TL;DR
1. Meme has experienced a slow budding stage from 2013 to 2019, followed by a rapidly changing chaotic period from 2020 to 2022, and finally entered a phase of rapid development from 2023 to 2024, officially gaining widespread recognition and audience base as a standalone track.
2. The daily turnover rate of Meme is about 11%, compared to DeFi's 5%, Layer 2's 7%, and Layer 1's 4%. This ratio not only highlights the high liquidity of Meme but also indicates that users have high interest and trading frequency for Meme.
3. By the end of the third quarter of 2024, Meme's market cap share in the entire crypto market has risen from 0.87% two years ago to the current 2.58%, and there is still a growing trend. If we do a simple linear regression simulation, this share is expected to reach 3.54% in 2025 and 7.81% in 2030.
4. Memes are leveraged Layer 1, meaning that during favorable market conditions, there will be a Layer 1 growth of around 5 to 10 times.
5. Animal-based Memes and Cult culture Memes are types suitable for long-term attention. In contrast, other categories of Memes are often associated with short-term trends; their attention and popularity may rise rapidly and then fall back.
In 2024, the industry and market are undergoing a severe reshuffle. Against the backdrop of many VC-invested and supported projects performing poorly upon launch, Meme has risen against the current, becoming a new force that cannot be ignored. The rise of PvP models, the wealth effect brought by single-coin strikes, and the Meme-friendly Solana have all shown unique brilliance this year. The new generation of Meme representative Murad has quickly become a hot figure in the Meme circle through his Supercycle speech. However, behind this Meme craze, what changes has Meme undergone? From a VC perspective, how should we participate? These questions are worth delving into.
Meme market panorama: Origins, evolution, and market data analysis
Origins and influences
As a cultural dissemination phenomenon, the emergence of Memes is closely linked to human history. Originating from early social language, beliefs, and customs, they spread within groups through imitation and learning. The advent of the internet has significantly accelerated the dissemination of Memes, which spread rapidly among users in the form of images, videos, text, and memes due to humor, satire, or resonance. Memes meet people's needs for expressing emotions, sharing viewpoints, and establishing resonance in social interactions, reflecting social trends, group psychology, and cultural changes. Their spread and popularity are influenced by a variety of factors including content appeal, dissemination environment, community acceptance, and KOL influence.
In Web2, Meme culture mainly originated and developed on the two platforms of 4chan and Reddit. 4chan is the birthplace of the popular Meme Pepe the Frog, gathering a large amount of content related to Pepe Memes and its derivative culture. At the same time, 4chan is also a hotbed for Boy's Club comics, providing us with an important perspective for a deep understanding of Meme culture. Reddit, on the other hand, has nurtured classic Memes like Dogecoin and Success Kid. Thanks to the vibrant community atmosphere and solid user base of these two platforms, they remain the birthplace of many new Memes today. Besides these two platforms, other popular social media platforms with numerous users (such as Twitter X and Telegram) have also birthed some popular Memes. For example, dogwifhat, a dog in a pink knitted hat, has formed a 'hat' totem culture in the community early on, with many liking users and celebrities reposting related images of the hat dog.
Evolution and development
Starting from Web2, crazed in Web3. In this article, we collectively refer to Meme and its related currencies as 'Meme', without specific differentiation. Looking back at the development of Meme, we notice that it was not prominent in the early days and did not receive enough attention. Referring to the cyclical changes of bull and bear markets in the industry, we can divide the development of Meme into three stages: the budding period (2013 to 2019), the chaotic period (2020 to 2022), and the rapid development period (2023 to 2024). By consulting historical snapshot data statistics from CoinMarketCap, single-coin data from Coingecko, historical information from search engines, and social media content, we can gain a more comprehensive understanding of Meme's evolution.
Chart: Evolution and development of Meme
By December 31, 2019, during the budding stage, Dogecoin was the only Meme-type currency ranked 34th in the cryptocurrency market cap leaderboard. Reviewing the period from 2013 to 2019, Meme-type currencies did not occupy a significant position in the market. During this period, the industry was in a rapid infrastructure construction phase, exploring various new concepts. The mainstream new coins were usually payment public chains with more efficient transaction processing capabilities and faster confirmation times, or new public chains equipped with strong smart contract functions. For Meme-type currencies, the challenges they faced were that they needed significantly higher costs to establish their supporting carriers, and due to the difficulty of constructing liquidity, this led to smaller trading volumes, making it challenging to gain wide support from centralized exchanges. Thus, during the budding period of Meme coins, besides Dogecoin, which featured the 'Doge' meme and had significant propagation effects, there were not many other Meme coins able to survive.
