Author: Coinspire
TL;DR
1. With the dust settling from the US elections, Bitcoin successfully broke through $100,000, and Memes ushered in the Summer season.
2. The initial nature of Memecoin was not primarily speculative; the birth of DOGE was the original intention of the meme: straightforwardness, humor, and grassroots efforts, with most of the funds directed towards charitable causes.
3. A new trend is that Memecoin is gradually becoming a vehicle for expressing support and belief.
4. At the current stage, with continuous improvement of infrastructure, the number of Memecoins is surging, while presenting a new duality.
5. Memecoin is a complex investment that requires comprehensive consideration of narrative, community, marketing, risks, market performance, and smart money.
Introduction
An animal image, a meme image, an ICON—though memes are ubiquitous in the internet age, turning popularity into currency and assets, and leveraging massive returns of hundreds, thousands, or even tens of thousands of times, is a unique landscape of Web3. In the year Bitcoin unlocked a price of $100,000, Memecoin sparked a grand symbolic carnival in the cryptocurrency market.
According to data from Artemis Terminal, Memecoin has performed exceptionally well from early 2024 to the present, with the Benchmark index rising from 1.2% at the beginning of the year to 372.9% on December 8, significantly outpacing other crypto tracks like DeFi, BTC, and AI tokens. Meanwhile, the total market value of the Memecoin track has increased from the beginning of the year to over $139 billion, with the number of Memecoins joining the $1 billion market cap club rising to 10, and the growth of leading projects seems limitless, with Dogecoin reaching $1 billion in 1487 days, while PNUT, released in November 2024, achieved this 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, from January to November 2024, Solana and Base captured half of the investment interest of public chain ecosystems, becoming the only two public chains surpassing Ethereum, all thanks to the explosive growth of the Memecoin ecosystem. Base, due to its meme characteristics, rapidly rose to prominence among Layer2 public chain ecosystems, with the number of active addresses increasing 20 times compared to the beginning of the year, leading in TVL, trading volume, and user activity among other L2 projects.
Image source: growthepie.xyz
Nevertheless, the controversies surrounding Memecoin have never ceased. It seems to represent two poles of the Web3 world: on one side is the simple yet highly tempting wealth narrative and the totem of the rebellious spirit of crypto culture; on the other hand is the reinforcement of external stereotypes: technological uselessness and easily burst funding bubbles.
In this regard, this article will provide a simple 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 on the blockchain, transferable, usable in blockchain-based applications, and tradable on secondary markets like DEX. Reviewing the development of Memecoin, the speed at which hot projects change is extremely fast, evolving in quantity, themes, and on-chain positions. This article divides them into three development stages:
First Stage: The Black Humor Represented by DOGE
To tell the story of the Meme, one must not overlook the earliest and currently highest market-valued Memecoin—DOGE. It can be said that the development of DOGE has laid the cultural foundation of Memecoin—straightforwardness, humor, and grassroots efforts.
In 2013, Jackson Palmer, who worked in the marketing department of Adobe Systems, and Billy Markus, a software engineer at IBM, bonded over humor, combining two of the hottest topics on the internet at the time: the Shiba Inu meme 'doge' and cryptocurrency to create DOGE, affectionately known as Dogecoin in Chinese.
Unlike projects in other cryptocurrency ecosystems, Dogecoin does not attract attention through grand declarations of the future or major technological breakthroughs. Instead, it has no innovative development, and its network topology is quite weak, but it is refreshingly genuine: becoming the most interesting token in the world. This declaration gained viral dissemination in the English forum Reddit community, where its tipping bot also became an early means of spread. Reddit users could share Dogecoin back and forth to expand its followers.
What truly propelled Dogecoin to fame was Elon Musk, CEO of Tesla and SpaceX. In 2021, Musk tweeted, 'Dogecoin might be my favorite cryptocurrency' and mentioned it frequently. With his immense influence, Dogecoin became the best-performing asset that year, deeply binding it to him, as Dogecoin's price would rise whenever Musk tweeted.
Image source: Crowthepie.ch
In the early days of the Memecoin track, when it was not yet formed, most Memecoins aligned with the original hit DOGE, sharing common features:
1. Themed around animals, predominantly 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 at the Winter Olympics; Shiba Inu (SHIB) also donated 10% of its supply to India's COVID-crypto relief fund at its inception.
3. It has abandoned the esoteric blockchain terminology, focusing on its greatest characteristic—black humor—and relies on widespread community dissemination.
