TL;DR
With the dust of the US elections settled, Bitcoin successfully broke through $100,000, ushering in the Sunmmer season for memes.
The initial purpose of meme coins was not primarily speculation; the birth of Dogecoin embodies the original intention of memes: directness, humor, and grassroots involvement, often directed towards charitable causes.
A new trend is that meme coins are gradually becoming a vehicle for expressing support and belief.
At this stage, as infrastructure continues to improve, meme coins are not only experiencing a surge in numbers but also presenting a new duality.
Meme coins represent 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; although memes in the internet age are everywhere, turning trends into currency and assets while triggering massive surges of a hundredfold, thousandfold, or even ten-thousandfold is a unique landscape of Web3. In the year Bitcoin unlocked $100,000, meme coins ignited a grand symbolic carnival in the coin market.
According to data from Artemis Terminal, meme coins have performed excellently from the beginning of 2024 to now. The Benchmark index surged from 1.2% at the beginning of the year to 372.9% on December 8, significantly outperforming other crypto sectors like DeFi, Bitcoin, and AI tokens. At the same time, the total market capitalization of the meme coin sector has increased from tens of billions at the start of the year to over $139 billion now, with the number of meme coins entering the $1 billion market cap club rising to 10, and the gains of leading projects seem limitless. Dogecoin reached its $1 billion market cap in 1,487 days, while PNUT, launched in November 2024, achieved it in just 11 days.
The cornerstone of Web3—the public chain ecosystem—has also changed due to meme coins.
According to research data from Coingecko, during the period from January to November 2024, Solana and Base captured half of the public chain ecosystem investors' interest, making them the only two public chains surpassing Ethereum, which is closely linked to the explosion of the meme coin ecosystem. Base, in particular, has quickly risen as a new contender in the Layer2 public chain ecosystem, achieving a 20-fold increase in weekly active addresses compared to the beginning of the year, leading other L2 projects in TVL, trading volume, and user activity.
Despite this, the controversies surrounding meme coins have never ceased. They seem to represent two poles of the coordinate axis in the Web3 world: one side is the crude yet alluring wealth narrative, a totem of the rebellious spirit of crypto culture; the other side reinforces external stereotypes: the uselessness of technology and the easily burst financial bubbles.
In this regard, this article will provide a brief overview of the development stages of meme coins and attempt to deconstruct its dual nature.
Part.1 Development Stages of Meme Coins
By definition, meme coins are the tokenized description of internet memes or other humorous events or concepts. They are native assets of the blockchain, transferable, usable in blockchain-based applications, and tradable in secondary markets like DEX. Looking back at the development of meme coins, the speed of changing hot projects is extremely fast, with evolution in quantity, themes, and on-chain positions, which this article divides into three development stages:
First Stage: Dogecoin representing dark humor
To talk about memes, one must mention the earliest and currently highest market value meme coin—$DOGE. It can be said that the development of Dogecoin has laid the cultural groundwork for meme coins—directness, humor, and grassroots.
In 2013, Jackson Palmer, who worked in the marketing department of Adobe Systems, and Billy Markus, a software engineer at IBM, bonded over fun to combine two of the hottest topics online at the time: a Shiba Inu meme 'doge' and cryptocurrency, creating Dogecoin, affectionately referred to as Dogecoin in Chinese contexts.
Unlike other projects in cryptocurrency ecosystems, Dogecoin does not attract attention through grand declarations about the future or significant technological breakthroughs. Instead, it is simply and genuinely: becoming the most interesting token in the world. This declaration gained viral spread in the English forum Reddit community, where its tipping bot became an early means of dissemination. Reddit users could share Dogecoin back and forth, further expanding its following.
What truly made Dogecoin famous 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 enormous influence, Dogecoin became the best-performing asset that year, deeply binding with him and indirectly extending its lifespan. From that point on, every time Musk posted, Dogecoin's price would rise accordingly.
In the early days before the meme coin sector was fully formed, most meme coins looked up to the original hit Dogecoin, sharing common traits:
The theme revolves around animals, predominantly dogs and cats.
Charity is the original intention of most meme coins. In the first two years of its development, the Dogecoin community sponsored dozens of charitable activities, including supporting the Jamaican bobsled team participating in the Winter Olympics; Shiba Inu (柴犬币) also donated 10% of its supply to the India COVID-crypto relief fund at its inception.
It discards convoluted blockchain terminology, focusing on its most significant advantages—dark humor, and relies on the community's extensive dissemination.
The main battlefield is Ethereum.
Image source: CoinGecko
Second Stage: Expression Vehicle of Web3 Culture
If the early-stage meme coins focused primarily on animals, the second stage has seen a broader range of meme coin types, from the original animal coins to anything that can become a meme, such as celebrity coins, political coins, emoji coins, etc.