Starting from the chaotic period beginning in 2020, more precisely from August 2020, triggered by the DeFi Summer's wave of IDOs, DeFi Summer's IDOs allowed people to build liquidity on-chain at low costs, providing trading, and quickly constructing trading scenarios. This allowed for low-cost token issuance and the background of circulating directly in the secondary market without going through exchanges, resulting in many on-chain Memes. During this period, surviving Meme coins included SHIB, FLOKI, and PEOPLE. However, these early Meme coins did not receive market attention, and their popularity was mainly based on speculative concepts. Additionally, the popularity of Memes during the chaotic period often arose against the backdrop of excess liquidity in the industry, typically appearing as the last relay after multiple sectors took turns rising. It is worth mentioning that Memes during this period also gained wide attention due to their associations with celebrities, particularly Elon Musk's continuous speaking on Dogecoin in 2021, which not only made Dogecoin's price fluctuations extremely significant but also propelled Dogecoin to a new level in market cap, with the community significantly expanding.
With the arrival of 2023, the craze for Meme coins continues to heat up, giving rise to a diverse array of Meme coins such as BONK, PEPE, CHEEMS, and Cult culture-related BITCOIN (HarryPotterObamaSonic10Inc) and SPX (SPX6900), WIF, and MOG, etc. During this period, the types of Meme coins began to refine, with other public chains like Solana also coming to the forefront. By 2024, the development of Meme coins has entered an accelerated phase, with new coins like BOME, lowercase NEIRO, and GOAT continuously emerging, each with its unique features. Meme officially gained widespread recognition and audience base as a standalone track.
Chart: Some data indicators of Meme
After sorting out the data indicators of Meme's market cap proportions and market performance from 2013 to 2024 in the top 600 of the cryptocurrency market, we can clearly see the growth of Meme's market cap and the expansion of its categories and numbers. During this period, Meme's market cap not only achieved significant growth, but its varieties and quantities also increased. By the end of the third quarter of 2024, Meme's market cap share in the entire crypto market has risen from 0.87% two years ago to the current 2.58%, and there is still a growing trend. If we do a simple linear regression simulation, this share is expected to reach 3.54% in 2025 and 7.81% in 2030.
Perhaps we once doubted whether Meme was just a fleeting phenomenon, quickly fading after the craze. However, with further research and understanding of Meme, we believe our view has changed. Memes will not disappear; instead, they will continue to evolve, and new leading Memes may emerge in every era cycle. However, behind these dazzling leading Memes lies a harsh reality that reminds us to always maintain a calm and clear mind.
Market data analysis
By analyzing the development and historical data of Meme, we can roughly understand its development trends. Now, studying the current market landscape can provide us with an intuitive perspective to observe changes in market hotspots and capital flows. Below, we further delve into the macro indicators of the Meme sector, including market cap, trading activity, and daily trading volume, among other core indicators. These analyses not only reveal the latest dynamics of the Meme sector but also showcase its future development trajectory.
Changes in market cap and quantity: The changes in Meme's market cap and circulation quantity can reflect the market's demand and acceptance level. Although some Meme tokens may have low market caps, the increase in the number of new Memes indicates that community interest in the entire sector is growing. Compared to other sectors (Layer 1/Layer 2/DeFi), Meme has far outpaced in total market cap and new additions over the past two years.
Trading activity: The trading activity and turnover rate of Meme are usually higher than those of other sectors. According to CoinMarketCap data, the overall market cap of Meme tokens is about $50 billion, with daily trading volume around $5 billion, and this trading volume's activity level is significantly higher than that of other sectors. On average, the daily turnover rate of Meme tokens is about 11%. In contrast, the daily turnover rate of DeFi is about 5%, Layer 2 is about 7%, and Layer 1 is about 4%. This ratio not only highlights the high liquidity of Meme but also indicates that users have greater interest and trading frequency for Meme. For Meme tokens that are above the sector level, especially those with larger trading volumes, they often become targets of market capital pursuit.
