TL;DR
1. With the US election dust settled, Bitcoin has successfully broken through $100,000, and Meme is welcoming the Sunmmer season;
2. The initial purpose of Memecoin was not primarily speculative, 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 Memecoin is gradually becoming a carrier for expressing support and belief;
4. At the current stage, with the continuous improvement of the infrastructure, Memecoin has shown a new two-sided nature while the number has increased dramatically;
5. Memecoin is a complex investment that requires comprehensive consideration of narrative, community, marketing, risk, market performance and smart money.
Introduction
An animal image, a meme image, an ICON, although Meme has 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, Memecoin has sparked a grand symbolic carnival in the cryptocurrency market.
According to Artemis Terminal data, Memecoin has 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 Memecoin with a market value of over $1 billion increasing to 10, and the upside of the leading projects seems to have no limit, it took Dogecoin 1487 days to reach $1 billion, while PNUT released in November 2024 achieved this in just 11 days.
The Web3 cornerstone - the public chain ecosystem has also undergone changes due to Memecoin.
According to Coingecko research data, in the period from January to November 2024, Solana and Base occupied half of the public chain ecosystem investors' interest, becoming the only two public chains that surpassed Ethereum, and both of which cannot be separated from the outbreak of the Memecoin ecosystem. Base has even become the new rising star in the Layer 2 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 Memecoin 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: the uselessness of technology and the easily burst financial bubble.
In this regard, this article will make a simple review of the development stages of Memecoin and try to deconstruct its two-sided nature.
Part.1 The Development Stages of Memecoin
By definition, Memecoin is a tokenized description of an Internet Meme or other humorous event or concept. 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 Memecoin, the speed of hot project replacement is extremely fast, and there have been changes in terms of quantity, theme, and on-chain positions, which this article has divided into three development stages:
Stage 1: The Black Humor Represented by DOGE
To talk about Meme, we must not forget the earliest and currently the highest market value Memecoin - DOGE, which can be said to have laid the cultural foundation of Memecoin - 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 emoticon "doge" and cryptocurrency, and created DOGE, which is affectionately called "Dogecoin" in the Chinese context.
Unlike the projects in other cryptocurrency 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 ideas about 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. In 2021, Musk tweeted that "Dogecoin may be my favorite cryptocurrency" and mentioned it frequently, and under his huge influence, Dogecoin became the best performing asset that year and was deeply tied 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. Themed around animals, mostly dogs and cats.
2. Charity is the original intention of most Memecoins. In the first two years of its early 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: The Carrier of Web3 Culture
If the first stage of Memecoin was just doing a lot of work on animals, then the types of Memecoin in the second stage have become more diverse, from the original animal coins to Meme of all things, such as celebrity coins, political coins, emoji coins, etc.
A new trend is that Memecoin is gradually becoming a carrier for expressing support and belief, whether it is for a certain spirit or an ICON-like figure.
At the same time, Solana, with its high throughput and lower gas fees, has become the main battlefield for Memecoin.
▎Spiritual Memecoin
BONK, a Memecoin themed on dogs, was launched on Solana shortly after the collapse of the cryptocurrency exchange FTX in late 2022. BONK was initially launched to reignite people's interest in Solana and catalyze on-chain activity by airdropping free Memecoin 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 Memecoin 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-style Memecoin
The majority of Memecoin categories currently include political coins and celebrity coins, which are collectively referred to as ICON-style Meme here.
Here is the English translation of the text, with the specified terms retained and not translated:In 2024, as the United States gears up for its 60th quadrennial presidential election, political figures have also emerged and gained attention in the form of Memecoins, particularly those themed around Doland Tremp. Not only have multiple versions appeared, such as TRUMP, MAGA, TREMP, STRUMP, FIGHT, and MVP, but they have also been actively traded in the cryptocurrency market, leveraging the heat of related political events and the controversy surrounding them on social media.
As of the time of writing this article, 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 theme-based personalities, are increasingly being viewed as a means to support political movements, crowdfunding activities, and attract voters through DeFi mechanisms.
Other representative ICONS include the meme stock trader Roaring Kitty and the crypto KOL Murad. The former had once 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 associated with him saw triple-digit gains within 24 hours. The latter, on the other hand, saw his recommended Memecoins surge due to the popularity of his speech video at Token 2049.