A new trend is that meme coins are gradually becoming a vehicle for expressing support and belief, whether for a certain spirit or an ICON-style figure.
At the same time, Solana has become the main battlefield for meme coins due to its high throughput and lower gas fees.
▎Spiritual Meme Coins
The dog-themed meme coin $BONK was launched on Solana shortly after the collapse of the 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 meme coins to Solana developers, SAGA phone users, and NFT holders. It has indeed played its role; aside from a significant price increase, since its launch, $BONK has integrated into the Solana ecosystem, including decentralized exchanges BonkSwap, BonkDex, non-custodial wallets BonkVault, and gamified fitness applications like Moonwalk, further enhancing the practicality of $BONK.
The meme coin $BOME, featuring the Sad Frog character, was created on Solana in March 2024. Its founder has a vision to immortalize meme culture by utilizing decentralized storage solutions such as Arweave and IPFS, exploring the intersection of meme culture, blockchain technology, and decentralized finance, and is seen as an important step for blockchain in cultural preservation and digital expression.
▎ICON-style Meme Coins
Currently, most classifications of meme coins include political coins and celebrity coins, which are collectively referred to as ICON-style memes here.
In 2024, as the 60th quadrennial presidential election in the United States heats up, political figure meme coins have emerged and garnered attention, especially meme coins themed around Donald Trump, which not only have multiple versions: $TRUMP, $MAGA, $TREMP, $STRUMP, $FIGHT, $MVP, etc., but also actively leverage the heat of related political events and their controversy on social media, performing actively in the cryptocurrency market. Similarly, meme coins inspired by Vice President Kamala Harris also appeared in different versions: $KAMA, $MAWA.
As of the time of this article's publication, CoinGecko has listed 83 PolitiFi tokens on its platform, with a total market cap of $500 million (which has shrunk considerably since the total election period). These political meme coins attract a specific audience through their thematic figures, and are increasingly seen as vehicles for supporting political movements, crowd-funding activities, and attracting voters through DeFi mechanisms.
Other representative ICONs include retail traders Roaring Kitty from US stocks and crypto KOL Murad. The former led the 'Retail War against Wall Street' myth, which once caused the stock of the long-losing American game retailer GameStop ($GME) to surge multiple times, destroying almost all short-sellers, all because he posted on X platform for the first time in three years, leading to his related meme coins $KITTY and $GME also achieving triple-digit gains within 24 hours; the latter gained popularity due to a speech video at Token2049, causing all the meme coins he recommended to rise.
Third Stage: New Modalities of Meme Coins
With the further enhancement of meme coins' value in the financial market and the emergence of token launch platforms represented by Pump.fun, meme coins are experiencing explosive growth in quantity while presenting two distinct yet converging directions: one is a severely depressed meme coin market, and the other seeks to combine with new narratives to attempt to endow meme coins with application value.
▎A Chaotic Meme Coin Market
In the early days, issuing tokens was often costly and required technical skills to write or adjust contracts, issue tokens on the blockchain, and create liquidity pools on DEX for trading. However, with the extremely low issuance cost (only $2) of Pump.fun on Solana, anyone can generate their own tokens on the Solana network, breaking this boundary.
Once a meme coin 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 about $69,000, it is automatically deployed to Solana's decentralized finance protocol Raydium; once a meme coin in DEX has a relatively high market value, an active community, large trading volume, and high topic relevance, it is likely to be listed on centralized exchanges like Binance.
The direct impact of Pump has been a surge in the number of meme coins. Since March 2024, Pump.fun has deployed over 4 million tokens, making it the fastest Web3 application in history to earn $100 million. However, at the same time, because everyone on-chain can issue tokens, many malicious scam tokens and contract vulnerability tokens have emerged. The vast majority result in rug pulls or zero value, with only a tiny fraction of meme coins potentially advancing to DEX, and even fewer making it to CEX.
Nevertheless, under the Pump effect, major public chain ecosystems have followed suit. Whether it is TRON's SunPump, BSC's Four. memes or Base's rapidly emerging Virtuals, Clanker, etc., all provide fertile ground for the explosive growth of meme coins.
Image Source: Dune
▎Meme Coins + Applications
With the explosive growth in the number of meme coins, the flooding of similar tokens and the exhaustion of innovation, meme coins need new narratives. The market realizes that, in the long run, for meme coins to have longevity, they need to have long-term appeal to a sufficiently large consumer group. At this point, 'application-based meme coins' emerge, and the introduction of AI injects new vitality into meme coins.
Meme Coins as Applications
For example, the leading meme coin on the Base chain, $DEGEN, initially rose on the decentralized social protocol Farcaster’s /degen channel. The development team later launched the L3 - Degen Chain based on the Base chain, aiming to transition from a community meme coin to a crypto asset with real application value and market competitiveness, thereby extending its lifespan.