New Meme coins experience significant rise and low success rates: New coins continuously emerge in the Meme market, sometimes rising even more than mainstream cryptocurrencies like BTC. This indicates that the Meme token space has high volatility and speculative opportunities. However, among numerous new Memes, taking pump.fun's data as an example, the success rate of launched Memes is less than 2%, and only 0.23% maintain a market cap above 1M, meaning the probability of those that withstand the test of time and survive is extremely low.
Huge trading volume and new users: Meme can generate enormous trading volume and has a relatively loyal user base. Thus, for CEX, listing Meme coins can become an important strategy for attracting traffic and users. Taking Binance's spot market as an example, among the top 30 trading pairs ranked by trading volume, 20% are Memes.
Chart: CMC's Binance spot trading data
Scarcity of blue-chip Memes: Blue-chip level Memes are relatively scarce. Faced with a large number of hundreds or thousands of Meme tokens, those that can truly be called blue-chip are less than 1%. Taking the Memes recorded on Coinmarketcap as an example, despite the endless emergence of new Memes in the market, very few can withstand the test of time and eventually stand out. Additionally, the market cap distribution of the Meme sector also shows a significant Pareto principle: the market cap of the entire sector is primarily driven by less than 10% of the top Memes. This highly concentrated market cap distribution undoubtedly increases the difficulty of finding true value investments in the Meme field. If participating in Meme investment from a VC perspective, this aligns with the experience rule '2-8 rule' in venture capital: about 10% of successful Meme investments can make up for losses from other Meme investments.
Summary
Combining with Murad's recently acclaimed speech in the Meme circle, he predicts that the market cap of Meme will reach $1T in the future, implying a potential increase of 25 times, with more than 25 Memes expected to enter the industry's Top 100, and VCs purchasing blue-chip Memes, etc. Referring to our statistical data, this prediction is overly optimistic, as the current Meme, both in quantity and market cap, already occupies a significant proportion of the industry, and future developments are more about breaking through above Layer 1. However, Layer 1 itself is also an important soil for Memes to grow. The development of Memes will inevitably drive Layer 1 forward, thus we cautiously believe that Memes are leveraged Layer 1, meaning that when market conditions improve, there will be a Layer 1 growth of around 5 to 10 times. Nevertheless, we must acknowledge that Meme is indeed a field worthy of long-term observation and research. Therefore, establishing a systematic trading framework can help us better understand and participate in this market full of potential and challenges.
Exploring and studying Meme
With the wave of Meme sweeping the market and combining our previous panoramic research on the Meme market and future trend predictions, we believe it is very necessary to explore and study Meme in depth. Through this, we find that the value of Meme does not stem from technology or practical applications, but from the community's enthusiasm and recognition of Meme culture. This drive makes Meme's performance in the market full of uncertainty and volatility, but at the same time, it brings unprecedented vitality. By summarizing these characteristics, we have constructed a clear analytical framework to understand and grasp the potential value and risks of Meme.
Basic characteristics of the sector
Analyzing a single Meme can provide in-depth insights, but to fully grasp the development trends of the entire Meme sector, a broader perspective is required. Therefore, we first conducted a comprehensive study and analysis of the basic characteristics of the Meme sector. In the current market environment, the Meme sector has shown the following significant characteristics:
Low entry threshold: The issuance threshold for Meme is extremely low; as long as you have a social media account, a Telegram group, and some creative images, you can easily launch a new Meme without needing to develop products and applications like traditional crypto projects, where the token itself is the product. The issuance threshold for Meme is significantly lower than for traditional projects. As long as you have a social media account, a Telegram group, and some creative images, you can easily launch a new Meme. This process does not involve complex product development or application building, making the token itself the core and directly market-facing 'product'.
Explosive increase in quantity: Due to the extremely low barrier to creating Memes, large numbers of new Memes emerge daily, rapidly expanding the market's token pool and leading to a sharp increase in supply. With the continual addition of new Memes, everyone faces more choices, bringing higher filtering difficulty.
Significant wealth effects: Despite the considerable risks in the Meme market, it also offers huge potential returns for players who entered early. The wealth effect of single-coin strikes and small bets magnifies like a magnet, attracting many users' attention and sparking their heightened interest and active participation in the Meme market.