Stage Three: New Modalities of Memecoins
As the value of Memecoins in the capital market continues to rise, 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 capabilities to write or adjust contracts, issue tokens on the blockchain, and create liquidity pools on DEXes for trading. However, Pump.fun on the Solana blockchain, 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 and faces two stages: after reaching a market capitalization of around $69,000, it is automatically deployed to the Solana decentralized finance protocol Raydium; and the Memecoins that have relatively high market capitalization, 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 in the number 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 the chain, many malicious scam tokens and contract vulnerability tokens have emerged, with the vast majority ending in a rug pull or going to zero, and only a tiny fraction of Memecoins progressing to the DEX, let alone making it to the CEX.
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
▎Memecoin + Application
With the explosive growth of Memecoins and the proliferation of similar tokens, as well as 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 is where "application-based Memecoins" have emerged, and the introduction of AI has breathed new life 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 to transform the community Memecoin into a crypto asset with real application value and market competitiveness, thereby extending its lifespan.
Floki, too, 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 LUM, a Memecoin co-issued by the 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-Sided Nature 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 coin?
Anti-Seriousness, Dissolving Authority VS. Technological Nihilism
At its core, 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 - serves 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 frenzy is seen as a community's expression of resistance against VCs, where there is no manipulated odds of success, and all participants have an equal opportunity 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 technology 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 inadvertently 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 underwater cable group?
Low Cost, High Returns VS. Capital Bubble
The passion for Memecoins largely stems from the narrative of rapid doubling, hundredfold, and thousandfold wealth. For example, GMGN data on November 24 showed that a certain smart money had invested 1 SOL to buy the Memecoin Mustard early on, and is now sitting on a 4,424x profit. 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, storming the fortress in a bull market - a period where FOMO mentality outweighs narrative.
Here is the English translation of the text, with the specified terms retained and not translated: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 normal 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 Uncontrollability and Transience
The essence of Memecoin is based on attention, and the composition of attention includes:
1. Symbolized forms of dissemination: The symbolic content form itself endows it with outstanding dissemination advantages. A network emoji, a well-known animal or anime character is obviously a labor-saving medium that 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, where token issuers can showcase their creativity or behavior in real-time, attract the attention of the audience, and drive token trading.
2. Community-driven dissemination media: The dissemination of Memecoin is driven by the community, a decentralized dissemination method that is both efficient and highly penetrating, such as reddit forums, 4chan, Twitter, and TG groups.
However, at the same time, attention is extremely unstable, and the rapid shift of market attention also means that the value of Memecoin may collapse instantly, with the average lifespan of many new projects being short and the success rate extremely low. In addition, some Memecoin, such as political figure Memecoin, have a time limit, and once the event is over and the news value is reduced, the popularity will also end.
Similarly, when hype has no bottom line and people pursue attention by any means, the bottom line will also become blurred or even disappear. When the Pump.fun live streamers begin to compete for more extreme behaviors, from self-harm, suicide to animal abuse, and even performances imitating 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 most Memecoin have a shorter lifespan and a higher failure rate, 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 to provide some reference value for readers to exclude shitcoin.
1. Narrative
A Memecoin's popularity requires a viral 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, and Discord. Memecoin are heavily dependent on the power of social media and online communities, the more attention they receive, the more likely they are to attract new investors. 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 spaces 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 strength of the crypto KOL matrix, the discussion trends 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 relevant celebrities like Vitalik, Musk, or top KOLs are associated with it, the dissemination potential will be greater, and it is likely to attract more attention and capital. It should be noted that the endorsement effect of crypto KOLs is limited and should not be blindly followed.
4. Risk Review
Check if the LP tokens have been burned to ensure that the project developers cannot withdraw 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, indicating their abandonment of ownership, which means they can no longer modify the token supply or manipulate the code, reducing the risk of malicious changes and harm to investors.
5. Market Performance
Expected market capitalization: The estimated value of the narrative, which determines the expected profit space. If the current market capitalization of the Memecoin is still far from the market capitalization value of the narrative, there is still space to obtain alpha. The expected 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, which are the barometers 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, 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, and 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, and trading bots;
Only invest what you can afford to lose, and set a stop-loss;
Diversify your 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 dethrone the king in a laughing manner.
Similarly, Memecoin is like a carnival ritual in the crypto world, born of mockery, stripping the jargon of the blockchain of its mystique, and pulling the VCs down from their pedestal, becoming an undeniable force in the crypto world with a momentum like a breaking wave. 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 digital games in the asset market, but bringing a new look to Web3 beyond its rebellious spirit.
*All content on the Coinspire platform is for reference only and does not constitute an offer or recommendation of any investment strategy. Any personal decisions made based on the content of this article are the sole responsibility of the investor, and Coinspire is not responsible for any profits or losses arising therefrom. Investing involves risk, and decisions should be made with caution!
