TL;DR
1. With the U.S. election settled, Bitcoin successfully broke $100,000, and memecoins welcomed the 'Sunmmer' season;
2. The initial intention of memecoins was not primarily speculation; the birth of DOGE was rooted in the meme's essence: straightforwardness, humor, and grassroots involvement, with many investing in charitable causes;
3. A new trend is that memecoins are gradually becoming a medium for expressing support and belief;
4. At this stage, with continuous infrastructure improvement, memecoins are experiencing a surge in numbers while also presenting a new duality;
5. Memecoins are 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 memes in the internet age are ubiquitous, turning popularity into currency and assets, and leveraging massive increases by hundreds, thousands, or even tens of thousands of times, is a unique landscape of Web3. In the year Bitcoin unlocked $100,000, memecoins sparked a grand symbolic carnival in the coin market.
According to data from Artemis Terminal, memecoins have performed excellently from the beginning of 2024 to now, with the Benchmark index rising from 1.2% at the beginning of the year to 372.9% on December 8, significantly outpacing other crypto sectors like DeFi, BTC, and AI tokens; meanwhile, the total market value of the memecoin sector has surged from tens of billions at the beginning of the year to over $139 billion, with the number of memecoins joining the billion-dollar market cap club increasing to 10. The gains of leading projects seem limitless; it took Dogecoin 1487 days to reach a billion dollars, while PNUT, released in November 2024, achieved this in just 11 days.
The foundation of Web3 — the public chain ecosystem is also undergoing changes due to memecoins.
According to research data from Coingecko, from January to November 2024, Solana and Base accounted for half of the public chain ecosystem investors' interest, surpassing Ethereum as the only two public chains, and this is inseparable from the explosion of the memecoin ecosystem. Base has quickly emerged as a new star in the Layer 2 public chain ecosystem, achieving a 20-fold increase in the number of weekly active addresses compared to the beginning of the year, leading in TVL, trading volume, and user activity among other L2 projects.
Image source: growthepie.xyz
Nonetheless, the controversies surrounding memecoins have never ceased. They seem to represent two extremes on the coordinate axis of the Web3 world: one side is the simple yet highly tempting narrative of wealth and the totem of the rebellious spirit of crypto culture; the other side reinforces external stereotypes: technical uselessness and easily burst capital bubbles.
In response, this article will provide a brief overview of the development stages of memecoins and attempt to deconstruct their dual nature.
Part.1 The development stages of memecoins
By definition, memecoins are tokenized representations of internet memes or other humorous events or concepts. They are native assets of the blockchain, transferable, usable in blockchain-based applications, and can also be traded on secondary markets like DEX. Reviewing the development history of memecoins, the speed of turnover for hot projects is extremely fast, evolving in quantity, theme, and on-chain territory. Based on this, this article divides them into three development stages:
Phase One: The dark humor represented by DOGE
To tell the story of memes, one cannot avoid the earliest and currently highest market value memecoin — DOGE. It can be said that the development of DOGE laid the cultural foundation of memecoins — straightforwardness, humor, and grassroots.
In 2013, Jackson Palmer, who worked in the marketing department of Adobe Systems, and Billy Markus, a software engineer at IBM, connected through humor and combined two of the internet's hottest topics at that time: the Shiba Inu meme 'doge' and cryptocurrency to create DOGE, affectionately called Dogecoin in the Chinese context.
Unlike other projects in the cryptocurrency ecosystem, Dogecoin does not attract attention through grand proclamations of the future or significant technological breakthroughs; instead, it lacks innovative development and has a very fragile network topology, yet it is refreshingly authentic: becoming the most interesting token in the world. This declaration spread virally within the English forum Reddit community, and its tipping bot became an early means of dissemination. Reddit users could share back and forth to earn dogecoin, further expanding its following.
What truly propelled Dogecoin to fame was Tesla and SpaceX CEO Elon Musk. In 2021, Musk tweeted, 'Dogecoin might be my favorite cryptocurrency' and frequently mentioned it. Under his immense influence, Dogecoin became the best-performing asset of the year, deeply binding it to him; every time Musk tweeted, Dogecoin's price would rise accordingly.
Image source: Crowthepie.ch
In the early days of the memecoin track, most memecoins aligned with the initial hit DOGE, sharing common characteristics:
1. Themed around animals, mainly 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 supporting the Jamaican bobsled team to participate in the Olympics; Shiba Inu (SHIB) also donated 10% of its supply to the COVID-crypto relief fund in India at its inception.
3. Abandoning convoluted blockchain terminology, focusing on its greatest advantageous feature — dark humor, and relying on the widespread dissemination by the community.
