It seems that since the small secondary market boom at the beginning of the year ended, [Meme fever] has become the mainstream of the market for the past six months.

According to some of my past statistics, the high occurrence scenarios for Memes mainly revolve around Solana and Base chains, with occasional emergence of another chain becoming a competitor in the MEME battleground.

  • But ultimately, the market's attention still returns to these two chains.

This article will discuss four aspects: changes in market share, the fragmented state of the industry, the value proposition of Memes, and risk factors.

1. Changes in market share 🔻

The overall market share of the MEME track in 2022 was 4%, while this year, the market share is 11%. Even so, this figure still does not reach the peak moment of 2021.

From the perspective of the secondary market, although this year's market share is similar to that of 2021, there are quite obvious differences.

In 2021, Dogecoin $DOGE and $SHIB combined had a market capitalization of over a trillion (approximately 80 billion and 39 billion respectively).

In this round, the remaining market capitalization of the two is less than one-third (current market capitalizations are approximately 25 billion and 10 billion).

Based on this phenomenon, an even more frightening fact is that in this cycle, no emerging Memes have replaced them; our statistical data source, after a cycle, is still them.

Therefore, we can infer a superficial viewpoint: the main reason the market share of the Meme track in this round remains similar to the previous round is due to the expansion of the tail effect throughout the entire track.

The competition in the track has a strong PVP atmosphere, and the lack of leading IPs entering mainstream visibility is some of my personal observations.
In this year's new batch of Meme projects listed on #Binance, except for $WIF, other projects generally have a market capitalization below one billion.

2. Fragmented industry status 🔻

The tail effect of the Meme track has not occurred in the CEX scenario either, and since the scene occurs on-chain, CEX, as a vested interest in the secondary market, will not actively promote any hot situations on-chain.

This leads to a very fragmented emotional stage between the secondary market and on-chain.

Why Meme coins attract so much market attention is a long-discussed topic. In the latest report produced by @BinanceResearch, I found some viewpoints for reference.

(1) In the context of global inflation over the past few years, faced with continuously depreciating currencies, rational investors typically invest the depreciating currency in assets they believe have long-term value to avoid the value loss from currency inflation.

(2) MEME coins may resonate with investors due to narrative and cultural reasons, with their main driving force being their symbolic value rather than traditional valuation metrics like cash flow.

(3) Additionally, because participants in the crypto market are generally younger, it can almost be said that traditional market participants and Web3 are two completely different age groups. Millennials and Gen Z are very active in the crypto industry, and the energetic, dynamic market participants may drive a lot of MEME coins' activity.

(4) Moreover, the rise of Meme coins can also be seen as an early use of public trading markets as a voting mechanism, where market participants now use their capital to vote against the existing TradFi and fiat systems, thereby embracing community economic systems.

3. The value proposition of Meme coins 🔻

"Meme coins have no value" is, in my view, the value proposition of Meme coins.

Meme, as a brand new asset type, also represents a certain cultural aspect of the domain, benefiting from Web3's token economic system, which allows it to be completely free from the constraints of traditional financial systems.

Let me give an example that I find very vivid: the combination of the AI track and Web3.

In fact, most people question the combination of AI and Web3 as a pseudo-concept, and this skepticism mainly arises from practical use cases.

From this line of thought, there is certainly no problem:

But I believe that the core of Web3 + AI is somewhat similar to Meme; it offers market participants the opportunity to participate in the AI track with a sufficiently low threshold.

It still operates in a manner similar to [voting]. In many ways, this phenomenon is very similar to the past ICO phase.

At that time, market participants could easily participate in the early development dividends of the industry through ICOs (regardless of whether this project seems sustainable now).

🔻How easy was it to participate in ICOs back then? You just needed to join a WeChat group.

🔺How easy is it to participate in Memes now? You just need to join a TG group.

- So let's think in reverse.

The end of the ICO boom, marked by regulatory intervention as a process and institutional entry as a conclusion, has resulted in the current industry-wide situation of 'low circulation and high FDV'.

Will Memes follow this trend?

In my opinion, it absolutely won't. First of all, the definition of Meme itself contradicts this phenomenon. Although the PVP landscape is intensifying, and institutions have begun to act this way, if large early chips are found to be controlled or held by institutions, that's a different story.

It will also be labeled as a 'conspiracy group' by the community; only relatively fair and transparent projects with a certain narrative, even if competition is fierce, still fall within the category of Meme tracks.

4. Risks in the track that must be noted 🔻

Not heavily investing, not going all-in, and having a high psychological tolerance for risk are things I have seen in excellent Trader perspectives in the Meme track.
I believe this is something that anyone with basic common sense should understand: extreme risk is the main characteristic of the Meme track.

The rapid growth and speculative atmosphere have made Meme coins a highly potential investment tool in the industry, but they heavily rely on market sentiment, lacking any valuation methods to support them, which makes them a highly risky asset class.

  • (Data shows that over 75% of Memes were created in the past year.)

Therefore, if one does not have a high psychological tolerance for risk, it is not suitable to participate in this market.

Besides that, regarding market participants, the structure of the market is also changing.

A certain group mentioned in a Cryptonary article this year (commonly referred to as 'conspiracy groups') attempted to use meticulously planned Meme coin pump-and-dump schemes to exploit retail investors for exit liquidity.

Although on-chain data shows sufficiently transparent chip turnover, determining that different individuals control these addresses remains highly challenging.

Furthermore, most retail investors do not have the capability to use professional on-chain address analysis tools, so multiple new addresses controlled by a single individual can easily manipulate an early token, misleading traders into believing that the token is widely distributed among numerous holders.

Additionally, these conspiracy groups may promote by paying KOLs in the market, thus creating false market hype on social media and manufacturing the illusion of organic growth.

  • (This also reflects that distinguishing which KOLs are fake is also a relatively important skill.)

This article concludes here. The content was originally planned to be written as a translation. After all, I find it hard to imagine that as a creator who has long focused on the infrastructure field, I could still produce a fair amount of content regarding the Meme track.

Thank you for reading. The data and some viewpoints in this article are referenced from BinanceResearch's latest track report.