Market resilience: Meme has exhibited good resilience in the face of market fluctuations, able to recover and rebound quickly from oscillations. This rapid recovery is primarily due to the driving of community sentiment value and the enthusiastic pursuit of funds for Meme.
Celebrity effect: The participation of well-known individuals significantly enhances the speculative heat and market attention of Meme, further intensifying price volatility. This celebrity effect not only attracts more attention but may also lead to a series of information arbitrage behaviors, where some top players in the information chain may use their influence and information advantages to gain unjust benefits.
Low liquidity and limited capital capacity: In the early to mid-stage of Meme, i.e., the on-chain market period, Meme's liquidity is not high, which means there is a substantial portion of water in its vast market cap and trading volume. Due to insufficient liquidity, large funds encounter high slippage when buying or selling, leading to increased trading friction costs. Therefore, the on-chain capital capacity of the Meme market is relatively limited, making it difficult for institutions to enter and exit on a large scale without significantly impacting prices. This limitation not only increases the difficulty of trading but also restricts the depth and breadth of the market, making the Meme market appear more vulnerable in the face of large capital flows.
Extremely high trading risks: Due to the lack of actual application support and intrinsic value, many Memes' prices often fluctuate dramatically like a roller coaster, quickly rising and then sharply falling. Even more concerning is that many Memes ultimately face a fate of going to zero, meaning their market value and trading volume drop to nearly zero. This high-risk trading environment requires us to be particularly cautious when venturing into Meme, fully recognizing the potential risk of capital loss.
Trading activity and susceptibility to manipulation: The frequent trading and large trading volume of Meme also indicate the great interest in it from the market. However, lurking behind the trading volume may be unknown manipulation funds. Therefore, unlike VC projects, the Meme market is more like a public gambling speculative market of 'willing to bet and lose'.
After a thorough analysis of the basic characteristics of the Meme sector, we can conclude that the Meme sector indeed possesses some unique traits that distinguish it in the crypto market. The low entry threshold for Meme, the explosive increase in quantity, low liquidity and limited capital capacity, extremely high trading risks, significant wealth effects, trading activity, and susceptibility to manipulation, market resilience, and celebrity effects together constitute the unique ecology of this sector. For this reason, the Meme sector is often seen as a PvP arena, which is not without reason. In this fiercely competitive field, everyone needs to identify the true blue-chip Memes and hidden gems from a vast array of Meme coins like a gold miner.
Characteristics and categories
As the Meme sector matures, we should no longer be bound by outdated concepts. Standing at the periphery and ignoring it will not help us understand the deeper laws of Meme. Today's Meme culture has long surpassed the simple meme images of the past; it has become a diversified expression of market sentiment and an important vehicle for communicating with outsiders. Therefore, it is necessary for us to have a basic understanding of its key features and classifications.
Meme has many characteristics, some of which can be quantified with data indicators, while others are relatively difficult to quantify, leaning more towards qualitative characteristics. The key characteristics are roughly as follows:
1. Cultural uniqueness: This is the core of Meme, which typically originates from specific cultural phenomena or social trends, establishing its unique identity and appeal. Just like the lighthearted Dogecoin and self-mocking Pepe, before entering Web3, they attracted many enthusiasts with these cultural traits, whether through memes or secondary creations of related expressions.
2. Sustainability: This is the key to measuring whether it can exist long-term in the market. A successful Meme can often transcend short-term trends and create lasting cultural impacts, akin to the concept of 'diamonds are forever, one will always be passed down.' Dogecoin, which has lasted for over a decade, has accompanied the growth of the cryptocurrency industry and is the origin of the entire Meme. For new Memes, we cannot expect them to immediately undergo years of testing like Dogecoin, nor can we fantasize that every one will be able to complete their launch on Binance within three days. Therefore, we believe that Memes should have sustainability lasting between six months to a year, which also aligns with the time cycle for centralized exchanges to evaluate project listings.
3. Spreadability: This is an important factor determining whether a Meme can rapidly spread and be widely accepted. A Meme that is easy to spread and has good conversion effects can attract a large amount of attention in a short time. Generally, this can be observed through the discussion levels of social media regarding related Memes and the growth speed of community size. For example, the number of followers on Meme Twitter reaching tens of thousands is the basic requirement, while a better standard would be in the hundreds of thousands or even millions.