4. The main battleground is Ethereum.
Image source: CoinGecko
Phase Two: A Medium for Expressing Web3 Culture
If the initial phase of memecoins focused heavily on animals, the second phase of memecoins has broadened in types, evolving from the initial animal coins to anything can be meme-ed, such as celebrity coins, political coins, and emoji coins.
A new trend is that memecoins are gradually becoming a medium for expressing support and belief, whether for a certain spirit or for ICON-like figures.
Meanwhile, Solana, with its high throughput and lower gas fees, has become the primary battlefield for memecoins.
▎Spiritual memecoins
The dog-themed memecoin BONK was launched on Solana shortly after the collapse of cryptocurrency exchange FTX at the end of 2022. BONK was initially intended to reignite interest in Solana and catalyze on-chain activities by airdropping free memecoins to Solana developers, SAGA phone users, and NFT holders. It indeed played its role; besides a significant price surge, BONK has integrated into the Solana ecosystem since its launch, including decentralized exchange BonkSwap, BonkDex, non-custodial wallet BonkVault, as well as a gamified fitness application Moonwalk, further enhancing BONK's utility.
The sad frog-themed BOME was created on Solana in March 2024. Its founder has a vision to immortalize memecoins by utilizing decentralized storage solutions like Arweave and IPFS to preserve meme culture on the blockchain, exploring the intersection of meme culture, blockchain technology, and decentralized finance, seen as an important step for cultural preservation and digital expression on the blockchain.
▎ICON-style memecoins
Currently, most categories of memecoins include political coins and celebrity coins, which can be collectively categorized as ICON-style memes.
In 2024, as the 60th quadrennial presidential election year in the U.S. heats up, political figure memecoins have emerged and gained attention, especially the Doland Tremp-themed memecoins, which not only have multiple versions: TRUMP, MAGA, TREMP, STRUMP, FIGHT, MVP, etc., but also leverage the heat of related political events and their controversy on social media, performing actively in the cryptocurrency market. Memecoins inspired by U.S. 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 value of $500 million (which has significantly shrunk compared to the total election period). These political memecoins attract specific audience groups through their thematic figures and are increasingly viewed as vehicles to support political movements, crowdfunding activities, and attract voters through DeFi mechanisms.
Other representative ICONs include U.S. retail trader Roaring Kitty and crypto KOL Murad. The former once led the 'retail battle against Wall Street' myth, causing the long-suffering U.S. gaming retailer GameStop's stock GME to soar several times, destroying almost all short-selling institutions. Merely due to a post on X platform after three years, the related memecoins KITTY and GME both achieved triple-digit increases within 24 hours. The latter gained popularity due to a speech video at Token 2049, causing the memecoins he recommended to rise across the board.
Phase Three: The new modality of memecoins
As the value of memecoins in the financial market continues to rise, and with the emergence of token issuance platforms represented by Pump.fun, memecoins are showing two starkly different yet converging paths: one is an extremely downward memecoin market, while the other attempts to combine with new narratives to impart application value to memecoins.
▎A mixed bag of memecoin markets
Most early issued tokens were costly and required technical ability to write or adjust contracts, issue tokens on the blockchain, and create liquidity pools on DEX for trading. However, Pump.fun on Solana broke this boundary with an extremely low issuance cost (only $2), allowing anyone to generate their own tokens on the Solana network.
Once a memecoin is generated on the platform, it can be traded directly in the platform's internal market, facing two phases: automatic deployment to the Solana decentralized finance protocol Raydium after reaching a market value of approximately $69,000; once the memecoin has a relatively high market value, an active community, significant trading volume, and high topic popularity in DEX, it may be listed on centralized exchanges like Binance.
The direct impact of the Pump effect is the explosive increase in the number of memecoins. Since March 2024, Pump.fun has deployed over 4 million tokens, thus becoming the fastest Web3 application in the entire crypto industry history to earn $100 million. However, at the same time, due to the ability for everyone on-chain to issue tokens, 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 very few memecoins potentially advancing to DEX, with even fewer making it to CEX.
Nevertheless, under the pump effect, various public chain ecosystems have followed suit; whether it's TRON's SunPump, BSC's Four.Meme, or Base's frequent hits like Virtuals and Clanker, they have all provided fertile ground for the explosive growth of memecoins.
Image source: Dune
▎Memecoin + Applications
With the explosion of memecoin numbers, the proliferation of similar tokens and the exhaustion of innovation, memecoins need new narratives. The market recognizes that for memecoins to have longevity in the long run, they need to maintain long-term appeal to a sufficiently large consumer group; thus, 'application-based memecoins' have emerged, and the introduction of AI has infused new vitality into memecoins.
┅ Memecoins as applications
For example, the leading meme DEGEN on the Base chain originated from the /degen channel on the decentralized social protocol Farcaster; subsequently, the development team launched the L3 — Degen Chain based on the Base chain to transform community memecoins into crypto assets with practical application value and market competitiveness, effectively extending its lifespan.