Floki also initially started as a meme coin but later transformed into a utility project with a considerable ecosystem. It ventures into 3D NFT metaverses, DeFi, real-world assets (RWA), and even pre-paid cards.
Applications of Meme Coins
For instance, the meme coin $LUM issued collaboratively by two AI Agents, aethernet and clanker. Additionally, the rapidly rising $GOAT was also a creative output from the AI Bot 'Terminal of Truth' during its self-dialogue.
Part.2 The Dual Nature of Meme Coins
Looking back at the development of meme coins, it's hard to imagine that the birth of a joke coin could evolve into such a prosperous situation over nearly a decade, officially recognized as a choice of crypto assets. Behind this transformation, we cannot help but ponder the underlying reasons: What ignited the passion for meme coins? And how do we view the shadow side of meme coins?
Anti-seriousness, Dissolution of Authority VS Technical Nihilism
Essentially, meme coins are the monetization of deconstructionism, behind which lies a creative adaptation of pop culture and internet culture, as well as a humorous and satirical expression of news events, thus creating a unique meme image and story: dissolving authority, absurdity, and anti-seriousness, and attracting investors' attention and participation through the market's fervent performance.
The meme coin craze of 2024 has shifted the goal of dissolving authority from Web2 to Web3 and has been concretized.
In the last bull market cycle, VC Tokens were regarded as blue-chip assets, but they have now lost their appeal to secondary market investors. The rising market entry barriers have brought the chance for retail investors to purchase pre-issue tokens close to zero; the current state of high FDV (fully diluted value) and low circulation has also made valuation inversion and 'opening price equals peak' the norm. Combined with airdrop returns falling short of expectations, retail investors urgently seek rights and wealth redistribution. The explosive rise of meme coins is seen as a communal expression of resistance against VCs, indicating that there are no dealers manipulating the odds, and all participants have a fair opportunity to profit.
However, as meme coins absorb the majority of traffic and funds, leaping to become staples rather than side dishes, it inevitably raises concerns about Web3 falling into technical nihilism. 'I'm not against memes, but meme coins have become a bit strange now; let's build real applications with blockchain,' I believe this is not just the sentiment of Binance founder CZ.
When the technical story fails, and the cake is eaten away, will this diminish the enthusiasm for technical construction and innovative applications in the Web3 industry?
Moreover, meme coins dissolve the authority of the dealers, which in turn invisibly crowns the authority of KOL opinion leaders. In the absence of a dealer's control, is it also a weakening of the image of the underwater cable group?
Low cost and high returns VS Financial bubbles
The enthusiasm for meme coins largely stems from the wealth narrative of rapid doubling and hundredfold or thousandfold returns. One example is GMGN, which on November 24 showed that some smart money early on invested 1 $SOL to buy the meme coin $Mustard, now realizing a return of 4,424 times. With minimal initial investment, becoming the protagonist of the next rags-to-riches story is the greatest attraction of meme coins; they act like a new type of crypto lottery, seizing opportunities in a capital-rich bull market—a time when FOMO mentality surpasses narrative.
However, the other side of the wealth myth is the sobering reality that most meme coins fail to maintain their initial momentum, leaving a trail of shattered hopes. Research from ChainPlay shows that 97% of meme coins have disappeared, with an average lifespan of 1 year, which is one-third of the lifespan of ordinary crypto projects. Additionally, malicious activities have severely impacted the meme coin market, with over half of meme coins (55.24%) being deemed malicious, and nearly one-third of investors (28%) reporting losses due to fraudulent meme coins.
Attention Economy VS Loss of Control and Transience
The essence of meme coins is based on attention, and the components of attention include:
Symbolic forms of dissemination: The symbolic content form itself grants 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 promote natural participation. The live streaming feature launched by Pump.fun on Solana at one point maximized the attention economy, allowing token issuers to showcase their creativity or actions in real time, attracting viewers' attention and promoting token trading.
Community-driven dissemination media: The dissemination of meme coins is driven by the community. This decentralized mode of dissemination 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, and the rapid shift of market attention also means that the value of meme coins may collapse in an instant. Many new projects have a short average lifecycle and a very low success rate. Moreover, some meme coins, such as political figure meme coins, have a time sensitivity; once the event ends, the news diminishes, and the popularity quickly fades.
Similarly, when hype knows no bounds and people resort to any means for attention, the bottom line becomes blurred or even disappears. As 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 streaming feature and the short life span of related meme coins become foreseeable.
Part.3 How to Identify Quality Meme Coins or Shitcoins?
Although most meme coins have short lifespans and high failure rates, they still attract a large number of investors due to their potential for quick profits. Detailed investigations are particularly important. It should be noted that the author is not an expert, but based on publicly available research conclusions and community wisdom, I summarize the following three factors to consider, aiming to provide some reference value for readers to eliminate shitcoins.