4. The main battleground is Ethereum.
Image source: CoinGecko
Second Stage: A Vehicle for Expressing Web3 Culture
If the initial stage of Memecoin focused heavily on animals, then the types of Memecoin in the second stage have become more diverse, evolving from animal coins to everything that can be memed, such as celebrity coins, political coins, emoji coins, and so on.
A new trend is that Memecoin is gradually becoming a vehicle for expressing support and belief, whether for a certain spirit or iconic figures.
At the same time, Solana, with its high throughput and lower gas fees, has become the main battleground for Memecoin.
▎Spiritual Memecoin
The dog-themed Memecoin BONK was launched on Solana shortly after the collapse of the cryptocurrency exchange FTX in late 2022. BONK was initially intended to reignite interest in Solana and stimulate on-chain activity by airdropping free Memecoin to Solana developers, SAGA phone users, and NFT holders. It indeed played a role, as besides a significant price increase, BONK has integrated itself into the Solana ecosystem, including decentralized exchanges BonkSwap, BonkDex, non-custodial wallet BonkVault, and gamified fitness applications like Moonwalk, further enhancing BONK's practicality.
The BOME Memecoin, featuring a sad frog, was 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, viewed as an important step for cultural preservation and digital expression on the blockchain.
▎ICON-style Memecoin
Currently, most categories of Memecoin include political coins and celebrity coins, unified here as ICON-style Memes.
In 2024, with the upcoming 60th quadrennial presidential election in the US, political figure Memecoins have also emerged and gained attention, especially those themed around Doland Tremp, which appeared in multiple versions: TRUMP, MAGA, TREMP, STRUMP, FIGHT, MVP, etc. These have leveraged the heat of related political events and the controversy on social media to perform actively in the cryptocurrency market. Different versions inspired by US Vice President Kamala Harris have also appeared: 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 decreased significantly since the total election period). These political Memecoins attract specific audience groups through their thematic figures and are increasingly viewed as vehicles for supporting political movements, crowdfunding events, and attracting voters through DeFi mechanisms.
Other representative ICONs include the retail trader Roaring Kitty and crypto KOL Murad. The former led the 'retail vs. Wall Street' myth, dramatically increasing the stock price of the long-losing American gaming retailer GameStop (GME) dozens of times, destroying almost all short-selling institutions, merely by posting on X platform three years later, which led to the related Memecoins KITTY and GME achieving triple-digit increases within 24 hours. The latter gained popularity from a speech video at Token2049, causing the Memecoin list he recommended to rise sharply.
Third Stage: New Modalities of Memecoin
As the value of Memecoin in the capital market further rises, along with the emergence of token launch platforms like Pump.fun, Memecoin is experiencing explosive growth in quantity while displaying two distinct yet converging paths: one is an extremely sunk Memecoin market, while the other attempts to combine with new narratives, seeking to bestow application value on Memecoin.
▎A Mixed Bag in the Memecoin Market
Early token issuances were mostly expensive and required technical capabilities to write or adjust contracts, issue tokens on the blockchain, and 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 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: after reaching a market value of about $69,000, it is automatically deployed to the Solana decentralized finance protocol Raydium; once a MemeCoin has a relatively high market value, an active community, substantial trading volume, and a high topic frequency in DEX, it is expected to be listed on centralized exchanges like Binance.
The direct impact of Pump is the surge 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 achieve $100 million in revenue. However, at the same time, due to the fact that anyone can issue tokens on-chain, numerous malicious scam tokens and contract vulnerability tokens have emerged. The overwhelming majority of outcomes are rug pulls or complete losses, with only a tiny fraction of MemeCoins possibly advancing to DEX, and even fewer making it to CEX.
Nevertheless, under the Pump effect, major public chain ecosystems imitated each other. Whether it’s TRON's SunPump, BSC's Four.Meme, or Base's frequently emerging Virtuals and Clanker, they all provided fertile ground for the explosive growth of Memecoin.
Image source: Dune
▎Memecoin + Applications
As the number of Memecoins explodes, with a proliferation of similar tokens and depletion of innovation, Memecoin requires a new story. The market recognizes that, in the long run, to achieve longevity, Memecoin needs to possess long-term appeal to a sufficiently large consumer base, leading to the emergence of 'application-based Memecoin,' with the introduction of AI injecting new vitality into Memecoin.
┅ Memecoin as Applications
For instance, the leading meme DEGEN on the Base chain initially arose from the decentralized social protocol Farcaster's /degen channel, and later the development team launched L3—Degen Chain based on the Base chain to realize the transition from community Memecoin to a crypto asset with practical application value and market competitiveness, extending its lifespan in a timely manner.