Floki also initially started as a memecoin, later transforming into a practical project with a considerable ecosystem. It involves 3D NFT Metaverse, DeFi, real-world assets (RWA), and even prepaid cards.
┅ Applications as memecoins
For example, two AI agents, aethernet and clanker, collaborated to issue the memecoin LUM. The rapidly rising GOAT was also an idea conceived by the AI bot 'Terminal of Truth' in its musings.
Part.2 The dual nature of memecoins
Looking back at the development history of memecoins, it is hard to imagine that the birth of a joke coin could evolve into such a prosperous state in nearly 10 years, officially being accepted as a choice of crypto assets. Behind this transformation, it is inevitable to ponder the reasons behind it: What ignited the enthusiasm for memecoins? And how do we perceive the other shadow side of memecoins?
Anti-seriousness, undermining authority VS technical nihilism
Essentially, memecoins are a monetization of deconstructionism, behind which is the creative adaptation of pop culture and internet culture, as well as the humorous and satirical expression of news events, thereby creating unique and charming meme images and stories: undermining authority, absurdity, anti-seriousness, and attracting investors' attention and participation through the fervent performance of the market.
The memecoin craze of 2024 has shifted the goal of undermining authority from Web2 to Web3, making it more concrete.
In the last bull market cycle, VC tokens were regarded as blue-chip assets, but have now lost their appeal to secondary market investors. The increase in market entry barriers has brought the opportunity for retail investors to purchase pre-issued tokens close to zero; the high FDV (fully diluted value) and low circulation situation have led to negative valuations, 'opening price is the peak' becoming the norm, combined with airdrop earnings falling short of expectations, retail investors are eagerly seeking a redistribution of rights and wealth, and the explosive popularity of memecoins is seen as a community expression of resistance against VCs, signifying that there are no market makers manipulating the odds, and all participants have an equal opportunity to profit.
However, as memecoins absorb the majority of traffic and funds, becoming a staple rather than a side dish, it inevitably raises concerns about technology nihilism in Web3. 'I am not against memes, but memecoins have become somewhat strange now; let's build real applications using blockchain,' this sentiment likely resonates not just with Binance founder CZ.
When the technical narrative fails and the cake is being eaten away, will this dampen the enthusiasm for technological development and innovative use cases in the Web3 industry? Furthermore, memecoins undermine the authority of market makers while inadvertently crowning KOL influencers, under the psychological expectation of no market maker control, does this also weaken the image of the underwater cable group?
Low cost, high return VS capital bubble
The enthusiasm for memecoins largely stems from the narrative of rapidly doubling wealth and the myths of gains. An example is GMGN, which showed on November 24 that a smart money early investment of 1 SOL in memecoin Mustard has now yielded a return of 4424 times. With the lowest investment cost, becoming the next wealth story's protagonist is precisely the greatest allure of memecoins; it acts like a new type of crypto lottery, breaking through during a capital-rich bull market — a period in which a Fomo mentality outweighs narrative.
However, the other side of the wealth myth is the sobering reality that most memecoins have failed to maintain their initial momentum, leaving behind a series of shattered hopes. Research from ChainPlay shows that 97% of memecoins have perished, with an average lifespan of 1 year, which is one-third of the lifespan of typical crypto projects; additionally, malicious activities have severely impacted the memecoin market, with over half of memecoins (55.24%) considered malicious, and nearly one-third of investors (28%) reporting losses due to fraudulent memecoins.
Attention economy VS chaos and brevity
The essence of memecoins is based on attention, and the composition of attention includes:
1. Symbolic dissemination form: The very nature of symbolic content confers outstanding dissemination advantages. A viral meme, a well-known animal, or an anime character is obviously an effortless medium that can establish a connection with the audience and promote natural engagement. The live-streaming feature once launched on Pump.fun on Solana is the maximum manifestation of the attention economy; through live streaming, token issuers can showcase their ideas or actions in real-time, attracting the audience's attention and driving token trading.
2. Community-driven dissemination medium: The dissemination of memecoins is community-driven, and this decentralized form of communication is both efficient and highly penetrative, such as on 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 memecoins can collapse instantly. Many new projects have a short average lifecycle and a very low success rate. Moreover, some memecoins, like political figure memecoins, have a time-sensitive nature; once an event concludes, and the newsworthiness diminishes, their popularity quickly fades.
Similarly, when hype knows no bounds and people go to great lengths for attention, the bottom line can become blurred or even disappear. When Pump.fun streamers begin to compete for more extreme behaviors, from self-harm and suicide to animal abuse, and even mimic Nazi performances, the closure of the live broadcasting function and the short lifespan of related memecoins become foreseeable.
Part.3 How to distinguish quality memecoins from shitcoins?
