TL;DR
1. With the US elections settled, Bitcoin successfully broke the $100,000 mark, and memes usher in the Summer season.
2. The initial intent of Memecoin was not primarily speculative; the birth of DOGE was the original intention of memes: straightforwardness, humor, and grassroots, with most being invested in charitable causes.
3. A new trend is that Memecoin is gradually becoming a vehicle for expressing support and belief;
4. At this stage, with the continuous improvement of infrastructure, Memecoin is not only increasing in number but also presenting a new duality.
5. Memecoin is a complex investment that requires consideration of narrative, community, marketing, risk, market performance, and smart money.
Introduction
An animal image, a meme image, an ICON; although memes of the internet age are ubiquitous, transforming popularity into currency and assets, triggering hundredfold or thousandfold increases, is a unique landscape of Web3. In the year when Bitcoin unlocked $100,000, Memecoin stirred a grand symbolic carnival in the currency 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 outperforming other crypto sectors like DeFi, BTC, and AI tokens. Meanwhile, the total market cap of the Memecoin sector has grown from tens of billions at the beginning of the year to over $139 billion, with the number of Memecoins entering the $1 billion market cap club increasing to 10. The growth of leading projects seems limitless; Dogecoin took 1487 days to reach $1 billion, while PNUT, released in November 2024, achieved it in just 11 days.
The cornerstone of Web3—the public chain ecosystem—has also undergone changes due to Memecoin.
According to research data from Coingecko, during the period from January to November 2024, Solana and Base occupied half of the investor interest in the public chain ecosystem, being the only two public chains surpassing Ethereum, all of which is inseparable from the explosion of the Memecoin ecosystem. Base, in particular, became a rising star in the Layer 2 public chain ecosystem due to its meme characteristics, achieving a 20-fold increase in the number of active addresses per week compared to the beginning of the year, leading other L2 projects in TVL, trading volume, and user activity.
Image source: growthepie.xyz
Nevertheless, controversies surrounding Memecoin have never ceased. It seems to represent two polar extremes of the Web3 world: one side is a simplistic yet highly tempting narrative of wealth, a totem of the rebellious spirit of crypto culture; the other side reinforces external stereotypes: the theory of useless technology and a bubble that bursts at a touch.
In this regard, this article will provide a brief overview of the development stages of Memecoin and attempt to deconstruct its dual nature.
Part.1 Development Stages of Memecoin
By definition, Memecoin is a tokenized description of internet memes or other humorous events or concepts. They are native assets of the blockchain, transferable, usable in blockchain-based applications, and tradable on secondary markets like DEX. Looking back at the development history of Memecoins, the speed of turnover of hot projects is extremely fast, with evolution in quantity, themes, and on-chain positions; this article divides them into three development stages:
First Stage: The Dark Humor Represented by DOGE
To tell the story of Memes, one must mention the earliest and currently highest market cap Memecoin—DOGE. It can be said that the development of DOGE has laid the cultural foundation of Memecoin—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, combining two of the hottest topics on the internet at that time: the Shiba Inu meme 'doge' and cryptocurrency, creating DOGE, affectionately known as Dogecoin in Chinese contexts.
Unlike other projects in the cryptocurrency ecosystem, Dogecoin does not rely on grand declarations about the future or major technological breakthroughs to attract attention. Instead, it has no innovative development, and its network topology is quite fragile, but it is refreshingly genuine: it aims to be the most interesting token in the world. This declaration gained viral traction within the English forum Reddit community, and its tipping bot became an early means of dissemination, allowing Reddit users to share Dogecoin back and forth, further expanding its followers.
What truly brought Dogecoin to prominence was Elon Musk, the CEO of Tesla and SpaceX. 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, and thereafter, whenever Musk tweeted, the price of Dogecoin would rise accordingly.
Image source: Crowthepie.ch
In the early days, before the Memecoin track had formed, most Memecoins aspired to DOGE, sharing the commonality of:
1. Thematic around animals, mostly 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 Winter Olympics; Shiba Inu (SHIB) also donated 10% of its supply to the COVID-crypto relief fund in India at its inception.
3. Avoiding convoluted blockchain terminology, focusing on its greatest strengths—dark humor—and relying on the extensive dissemination by the community.
4. The main battlefield is Ethereum.
Image source: CoinGecko
Second Stage: A Vehicle for Expressing Web3 Culture
If the initial stage of Memecoin only focused on animals, then in the second stage, the types of Memecoins have become broader, evolving from initial animal coins to memes of all kinds, such as celebrity coins, political coins, emoji coins, etc.
