the integration with new narratives, attempting to imbue Memecoins with application value.
▎The Chaotic Memecoin Market
Early token issuances were often costly and required technical expertise to write or adjust contracts, issue tokens on the blockchain, and create liquidity pools on DEXes for trading. However, Pump.fun on Solana, with its extremely low issuance cost (only $2), has enabled anyone to generate their own tokens on the Solana network, breaking this barrier.
Once a Memecoin is generated on the platform, it can be traded directly on the platform's internal market, facing two stages: after reaching a market cap of around $69,000, it is automatically deployed to the Solana DeFi protocol Raydium; and the Memecoins with relatively high market cap, active community, large trading volume, and high visibility on the DEX may have the chance to be listed on centralized exchanges like Binance.
The direct impact of Pump is the explosive growth of Memecoins. From March 2024 to the present, Pump.fun has deployed over 4 million tokens, making it the fastest Web3 application to reach $100 million in revenue in the history of the crypto industry. However, due to the ease of token issuance on-chain, many malicious scam tokens and contract vulnerability tokens have emerged, with the vast majority ending in rug pulls or going to zero, and only a tiny fraction of Memecoins progressing to DEXes, let alone CEXes.
Nevertheless, under the Pump effect, subsequent major public chain ecosystems have followed suit, whether it's TRON's SunPump, BSC's Four.Meme, or the hit Virtuals and Clanker on Base, all of which have provided the soil for the explosive growth of Memecoins.
Source: Dune
▎Memecoins + Applications
With the explosion of Memecoins, the oversaturation of similar tokens, and the stagnation of innovation, Memecoins need new narratives. The market has realized that for Memecoins to have longevity, they need to have long-term appeal to a large enough consumer base. This has given rise to "application-based Memecoins," with the introduction of AI injecting new vitality into Memecoins.
┅ Memecoins Doing Applications
For example, the leading Meme DEGEN on the Base chain, which initially gained traction on the /degen channel of the decentralized social protocol Farcaster, and the development team later launched the L3 Degen Chain on the Base chain, transforming the community Memecoin into a crypto asset with real application value and market competitiveness, thereby extending its lifespan.
Floki also started as a Memecoin and later evolved into a utility project with a sizable project ecosystem. It has ventured into 3D NFT Metaverse, DeFi, Real-World Assets (RWA), and even prepaid cards.
┅ Applications Doing Memecoins
Examples include the Memecoin LUM issued by the collaboration of two AI Agents, aethernet and clanker, as well as the rapidly popular GOAT, which was a creative idea generated by the AI Bot "Terminal of Truth" in self-talk.
Part.2 The Two Sides of Memecoins
Looking back on the development of Memecoins, it is hard to imagine that the birth of a joke coin could have evolved into such a prosperous state in nearly 10 years, being formally accepted as a choice of crypto asset. Behind this transformation, we cannot help but ponder the reasons: What ignites the passion for Memecoins? And how do we view the other side of the Memecoin story?
Anti-Seriousness, Dissolving Authority VS. Technological Nihilism
Fundamentally, Memecoins are the monetization of deconstructionism, where the creation of unique charm in Meme images and stories - through the creative adaptation of popular culture and internet culture, as well as the humorous and satirical expression of news events - aims to dissolve authority, absurdity, and anti-seriousness, and attract investors' attention and participation through the market's frenzy.
The Memecoin fever in 2024 is a concretization of the goal of dissolving authority, shifting from Web2 to Web3.
The VC Tokens that were once regarded as blue-chips in the previous bull market have now lost their appeal to secondary market investors. The raised market access threshold has made the opportunity for retail investors to purchase pre-issued tokens almost zero, and the high FDV (fully diluted valuation) and low liquidity have made "opening price as the peak" a norm, along with airdrop returns not meeting expectations. Retail investors are urgently in need of the redistribution of rights and wealth, and the Memecoin craze is seen as the community's expression of rebellion against VCs - no more manipulated odds, but fair and equal opportunities for all participants to profit.