4. Stickiness or loyalty: Refers to the loyalty and participation of Meme community members. A Meme community with high stickiness can maintain long-term participation from members, and even during market fluctuations, members do not easily exit. This loyalty is crucial for the long-term success of Meme.
The original Dogecoin brought everyone cute cats and dogs as Meme images, but today, some new categories of Meme have emerged, integrating with past animal-based Memes, greatly expanding the categories of Meme. Below, we have simplified the classification of Meme, and different categories can be combined to some extent.
1. Animal-based Memes: Based on animal images, expressing emotions or viewpoints through humorous text, widely loved for their cuteness and affinity. The most famous examples are undoubtedly Dogecoin with dogs and Pepe with frogs.
2. Celebrity hype Memes: By leveraging the influence of celebrities or public figures, focusing on and capturing their statements and actions, and using imitation or satire methods for creative recreation. Typical examples include the series of Memes derived from Elon Musk's tweets, personal profiles, and avatars, such as 'Troll'.
3. Political figures and events Memes: Using humorous or satirical methods to allude to political figures or events. Representative Memes include slogans generated around Trump's campaign activities and Memes arising from sudden events, such as MAGA and FIGHT. Additionally, there are related Memes that misspell Trump's and Biden's names.
4. Cult culture Memes: Originating from specific community pop culture, containing specific symbols or memes that can only be understood by those who know the background, favored by specific groups for their uniqueness and exclusivity. This type of Meme is somewhat akin to the past DAO concept, with the representative example being PEOPLE, which started with raising funds to auction the purchase of the US Constitution and later transformed into a people's code.
5. IP-derived Memes: Tokens created based on traditional anime IPs or well-known NFTs, leveraging their existing popularity to attract corresponding target fan groups. For example, the related Meme launched by the NFT project mfer, which was once characterized by a culture of despair.
6. Mechanism-based Memes: Early mechanisms had special settings, such as fair distribution, burning, buy-sell tax buybacks, etc., while currently more refer to Memes issued by leveraging emerging AI technology. The most popular is the recently created first Meme goat GOAT by terminal of truths.
Dogecoin/Troll/Maga/People/mfer/GOAT
Meme exhibits unique cultural characteristics and audience bases across different categories, which affect their sustainability, spreadability, and community stickiness. Among these categories, animal-based Memes and Cult culture Memes are considered suitable for long-term attention due to their deep cultural roots and loyal fan bases. In contrast, other categories of Memes are often associated with short-term trends; their attention and popularity may rise rapidly and then fall back. To quickly identify and understand the core characteristics of various Memes, we provide the following assessment framework.
Primary market and launch platforms
In-depth observation of the birth process of Meme in the primary market is helpful for understanding Meme, especially those based on public chains. Even after several years, the initial liquidity establishment can still be reviewed. Taking SHIB as an example, we can know its astonishing growth in market cap by reviewing the initial transaction of adding liquidity to SHIB. Initially, SHIB's market cap was only equivalent to 20 ETH, valued at around $10K at the time. Calculated at today's ETH market price, SHIB's initial market cap was merely $50K. This is undoubtedly an attractive and promotional value for a Meme that grew to a billion-level market cap within a year.
https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
As a leader in Meme culture, SHIB's brilliant achievements have inspired the birth of numerous Memes. However, not all Memes can sustain development amidst this wave. Users face numerous challenges when participating in these Memes, such as the bizarre circulation and initial market values, as well as a series of security issues, such as sudden withdrawals from liquidity pools, PiXiu pools that can only be bought and not sold, token inflation, and ticker confusion caused by identical or inconsistent capitalization. These factors not only weaken user trust but also pose challenges to the robust growth of the entire Meme.
This situation continued until the emergence of Meme launch platforms like pump.fun. Although it specifically targets low-market-cap Memes, pump.fun has successfully promoted a standardized Meme mechanism, including the use of bonding curve pricing models, standardized total token supply, platform-backed contract safety, and standardized initial liquidity pool addition and destruction. These standardized practices not only enhance the transparency and credibility of Memes but also provide a solid foundation for the healthy development of the Meme ecosystem.