A new trend is that Memecoin is gradually becoming a vehicle for expressing support and belief, whether it be for a certain spirit or an ICON-like figure.
Meanwhile, Solana, with its high throughput and lower gas fees, has become the main battleground for Memecoins.
▎Spiritual Memecoin
The dog-themed Memecoin BONK was launched on Solana shortly after the collapse of the cryptocurrency exchange FTX at the end of 2022. BONK was initially aimed at reigniting interest in Solana and catalyzing on-chain activity, by airdropping free Memecoins to Solana developers, SAGA phone users, and NFT holders. It indeed played a role; in addition to a significant price increase, BONK has integrated into the Solana ecosystem, including decentralized exchanges BonkSwap, BonkDex, an unmanaged wallet BonkVault, and a gamified fitness application Moonwalk, further enhancing BONK's utility.
BOME, which features the sad frog, is a Memecoin created on Solana in March 2024. Its founder has a vision to make Memecoin immortal, claiming to utilize 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 blockchain in cultural preservation and digital expression.
▎ICON-style Memecoin
Currently, most categories of Memecoins include political coins and celebrity coins, which are collectively categorized here as ICON-style Memes.
In 2024, with the warming up of the 60th quadrennial presidential election in the US, political Memecoins also emerged and gained attention, especially Memecoins themed around Doland Tremp, which not only appeared in multiple versions: TRUMP, MAGA, TREMP, STRUMP, FIGHT, MVP, etc., but also utilized the heat of related political events and their controversy on social media, performing actively in the cryptocurrency market; Memecoins inspired by US Vice President Kamala Harris also appeared in different versions: KAMA, MAWA.
As of the time of writing this article, CoinGecko has listed 83 PolitiFi tokens on its platform, with a total market value of $500 million (which has shrunk considerably compared to the total during the election period). Such political Memecoins attract specific audiences through their thematic figures and are increasingly viewed as vehicles supporting political movements, crowdfunding activities, and attracting voters through DeFi mechanisms.
Other representative ICONs include retail traders Roaring Kitty from the US stock market and crypto KOL Murad. The former once led the myth of 'retail investors versus Wall Street,' causing the long-losing American retail giant GameStop's stock (GME) to surge dozens of times, destroying almost all shorting institutions, merely because he posted on X platform for the first time in three years, resulting in the related Memecoins KITTY and GME achieving triple-digit gains within 24 hours; the latter gained popularity due to a speech video at Token2049, which led to the entire list of Memecoins he recommended rising.
Third Stage: New Modalities of Memecoin
As the value of Memecoin in the funding market continues to rise, and with the emergence of token launch platforms represented by Pump.fun, Memecoin is experiencing explosive growth in number while presenting two distinctly different yet converging directions—one being an extremely downward Memecoin trading market, and the other being a combination with new narratives, attempting to endow Memecoin with application value.
▎A Chaotic Memecoin Market
In the early days, issuing tokens was often costly and required technical skills to write or adjust contracts, to issue tokens on the blockchain, and to create liquidity pools on DEX for trading. However, Pump.fun on Solana, with its extremely low issuance cost (only $2), allows anyone to generate their own tokens on the Solana network, breaking this boundary.
Once a Memecoin is generated on the platform, it can be traded directly in the platform's internal market and faces two stages: once it reaches a market value of approximately $69,000, it is automatically deployed to the decentralized finance protocol Raydium on Solana; when a MemeCoin has a relatively high market value, an active community, and significant trading volume and topic engagement on DEX, it is likely to be listed on centralized exchanges such as Binance.
The direct impact of the pump is the explosive increase in the number of Memecoins. Since March 2024, the total number of tokens deployed by Pump.fun has exceeded 4 million, making it the fastest Web3 application in history to earn $100 million in the entire crypto industry. However, at the same time, due to the fact that anyone can issue tokens on-chain, many malicious scam tokens and contract vulnerability tokens have emerged, with the vast majority ending in rug pulls or going to zero; only a very few Memecoins may advance to DEX, and even fewer make it to CEX.
Nonetheless, under the Pump effect, major public chain ecosystems have followed suit. Whether it’s TRON's SunPump, BSC's Four.Meme, or Base's frequently launched Virtuals and Clanker, they all provide fertile ground for the explosive growth of Memecoins.
Image source: Dune
▎Memecoin + Applications
With the explosion of the number of Memecoins, the flooding of similar tokens and the exhaustion of innovation, Memecoin needs new stories. The market recognizes that in the long term, for Memecoin to have longevity, it needs to have long-term appeal to a sufficiently large consumer base. At this point, 'application-based Memecoin' emerges, with the introduction of AI injecting new vitality into Memecoin.