However, as Memecoins have absorbed the majority of traffic and capital, becoming the staple rather than the side dish, it inevitably raises concerns about Web3 falling into technological nihilism. "I'm not against memes, but Memecoins have become a bit strange now, let's use blockchain to build real applications," this is likely not just the voice of Binance founder CZ.
With the failure of the technical narrative and the erosion of the cake, will it dampen the enthusiasm for technical construction and innovative use case development in the Web3 industry? Furthermore, while Memecoins have dissolved the authority of the manipulators, they have also crowned the authority of KOL opinion leaders. Under the psychological expectation of no behind-the-scenes control, is this also a weakening of the image of the cable group below the surface?
Low Cost, High Returns VS. Capital Bubble
The passion for Memecoins largely stems from the narrative of rapid doubling, hundredfold, or thousandfold wealth. For example, GMGN's data on November 24 showed that a certain "smart money" had invested 1 SOL to buy the Memecoin Mustard early on, and the current unrealized gain is 4,424 times. The ability to become the protagonist of the next get-rich-quick story with the lowest investment cost is the greatest appeal of Memecoins - it's like a new form of crypto lottery, conquering the capital-abundant bull market, a period when FOMO mentality outweighs narrative.
However, the other side of the wealth myth, the sobering reality is that most Memecoin have failed to maintain their initial momentum, leaving behind a series of shattered hopes. Research from ChainPlay shows that 97% of Memecoin have already perished, with the average lifespan of a Memecoin being 1 year, which is one-third of the lifespan of a regular cryptocurrency project; in addition, malicious activities have severely impacted the Memecoin market, with more than half of the Memecoin (55.24%) being considered malicious, and nearly one-third of investors (28%) reporting losses due to Memecoin fraud.
Attention Economy VS Uncontrolled and Ephemeral
The essence of Memecoin is based on attention, and the composition of attention includes:
1. Symbolic dissemination form: the symbolic content form itself endows it with outstanding dissemination advantages, a network emoticon, a well-known animal or anime character is obviously a labor-saving medium, which can establish connections with the audience and promote natural participation. The once-launched live streaming function of Pump.fun on Solana is the maximization of the attention economy, through live streaming, token issuers can showcase their creativity or behavior in real time, attract the attention of the audience, and promote token trading.
2. Community-driven dissemination media: the dissemination of Memecoin is driven by the community, this decentralized dissemination method is both efficient and highly penetrating, such as reddit forums, 4chan, Twitter, TG groups.
However, at the same time, attention is extremely unstable, the rapid shift of market attention also means that the value of Memecoin may collapse instantly, the average lifespan of many new projects is short, and the success rate is extremely low. In addition, some Memecoin, such as political figure Memecoin, have a time limit, and once the event is over, the news value is reduced, the popularity will also end immediately.
Similarly, when hype has no bottom line, and people stop at nothing for attention, the bottom line will also become blurred or even disappear. When the Pump.fun live streamers start to compete for more extreme behaviors, from self-harm, suicide to animal abuse, and even performances imitating the Nazis, the closure of the live streaming function and the short life of the related Memecoin are foreseeable.
Part.3 How to identify quality Memecoin or shitcoin?
Although the lifespan of most Memecoin is short and the failure rate is high, they still attract a large number of investors due to their potential for rapid profits, and thorough investigation is particularly important. It should be noted that the author is not an expert, but based on the publicly available research conclusions and community wisdom, the following three focus factors are summarized, in the hope of providing some reference value for readers to exclude shitcoin.
1. Narrative
The viral spread of a Memecoin requires a supportive narrative, such as news events, political themes, visually appealing stories or iconic figures.
When the old narrative is saturated, it is important to judge whether the new narrative has enough humor or satire, and whether it can attract the attention of the trend.
2. Community
It is important to check the real activity level of the Memecoin team's social media platforms, such as Twitter, Telegram, Reddit, Discord, etc. Memecoin is heavily dependent on the power of social media and online communities, the more attention it receives, the more likely it is to attract new investors, and a Meme that is easy to spread and has a good conversion rate is able to attract a large amount of attention in a short period of time.