Due to pump.fun's regulations on Memes: liquidity corresponding to bonding curves will not migrate to external DEXs until 100% is completed, and can only be traded on pump.fun. Therefore, players habitually refer to Memes that have not completed their bonding curves as 'internal disks'. On the pump.fun platform, the total issuance of Meme tokens is set at 1 billion, of which about 800 million are sold on internal disks. When internal sales reach the limit, approximately 85 SOL will be required. After pump.fun charges 1.5 SOL as a fee, 20% of the tokens will be minted, paired with 79 SOL, and then launched to Raydium exchange. At this point, the initial circulating market cap of the token is set at 69K SOL. This process not only ensures liquidity management for Meme projects but also provides a clear reference for setting initial market cap.
For readers who want to delve into the numerical simulation of the pump.fun protocol, Gryphsis Academy provides a detailed article titled 'Pump.fun Protocol Insights: From Bonding Curve Calculations to Profit Strategy Construction.' This article not only explains the workings of the pump.fun protocol in detail but also provides profound insights into how to utilize bonding curves for numerical simulation. (Migration fees change in real-time according to official settings; currently set at 1.5 SOL)
The current pump.fun focuses on launching low-market-cap Memes, but this does not mean that the ceiling of these Memes is limited. Recently, two Memes launched through pump.fun have successfully listed on first-tier exchanges (in contract form). This achievement not only has made the Meme launching activities of pump.fun more heated but also has brought significant economic benefits to pump.fun. Consequently, new products challenging the status of pump.fun have emerged on the Solana chain, such as Moonshot, while other public chains are also seeing Meme launch platforms imitating pump.fun, such as Tron’s Sunpump, all actively competing for market share in the Meme sector.
In terms of launch mechanisms, Moonshot's main improvement over pump.fun lies in supporting the addition of initial pools from different external DEXs and differences when the initial market cap is filled. Besides that, the differences between the two in other aspects are not significant. As for Sunpump, its overall mechanism is similar to pump.fun. Since the industry generally follows the 'first is first' principle, even if new entrants attract users through token airdrops and other incentive methods for vampire attacks, it is difficult for them to achieve significant surpassing. Next, we will delve into the data performance of pump.fun, Moonshot, and Sunpump using dune's data to assess their performance and competitiveness in the market.
According to Dune's data, the pump.fun platform shows a clear leading advantage in key indicators such as the number of token launches, revenue, and the number of new addresses participating. Specifically, on October 23 (when this article was written), the number of token launches on pump.fun reached an astonishing 34,027. In terms of revenue, pump.fun's performance is also remarkable, generating over $2.09 million in revenue within 24 hours. Moreover, the growth in daily active addresses reached 107,355, of which 43,760 are new wallets, reflecting a very high level of user participation in pump.fun. These data points collectively depict the strong performance and broad user base of pump.fun in the Meme market.
https://dune.com/adam_tehc/memecoin-wars
In contrast, the Ethereum mainnet, as a traditional Meme birthplace, has not produced a truly successful Meme launch platform, and the only recent Etherfun platform launched by Vista has not garnered much attention. Of course, this may relate to the TPS of the Ethereum mainnet and high gas fees, since launching low-market-cap Memes requires fast and low-cost transactions to achieve a numerical advantage. Perhaps in the future, we may see some changes and developments in the Meme space divided by good Base-like Layer 2.
Lifecycle and pricing logic
The lifecycle of Memes has unpredictability; their survival time may be as short as a few minutes or as long as several years. Memes that withstand the test of time and continue to be popular typically go through several different development stages. We outline the basic evolutionary process of Memes from the early DEX stage to the mature CEX stage, delineating the significant changes in key indicators such as market cap and community size during this process.
In terms of market cap and user number analysis, we use some steadily developing Meme projects to form preliminary judgments. According to 0xScope's holder analysis, it is found that the number of Retail Holders is generally far greater than that of other types of holders (such as whales and large holders), and the market value of tokens they hold accounts for about 20% to 25% of the total market cap. By analyzing the average purchase amount of Meme coins held by Retail Holders, we can estimate market cap data.
Taking a Meme coin with a market cap of $1 million as an example, the value held by Retail Holders is approximately between $200,000 and $250,000. Assuming there are about 1,000 holders, the average value of Meme coins held by each person is around $200 to $250. This figure is within a reasonable range for single-coin purchases among crypto users.