1. Narrative
The popularity of a meme coin requires supportive narratives that spread virally, such as news events, political themes, engaging stories, or ICON figures.
When the old narratives are saturated, it is also crucial to evaluate whether new narratives possess sufficient humor or irony, and whether they can attract trends.
2. Community
It is crucial to check the genuine activity of the meme coin team's social platforms, such as Twitter, Telegram, Reddit, and Discord. Meme coins rely heavily 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 has a good conversion effect is capable of attracting a large 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, hence it is necessary to wander in their social spaces to see how much Cult, passion, and religious atmosphere that community has.
3. Marketing
Marketing capability differs from community building; marketing capability represents the subsequent development potential of meme coins. This is reflected in the promotional strength of crypto KOL matrices, Twitter discussion trends, the number of shares on Telegram, etc., all of which can be checked through related tools. For example, Twitter's premium version can determine the number of related posts by searching keywords to judge whether the overall trend is rising or falling.
Celebrity effect: If there are related celebrities such as Vitalik, Musk, or top KOLs interacting with it, the potential for dissemination is greater, likely attracting more attention and funds. It should be noted that the endorsement effect of crypto KOLs is limited and should not be followed blindly.
4. Risk Assessment
Check whether LP tokens have been burned, which ensures that project developers cannot withdraw liquidity and flee (rug pull).
Check whether developers have relinquished ownership of the smart contract. This is reflected in whether meme coin developers have transferred the ownership of the smart contract to a null address. Giving up ownership means that developers can no longer modify the token supply or manipulate the code, thereby reducing the risk of malicious changes and damage to investors.
5. Market Performance
Expected Market Value: The estimated narrative value determines the expected profit margin. If the current market value of a meme coin is still far from the value indicated by the narrative, there is still room to capture alpha. The estimated value needs to combine the three points mentioned above: narrative, community, and marketing.
Liquidity: High liquidity allows investors to enter and exit quickly without significantly impacting the price, as reflected in the depth and trading volume of DEX. It should be noted that trading volume and depth can also potentially be manipulated, and can be compared to the degree of matching with FDV.
Chip Distribution: Use tools like Dexscreen to check the proportion of top holders; chips should not be concentrated in a few hands. Ideally, aside from excluding addresses that provide liquidity (like Binance, Raydium, etc.), the top 10 holders should hold at most 20% - 30%.
Trends: Closely observe price trends and market fluctuations, as they are barometers for assessing the risks and timing of meme coins.
6. Smart Money
By utilizing on-chain data analysis platforms like GMGX or trading bots to track the actions of 'smart money,' one can gain insights into market trends, which may improve the chances of successful trading.
It should be noted that smart money wallets are not all reliable; some meme coins specifically rely on smart money buy signals to rug retail investors.
In summary, when investing, one should follow these principles:
Mastering the use of technological tools will yield twice the result 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-loss limits;
Diversify your investments across multiple baskets, adjusting asset allocation according to risk appetite.
Conclusion
The Soviet thinker Bakhtin drew inspiration from the Western carnival to propose one of the crystallizations of his thought—the theory of carnival, which has a broad, inclusive interpretive power that can transcend temporal and spatial limits, extending to meme coins. In this theory, it emphasizes the spirit of liberation and freedom, with the core being universality and mockery of the sacred, meaning everyone is an active participant, where people crown and de-crown kings in a carnival atmosphere with laughter.
Similarly, meme coins are like a carnival ritual in the crypto world, born from mockery, demystifying obscure blockchain terminology, and bringing VCs down from their pedestals, becoming one of the formidable forces in the crypto world. The founder of Dogecoin once playfully mocked the 'bubble' market of cryptocurrencies, unexpectedly opening up one of the largest 'bubble' markets in cryptocurrency, which is an interesting phenomenon.
In the second half of 2024, we saw the potential for meme coins to integrate with the Web3 ecosystem. The arrival of AI technology and the emergence of new Web3 narratives have adorned meme coins with new attire. We look forward to meme coins not being satisfied with short-term speculative positioning beyond their rebellious spirit and bringing a new face to Web3 through digital games in the asset market.
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 the content of this article are the sole responsibility of the investor, and Coinspire is not responsible for any gains or losses resulting from this. Investing involves risks, and decisions should be made cautiously!
[Disclaimer] The market is risky, and investments should be made cautiously. This article does not constitute investment advice; users should consider whether any opinions, views, or conclusions contained herein are relevant to their specific circumstances. Investing based on this is at your own risk.
This article is reproduced with permission from: (PANews)
Original author: Coinspire
'In-depth interpretation of meme coins! A satirical product holding a market value of hundreds of billions, 6 key points to find quality targets' was first published in 'Crypto City'