Evaluating the potential of the community is also critical. Crypto KOL murad proposed the concept of "cult Meme", emphasizing that the ultimate form of Meme is the next religion, "so you need to hang out in their social space and see how big the Cult, passion and religious atmosphere of that community is."
3. Marketing
Marketing capability is different from community building, and marketing capability represents the subsequent development capability of Memecoin. It is reflected in the promotion intensity of the crypto KOL matrix, the discussion trend on Twitter, the dissemination frequency on Telegram, etc., which can be queried through relevant tools, such as the advanced version of Twitter can understand the number of related posts through keyword search, and judge the overall trend is rising or falling.
Celebrity effect: If there are relevant celebrities like Vitalik, Musk, or top KOLs who are associated with it, the dissemination potential will be greater, and it is likely to attract more attention and capital, but it should be noted that the endorsement effect of crypto KOLs is limited, and one should not blindly follow.
4. Risk Review
Check if the LP tokens have been burned, which can ensure that the project developers cannot withdraw the liquidity and run away with the money (rug pull).
Check if the developers have renounced ownership of the smart contract. This is reflected in whether the Memecoin developers have transferred the ownership of the smart contract to a dead address, the renunciation of ownership means that the developers cannot modify the token supply or manipulate the code, which can reduce the risk of their malicious changes and harm to investors.
5. Market Performance
Expected market cap: the estimated value of the narrative, which determines the expected profit space. If the current market cap of the memecoin is still far from the market cap value of the narrative, then there is still space to obtain alpha, and the estimated value needs to be combined with the three factors mentioned above: narrative, community and marketing.
Liquidity: High liquidity allows investors to enter and exit quickly without causing significant price impact, which is reflected in the depth and trading volume of the Dex. It should be noted that trading volume and depth can also be subject to manipulation, and can be compared with the matching degree of FDV.
Chip distribution: Use tools like Dexscreen to check the proportion of topholder, the chips should not be concentrated in the hands of a few people. Ideally, excluding the addresses providing liquidity (Binance, Raydium, etc.), the top 10 holders should hold no more than 20% -30%.
Trend: Closely monitor the price trend and market volatility, they are the barometer for measuring the risk and timing of Memecoin.
6. Smart Money
Through platforms like GMGX, a Memecoin on-chain data analysis platform, or trading bots to track the actions of "smart money", to gain insight into market trends, which may improve the chances of successful trading.
It should be noted that smart money wallets are not all reliable, some Memecoin specifically rely on smart money buy signals to rug retail investors.
In summary, the following principles should be followed when investing:
Mastering the use of technical tools will be twice the result with half the effort, such as trading platforms, on-chain browsers, on-chain data analysis tools, trading bots;
Only invest what you can afford to lose, and set a stop loss;
Put your eggs in multiple baskets and allocate assets according to your risk appetite.
Conclusion
The Soviet thinker Bakhtin once drew inspiration from the Western carnival to propose one of the crystallizations of his thought - the carnival theory, whose broad and inclusive explanatory power can completely transcend the limitations of time and space, and be extended to Memecoin. In his theory, he emphasizes the spirit of liberation and freedom, the core of which is universality and the mocking of the sacred, that is, everyone is an active participant, and in the carnival they crown and uncrown the king with laughter.
Similarly, Memecoin is like a carnival ritual in the crypto world, born of mockery, stripping away the jargon of the blockchain, and pulling VCs off their pedestal, becoming an undeniable force in the crypto world with a momentum like a storm. The founder of DOGE once mockingly criticized the "bubble" market of cryptocurrencies with his playful indifference, but little did he know that he had opened up one of the largest "bubble" markets in the crypto world, which is an interesting thing in itself.
In the second half of 2024, we see the potential for Memecoin to integrate with the Web3 ecosystem. The arrival of AI technology and the renewal of Web3 narratives have both added new attire to Memecoin, and we look forward to Meme no longer being satisfied with the short-term speculative positioning and the digital games in the asset market, but bringing a new look to Web3 beyond the spirit of rebellion.