Floki initially started as a Memecoin and later transformed into a practical project with a significant ecosystem. It involves 3D NFT Metaverse, DeFi, real-world assets (RWA), and even prepaid cards.
┅ Applications as Memecoin
For example, the Memecoin LUM, issued collaboratively by two AI agents, aethernet and clanker. And the quickly rising GOAT is also an idea conceived by the AI Bot 'Terminal of Truth' in its soliloquy.
Part.2 The Two Sides of Memecoin
Reflecting on the development of Memecoin, it is hard to imagine that the birth of a joke coin could flourish into such a prosperous state in nearly a decade, officially being accepted as a choice of crypto assets. Behind this transformation, we cannot help but ponder the reasons behind it: what ignited the enthusiasm for Memecoin? And how do we view the other shadowy side of Memecoin?
Anti-seriousness, dissolving authority VS technological nihilism
Essentially, Memecoin is the monetization of deconstructionism, behind which lies the creative adaptation of pop culture and internet culture, as well as humorous and satirical expressions of news events, creating unique meme images and stories characterized by the dissolution of authority, absurdity, and anti-seriousness, attracting investor attention and participation through the market's frenzied performance.
The Memecoin craze of 2024 has shifted the goal of dissolving authority from Web2 to Web3 and has materialized.
In the previous bull market cycle, VC tokens were regarded as blue chips, but they have now lost their appeal to secondary market investors. The increase in market entry thresholds has brought the chances for retail investors to purchase pre-issued tokens close to zero. The situation of high FDV (fully diluted value) and low circulation has also led to valuation inversion, with 'opening price being the peak' becoming the norm. Coupled with airdrop returns falling short of expectations, retail investors urgently need a redistribution of rights and wealth, and the explosive rise of Memecoin is viewed as an expression of the community's resistance against VCs, meaning there are no manipulators in play, and all participants have equal opportunities to profit.
However, as Memecoin absorbs the majority of traffic and funds, becoming a staple rather than a side dish, it inevitably raises concerns about Web3 falling into technological nihilism. 'I don't oppose memes, but Memecoin has become a bit strange now; let's build real applications with blockchain,' which I believe is not just the voice of Binance founder CZ.
Will the failure of technological narratives, the erosion of the cake, diminish the enthusiasm for technological construction and innovation use case development in the Web3 industry?
Moreover, Memecoin dissolves the authority of major players, while invisibly crowning the authority of KOL opinion leaders. In the absence of manipulators controlling the market, could this also be a weakening of the image of the underwater cable group?
Low cost, high return VS funding bubble
The enthusiasm for Memecoin largely stems from the wealth narrative of rapid doubling and hundredfold or thousandfold returns. For example, data from November 24 shows that some smart money invested 1 SOL to buy the memecoin Mustard and has since made a floating profit of 4424 times. The greatest appeal of Memecoin lies in becoming the next protagonist of a rags-to-riches story with minimal initial investment; it resembles a new type of crypto lottery that makes significant gains in a bull market—an era where FOMO outweighs narrative.
Yet, the other side of the wealth myth is the sobering reality that most Memecoins fail to maintain their initial momentum, leaving behind a series of shattered hopes. Research from ChainPlay shows that 97% of Memecoins have disappeared, with an average lifespan of 1 year, one-third that of ordinary crypto projects. Furthermore, malicious activities have severely impacted the Memecoin market, with over half of Memecoins (55.24%) deemed malicious, and nearly one-third of investors (28%) reporting losses due to scam Memecoins.
Attention economy VS chaos and transience
The essence of Memecoin is based on attention, and the composition of attention includes:
1. Symbolic forms of dissemination: The symbolic content form itself gives it outstanding dissemination advantages; an internet meme, a well-known animal, or an anime character is clearly an effortless medium that can connect with the audience and encourage natural participation. The live streaming feature once launched by Pump.fun on Solana is the ultimate representation of attention economy. Through live streaming, token issuers can showcase their creativity or actions in real-time, attract audience attention, and drive token trading.
2. Community-driven media: The spread of Memecoin is driven by the community, and this decentralized dissemination method is both efficient and highly penetrating, such as on Reddit forums, 4chan, Twitter, and TG groups.
However, at the same time, attention is extremely unstable; the rapid shift in market attention also means the value of Memecoin could collapse in an instant. The average lifespan of many new projects is short, and their success rate is very low. Additionally, some Memecoins, such as political character Memecoins, have a time sensitivity; once the event ends and the news fades, their popularity also quickly diminishes.