Although most memecoins have a short lifespan and a high failure rate, they still attract a large number of investors due to their rapid profit potential. Detailed investigation is especially important. It should be noted that the author is not an expert but has summarized the following three factors for consideration based on public research conclusions and community wisdom, hoping to provide some reference value for readers to weed out shitcoins.
1. Narrative
The popularity of a memecoin needs supportive narratives that spread virally, such as news events, political themes, watchable stories, or iconic figures.
When the old narrative saturates, it is also important to judge whether the new narrative possesses sufficient humor or irony and whether it can attract trending topics.
2. Community
Checking the real activity of the memecoin team's social platforms is crucial, such as Twitter, Telegram, Reddit, Discord, etc. Memecoins heavily rely 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 converts well can attract a massive amount of attention in a short time.
Evaluating community potential is also critical. Crypto KOL Murad proposed the concept of 'cult meme,' emphasizing that the ultimate form of a meme is the next religion. 'Therefore, it is necessary to hang out in their social space to see how large the cult, passion, and religious atmosphere of that community are.'
3. Marketing
Marketing ability differs from community building; marketing ability represents the subsequent development capability of memecoins. It is reflected in the promotional strength of the crypto KOL matrix, discussion trends on Twitter, and the number of shares on Telegram, all of which can be queried using relevant tools. For example, Twitter's advanced version allows one to search for the number of related posts using keywords, to determine whether the overall trend is rising or falling.
Celebrity effect: If there are relevant celebrities like Vitalik, Musk, or leading KOLs involved, the potential for dissemination is greater, likely attracting more attention and funds. However, it is important to note that the endorsement effect of crypto KOLs is limited and should not be blindly followed.
4. Risk review
Check whether LP tokens have been burned, which can ensure that project developers cannot withdraw liquidity and run away (rug pull).
Check whether developers have relinquished ownership of the smart contract. This is reflected in whether memecoin developers have transferred ownership of the smart contract to a null address. The relinquishment of ownership means that developers can no longer modify the token supply or manipulate the code, which reduces the risk of malicious changes that could harm investors.
5. Market performance
Expected market value: The estimated value of narrative determines the expected profit space. If one judges that the current memecoin's market value is still far from the narrative value, then there may still be space to acquire alpha. The estimated value needs to be combined with the three points mentioned above: narrative, community, and marketing.
Liquidity: High liquidity allows investors to enter and exit quickly without significantly impacting the price, reflected in the depth and trading volume of DEX. It is important to note that trading volume and depth can also be subject to potential manipulation, which can be compared with the matching degree with FDV.
Chip distribution: Use tools like Dexscreen to check the ratio of topholders; the chips should not be concentrated in a few hands. Ideally, excluding liquidity-providing addresses (e.g., Binance, Raydium), the top 10 holders should hold at most 20% to 30%.
Trends: Closely monitor price trends and market fluctuations, as they are barometers for judging the risks and timing of memecoins.
6. Smart Money
Gain insights into market trends by tracking the actions of 'smart money' through on-chain data analysis platforms like GMGX or trading bots, which may improve the chances of trading success.
It is important to note that not all smart money wallets are reliable; some memecoins rely specifically on smart money buy signals to rug pull retail investors.
In summary, the following principles should be followed when investing:
Mastering the use of technical tools will yield twice the results 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, set stop losses;
Don't put all your eggs in one basket; allocate assets according to your risk preference.
Conclusion
Soviet thinker Bakhtin drew inspiration from Western carnivals to propose one of the crystallizations of his thought — the Carnival Theory, whose broad and inclusive interpretative power can easily transcend temporal and spatial limitations, extending to memecoins. In his theory, he emphasizes the liberating and free-spirited core, centered on universality and a mockery of the sacred, meaning everyone is an active participant, where people elevate the king in a carnival by ridiculing.
Similarly, memecoins are like a carnival ritual in the crypto world, born out of jest, demystifying complex blockchain terminology, and pulling VCs off their pedestals, rapidly becoming one of the forces that cannot be ignored in the crypto world. The founder of DOGE once humorously mocked the 'bubble' market of cryptocurrency, but little did he know that this would usher in one of the largest 'bubble' markets in cryptocurrency.
In the second half of 2024, we see the potential for the integration of memecoins and the Web3 ecosystem. The arrival of AI technology and the innovation of Web3 narratives have both adorned memecoins with new garments. We expect memes to move beyond rebellious spirits and short-term speculative positioning, bringing new appearances to the asset market's digital games.
*All content on the Coinspire platform is for reference only and does not constitute an offer or advice for any investment strategy. Any personal decisions made based on this article's content are solely the responsibility of the investor, and Coinspire is not liable for any profits or losses incurred as a result. Investment carries risks, and decisions should be made cautiously!