This estimation method provides us with an intuitive perspective, helping us assess the correlation between Meme in different market cap ranges and user engagement.
https://dune.com/dyorcrypto/memecoins
Of course, based on the rough pricing above, we can attempt to find a more precise method or framework to assess the fair value of Meme. To this end, we can adopt methods similar to value investment valuation. Researching and studying existing Meme valuations and their related data, statistical analysis of the valuation changes of different types of Meme at various development stages, as well as the dynamics of on-chain data.
Generally speaking, the initial price of Meme is usually determined by the AMM model based on market supply and demand dynamics. Once the initial unit price is determined, the market cap of Meme can be calculated by multiplying the unit price by the circulation volume. It is important to note that this market cap will fluctuate with changes in market conditions and the dynamic adjustments of liquidity pools.
According to the constant product formula of AMM, the growth curve of capital inflow, the proportion of tokens in the initial liquidity pool, and the selling pressure will all impact the market cap. The simplest mnemonic of the basic model is: if the market cap doubles, the net inflow of funds is one fold; if the market cap triples, the net inflow of funds is three folds. However, this has not yet included some complex factors, such as:
1. Transaction fees paid to liquidity providers (LP);
2. The inflow and outflow of funds in liquidity pools (LP pools).
In the dynamically changing market, pricing models cannot be so ideal; therefore, it is necessary to consider other indicators to calculate the fair price of Meme, such as trading volume, trading frequency, and distribution of holding users. Of course, this is a cost-driven market cap thinking. As costs continue to rise, the market cap of Meme should also correspondingly increase. When breaking down these costs, the first thing to notice is the transaction fees brought about by trading volume. These fees constitute the main cost of maintaining market cap. In addition, there are other hidden costs: each transaction incurs gas fees paid to the blockchain network and the time cost of funds for holding users. The cumulative effect of these costs may have a significant impact on the overall market cap of Meme. We believe this can partly explain the fair value of Meme, but it is not a universal pricing formula.
Blue-chip Meme from a VC perspective
From the data, Meme has already evolved beyond just a small circle; they now have their unique features, and as VCs, everyone is paying attention to this sector. Therefore, just like investing in other projects, VCs need to find those blue-chip Memes that can withstand market fluctuations and demonstrate stable performance.
To identify quality Memes, one typically needs to pay attention to several key characteristics: sustainability, spreadability, and community activity. A quality Meme should possess long-term attraction, be easily spreadable, and have a passionate community supporting it. These factors form the foundation for the success of Meme.
For Memes driven by community or led by capital market management teams, it is essential to understand the main participants pushing from behind. This may include whales or other key stakeholders. Understanding these driving forces is crucial for assessing the potential and credibility of Meme. In the absence of market capitalization management, the community plays an important role in Meme projects. Their enthusiasm and participation can significantly affect the popularity and market cap of Meme. Unconscious collective actions, such as promotions and discussions on social media, can greatly boost the spread and acceptance of Meme. Therefore, the role of the community in Meme projects should not be overlooked, as it directly influences the success or failure of Meme.
Therefore, we believe that Murad's presentation on Meme Supercycle, particularly the concept of PvE Memecoins, is very vivid, specifically referring to the two images below.
Conclusion
Meme is becoming a new battlefield for VCs, testing whether they can keep up with market pulses, and the movements of on-chain Degen users also provide VCs a window to gain insights into user needs. However, Meme does not directly open its doors to VCs. The so-called Supercycle notion is also prone to lead VCs into FOMO. The harsh reality is that successful Memes are just a minority. Therefore, to succeed in the Meme field, VCs must invest significant time and effort to uncover those truly blue-chip Memes. This battlefield is not a place where broad net investments yield rich returns.
Reference
dogecoin: https://dogecoin.com/
pump.fun: https://pump.fun/
Vista's etherfun: https://etherfun.app/
0xScope: https://0xscope.com/
CoinMarketCap: https://coinmarketcap.com/
gmgn: https://gmgn.ai/
dogwifcoin: https://dogwifcoin.org/
Murad: https://x.com/MustStopMurad
Dune Memecoin Wars: https://dune.com/adam_tehc/memecoin-wars
Pump.fun Protocol Insights: From Bonding Curve Calculations to Profit Strategy Construction https://www.techflowpost.com/article/detail_18340.html
SHIB's initial trading pool: https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
SHIB's first LP addition transaction: https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