Similarly, when speculation knows no bounds, and people resort to any means for attention, the bottom line may become blurred or even disappear. When Pump.fun streamers begin to pursue more extreme behaviors—from self-harm and suicide to animal abuse, and even Nazi imitations—the shutting down of live streaming functions and the short lifespan of related Memecoins is predictable.
Part.3 How to Distinguish Quality Memecoin from Shitcoin?
Although most Memecoins have a short lifespan and a high failure rate, their potential for rapid profits still attracts large numbers of investors, making thorough investigation particularly important. It should be noted that the author is not an expert but has summarized the following three factors based on public research conclusions and community wisdom to provide some reference value for readers to weed out shitcoins.
1. Narrative
A Memecoin's popularity needs supportive narratives with viral dissemination, such as news events, political themes, watchable stories, or iconic figures.
When old narratives saturate, it's also important to assess whether the new narrative possesses enough humor or irony to attract attention.
2. Community
Checking the real activity level of the Memecoin team on social platforms like Twitter, Telegram, Reddit, and Discord is crucial. Memecoin heavily relies on the power of social media and online communities; the more attention it receives, the more likely it is to attract new investors. A meme that is easy to disseminate and converts well can attract significant attention in a short period.
Assessing community potential is also key. Crypto KOL Murad proposed the concept of 'cult Meme,' emphasizing that the ultimate form of Meme is the next religion, 'therefore it is necessary to hang around their social space to see how big the Cult, passion, and religious atmosphere of the community are.'
3. Marketing
Marketing ability differs from community building; marketing ability represents the future development capacity of Memecoin. This is reflected in the promotional strength of the crypto KOL matrix, discussion trends on Twitter, and the frequency of传播 on Telegram, etc., all of which can be checked through relevant tools, such as Twitter’s advanced version, which can search keywords to understand the number of related posts and judge overall trends.
Celebrity effect: If there are relevant celebrities like Vitalik, Musk, or leading KOLs involved, the dissemination potential is greater, and it is expected to attract more attention and funds. However, it should be noted that the endorsement effect of crypto KOLs is limited and should not be blindly followed.
4. Risk Assessment
Check if LP tokens have been burned to 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; relinquishing ownership means that developers can no longer modify the token supply or manipulate the code, reducing the risk of malicious changes and harm to investors.
5. Market Performance
Expected Market Value: The estimated narrative value determines the expected profit potential. If it is judged that the current Memecoin's market value is still far from the narrative's value, there may still be room to capture alpha. The estimated value needs to consider the three points mentioned above: narrative, community, and marketing.
Liquidity: High liquidity allows investors to enter and exit quickly without significantly impacting prices, manifested here as the depth and trading volume of Dex. It is important to note that trading volume and depth can also be subject to possible manipulation and can be compared with FDV.
Chip distribution: Use tools like Dexscreen to check the top holder's ratio; chips should not be concentrated in a few hands. Ideally, except for excluding liquidity-providing addresses (like Binance, Raydium, etc.), the top 10 holders should hold a maximum of 20% to 30%.
Trends: Closely observe price trends and market fluctuations; they are the barometers for assessing the risks and timing of Memecoin.
6. Smart Money
Use on-chain data analysis platforms like GMGX or trading bots to track the actions of 'smart money' to gain insights into market trends, which may improve the chances of successful trading.
It is important to note that smart money wallets are not all reliable; some Memecoins specifically rely on smart money buy signals to rug retail investors.
In summary, the following principles should be followed when investing:
Mastering the use of technical tools will yield better 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;
Diversify your investments across multiple baskets, and 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—carnival theory, whose broad and inclusive interpretive power can transcend temporal and spatial limitations, extending even to Memecoin. In his theory, he emphasizes the liberating and free spirit at its core, which focuses on universality and the mockery of the sacred, meaning everyone is an active participant, and during the carnival, people humorously elect a king to crown or dethrone.
Similarly, Memecoin acts as a carnival ritual in the crypto world, born from jest, demystifying esoteric blockchain terminology, bringing VCs down from their pedestal, and becoming one of the undeniable forces in the crypto world. The founder of DOGE once playfully mocked the 'bubble' market of cryptocurrency, yet unexpectedly opened one of the largest 'bubble' markets in cryptocurrency, which is quite an interesting phenomenon.
In the second half of 2024, we see the potential for Memecoin to integrate with the Web3 ecosystem. The advent of AI technology and the innovation of Web3 narratives have provided Memecoin with a new guise. We look forward to memes, beyond their rebellious spirit, no longer being satisfied with short-term speculative positions, and instead bringing a new face to Web3 through digital games in the asset market.