┅ Memecoin as Applications
For example, the leading meme on the Base chain, DEGEN, initially emerged from the /degen channel on the decentralized social protocol Farcaster. Subsequently, the development team launched L3 on the Base chain—Degen Chain—to realize the transformation from community Memecoins to crypto assets with practical application value and market competitiveness, effectively extending its lifespan.
Floki also started as a Memecoin but later transformed into a practical project with a substantial ecosystem. It involves 3D NFT Metaverse, DeFi, real-world assets (RWA), and even prepaid cards.
┅ Application-Based Memecoin
For example, the Memecoin LUM issued collaboratively by two AI agents, aethernet and clanker. The rapidly popular GOAT was also a concept conceived by the AI bot 'Terminal of Truth' during its musings.
Part.2 The Dual Nature of Memecoin
Looking back at the development of Memecoin, it is hard to imagine that the birth of a joke coin could develop into such a prosperous state in nearly ten years, formally accepted as a choice of crypto assets. Behind this transformation, we can't help but ponder the reasons behind the enthusiasm for Memecoin: what truly ignites the passion for Memecoin? And how do we view the other shadow aspect of Memecoin?
Anti-seriousness and the dissolution of authority VS Technological nihilism
Essentially, Memecoin is a monetization of deconstructionism, which is backed by creative adaptations of popular and internet culture, as well as humorous and satirical expressions of news events, thereby creating unique meme images and stories that dissolve authority, absurdity, and anti-seriousness, attracting investors' attention and participation through market frenzy.
The Memecoin craze of 2024 has shifted the goal of dissolving authority from Web2 to Web3 and has become more tangible.
In the last bull market cycle, VC Tokens were seen as blue chips, but they have now lost their appeal to secondary market investors. The increased market entry barriers have brought the opportunities for retail investors to purchase pre-issued tokens close to zero. The current situation of high FDV (Fully Diluted Valuation) and low circulation has also made inverted valuations and 'opening price equals peak' the norm, coupled with airdrop returns falling short of expectations, retail investors urgently need a redistribution of rights and wealth, while the explosive popularity of Memecoin is seen as a community's expression of resistance against VCs, indicating that there are no manipulators and all participants have a fair chance to profit.
But as Memecoins absorb most of the traffic and funds, leaping to become staples rather than side dishes, it inevitably raises concerns about the technological nihilism of Web3. 'I don't oppose memes, but Memecoins have become a bit strange now; let's build real applications with blockchain.' This sentiment likely resonates not just with Binance founder CZ.
With the story of technology failing, as the cake is eaten away, will this diminish the enthusiasm for technological construction and innovation use cases in the Web3 industry?
Moreover, Memecoin dissolves the authority of manipulators while inadvertently crowning the authority of KOL opinion leaders. Under the psychological expectation of no manipulators controlling the market, does this also weaken the image of the underwater cable group?
Low-cost high-return VS Capital Bubble
The enthusiasm for Memecoin largely stems from narratives of rapid doubling and mythical wealth of hundreds or thousands of times. One example is GMGN, which showed on November 24 that a smart money early investment of 1 SOL in the memecoin Mustard has yielded a profit of 4424 times. With minimal investment costs, becoming the protagonist of the next wealth story is the biggest attraction of Memecoin. It acts like a new type of crypto lottery during a bull market filled with abundant funds—a period when FOMO mentality outweighs narrative.
But 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 vanished, with an average lifespan of 1 year, which is one-third of the lifespan of ordinary crypto projects; moreover, 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 Out of Control and Transience
The essence of Memecoin is based on attention, and the components of attention include:
1. Symbolic forms of dissemination: The symbolic content form itself endows it with outstanding dissemination advantages. A meme, a well-known animal, or an anime character is obviously an effortless medium that can connect with the audience and promote natural participation. The live-streaming feature once launched by Pump.fun on Solana is the maximum display of attention economy; through live streaming, token issuers can showcase their creativity or actions in real time, attract audience attention, and promote token trading.
2. Community-driven media: The dissemination of Memecoin is driven by the community, and this decentralized way of spreading is both efficient and has strong penetration, such as on Reddit, 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. The average lifespan of many new projects is short, and the success rate is extremely low. Additionally, some Memecoins, such as those related to political figures, have a timeliness; once the events end, the news diminishes, and popularity swiftly fades.
