Recently, with the surge of meme coins ACT and PNUT after being listed on Binance, many investors achieved financial freedom overnight, sparking renewed interest in the community. The performance of meme coins seems to achieve crazy growth amidst extreme market emotions and speculative trends. In fact, every bull market sees many meme coins explode, generally starting with a thousandfold base and targeting ten thousandfold. However, when the FOMO emotion arises, it is still necessary to understand the entire investment logic of memes and what values drive the explosive growth of memes.
What is a meme coin?
Meme coins are a type of cryptocurrency based on internet cultural phenomena:
Culturally driven: The popularity of meme coins arises from the 'meme culture' on the internet, typically created by developers or enthusiasts based on popular cultural elements like memes.
Community-driven: The development and promotion of these types of coins primarily rely on community strength and market speculation sentiment, reflecting the characteristics of decentralization and community-driven.
Price volatility: The prices of meme coins may experience significant fluctuations in a short period, greatly influenced by market sentiment and social media attention.
Lack of practical application: Compared to traditional cryptocurrencies, meme coins usually do not have a clear technical basis or practical applications, and are more of a speculative tool or a symbol of cultural phenomena.
The popularity of meme coins not only reflects dissatisfaction with the traditional financial system and a pursuit of novel, interesting investment targets but also demonstrates the potential of blockchain technology in innovative applications.
What is the driving logic behind memes?
Market driving factors behind meme coins: liquidity, social media popularity, and monetary policy.
1. Decentralization and community-driven: The development and promotion of MEME coins mainly rely on the strength of the community and the market's FOMO sentiment, being primarily a community-led decentralized token. It effectively addresses liquidity and consensus problems in the market, and complete decentralization makes more retail investors willing to participate.
2. Reward and incentive mechanisms: MEME coins reward community members for their participation and contributions through incentive mechanisms. Users who hold and use MEME coins can receive certain rewards, which promotes community activity and growth. This also significantly enhances the overall popularity and spread of the token.
3. Unique cultural atmosphere: The MEME coin community is known for its unique cultural atmosphere, most typically represented by 'shit,' which was born in May 2022 and achieved thousandfold returns in a month. Its biggest characteristic is: riding the wave, then throwing a lump of 'shit' on the leading NFT, filled with humor, creativity, and a spirit of freedom. Community members often share interesting memes and creative works, creating a relaxed and enjoyable atmosphere.
The development history of meme coins
1. At the end of 2013, two software engineers jokingly issued $DOGE (Dogecoin) using the Doge meme, starting the craze of meme coins. In the following 10 years, the overall increase was closest to BTC, nearly 150,000 times!
2. In 2021, with the popularization of DeFi, the prevalence of NFTs across the internet, combined with high-frequency trading on the chain and Elon Musk's frenzied shout-out for $DOGE, the entire zoo series of meme coins emerged as the most representative.
3. After the market fell silent following the bankruptcies of FTX, 3AC, and the LUNA crisis in 2023, a new wave of MEME frenzy has emerged led by $PEPE.
4. With the strong support of the Solana Foundation, since the beginning of this bull market, early quality meme inscriptions on the Solana chain have allowed users to earn substantial profits, creating a positive upward spiral.
5. The emergence of meme launchers like pump.fun on Solana has elevated the MEME battle to a new height.
6. Every public chain wants to have its own unique MEME, whether it's BaseChain's $DEGEN, $BREET, BNBChain's $WHY, Ethereum's $PEPE, $SHIB, $MOG, or Solana's $BONK, $WIF. These are all driving the development of the entire meme, increasing on-chain TVL, activity, trading volume, GAS, etc.
Why do users like memes?
First, it has lottery-like characteristics: achieving tenfold returns on exchanges has become rare, and even hundredfold is difficult. However, memes can help you realize this wish, with thousands and ten thousands of memes available on the Solana chain, ETH chain, and Base chain.
Second, the beneficial effect: many people are willing to enter the market because they see others earning enough wealth for financial freedom through MEME in a short time, with low costs and high returns.
Third, participatory nature: because the market capitalization is very low, there are many with FDV below 10 million, some below 1 million, and some below 100,000. There is no limit upwards, opening up dreams, and one can still participate, so people are willing to take chances to turn a bicycle into a motorcycle.
How to pick a good meme?
1. Does it have a strong community consensus? The explosion of any meme coin relies on a community with strong consensus to promote it. Only then can it have a chance to break out and allow more people to understand it, forming a larger consensus.
2. Whether the community has global promotion: since it is decentralized trading on the chain, the community definitely needs to have global promotion, which allows for more imaginative space when memes explode.
3. Complete decentralization: major holders do not hold absolute control over the tokens, enabling more users to be willing to participate, promote together, and realize dreams step by step.
4. In an innovative track, whether in the cryptocurrency world or memes, it's always a place that doesn't lack funding; the only thing lacking is a very good story to tell. As long as your story is good and your imagination is rich enough, the ceiling will be high enough, and making money will be a natural thing.