Similarly, when speculation knows no bounds, and people go to extreme lengths for attention, the bottom line becomes blurred or even disappears. When Pump.fun live streamers begin competing for more extreme behaviors, from self-harm and suicide to animal abuse, and even mimicry of Nazi performances, the closure of the live streaming feature and the fleeting life of related Memecoins is foreseeable.
Part.3 How to Distinguish Quality Memecoins from Shitcoins?
Although most Memecoins have short lifespans and high failure rates, they still attract a large number of investors due to their rapid profit potential. Detailed investigations are especially important. It should be noted that I am not an expert, but based on publicly available research conclusions and community wisdom, I have summarized the following three points of focus to help readers filter out shitcoins.
1. Narrative
The popularity of a Memecoin requires supportive narratives that go viral, such as news events, political themes, watchable stories, or ICON figures.
When the old narrative saturates, it is also important to assess whether the new narrative possesses sufficient humor or irony and whether it can lead trends.
2. Community
It is important to check the real activity level of the Memecoin team's social platforms, 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 disseminate and converts well can attract a large amount of attention in a short time.
Assessing community potential is also crucial. Crypto KOL Murad introduced the concept of 'cult Meme,' emphasizing that the ultimate form of a meme is the next religion. 'Therefore, one needs to hang out in their social space to see how big the cult, passion, and religious atmosphere of that community are.'
3. Marketing
Marketing ability and community building are different; marketing ability represents the subsequent development capability of Memecoin. This is reflected in the promotional strength of the crypto KOL matrix, trends in discussions on Twitter, the frequency of dissemination on Telegram, etc., which can all be checked through relevant tools. For example, Twitter's advanced version can search keywords to understand the number of related posts, judging whether the overall trend is rising or falling.
Celebrity effect: If there are relevant celebrities like Vitalik, Musk, or top KOLs collaborating, the dissemination potential is greater and may attract 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 the developer has relinquished ownership of the smart contract. This is reflected in whether the 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 supply of tokens or manipulate the code, reducing the risk of malicious changes that could harm investors.
5. Market performance
Expected market value: The estimated narrative value determines the expected profit margin. If the current market value of Memecoin is still far from the value indicated by the narrative, there is still room to gain alpha. Estimating value needs to combine the three points mentioned above: narrative, community, and marketing.
Liquidity: High liquidity allows investors to quickly enter and exit without significantly impacting the price, reflected here as the depth and trading volume of DEX. It is important to note that trading volume and depth may also be subject to potential manipulation, which can be compared against the level of FDV.
Chip distribution: Use tools like Dexscreen to check the ratio of top holders; chips should not be concentrated in the hands of a few people. Ideally, the top 10 holders should hold at most 20%-30%, excluding addresses providing liquidity (such as Binance, Raydium, etc.).
Trends: Closely observe price trends and market fluctuations; they are the barometers for measuring the risk and timing of Memecoins.
6. Smart Money
Using on-chain data analysis platforms such as GMGX or trading bots to track the actions of 'smart money' may help grasp market trends, potentially improving trading success rates.
It is important to note that not all smart money wallets are reliable; some Memecoins rely solely on smart money buying signals to rug retail investors.
In summary, the following principles should be followed when investing:
Mastering the use of technical tools will yield great results, 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 stop-loss limits;
Put eggs in multiple baskets and allocate assets based on risk preference.
Conclusion
Soviet thinker Bakhtin was inspired by Western carnivals to propose one of the crystallizations of his thought—carnival theory. Its broad and inclusive interpretive power can completely break the limitations of time and space, extending to Memecoin. In his theory, it emphasizes the spirit of liberation and freedom, with the core being universality and the mockery of the sacred, meaning everyone is an active participant, where people crown kings in a carnival atmosphere with humor.
Similarly, Memecoin is like a carnival ritual in the crypto world, born from jest, demystifying complex blockchain terminology, and bringing VCs down from their pedestals, becoming one of the most significant forces in the crypto world. The founder of DOGE once playfully mocked the 'bubble' market of cryptocurrencies, yet unexpectedly opened up one of the largest 'bubble' markets in cryptocurrency, which is indeed an interesting phenomenon.
In the second half of 2024, we see the potential of Memecoin in conjunction with the Web3 ecosystem. The arrival of AI technology and the innovation of Web3 narratives have given Memecoin a new guise. We anticipate that memes, beyond their rebellious spirit, will no longer be satisfied with short-term speculative positioning, and will bring new appearances to Web3 with digital games in the asset market.
*All content on the Coinspire platform is for reference only and does not constitute any offer or advice for investment strategies. 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 incurred. Investment involves risks, and decisions must be made cautiously!
