Memecoins, the intersection of cryptocurrencies and internet culture, have attracted players across the industry. They are once again making waves due to their accessibility, virality and attractive profit potential.
In this article, we will talk about the origin of Memecoins, how Memecoins have evolved through cycles to become what they are today, how NFTs affect the landscape of Memecoins, recent developments and emerging trends in Memecoins, as well as potential risks and opportunities.
01
What is a Meme? Meme is a unit that carries cultural concepts and symbols and is spread among the public. Like genes, memes vary in their ability to spread; those that resonate continue to spread, while those with less impact are quickly forgotten.
“Memecoins” are cryptoassets that gain value based on the Meme they are associated with, essentially bringing financial value to the concept of Meme.
With the emergence of Memecoins, cultural ideas and symbols and their dissemination can facilitate trading and speculation. Based on memes’ relevance and ability to capture people’s attention, they create an entirely new kind of marketplace where cultural resonance can be quantified and have financial value.
02
A Brief History of Memecoins Here is a brief review of crypto market cycles and the memes that arise out of them:
1) PoW MemecoinsPOW Memecoins are mainly designed to allow block producers to allocate their resources to new blocks and types of Tokens for sale. Many Memecoins originally debuted on crypto forums like Bitcointalk. While a significant number of Memecoins failed to make it to trading platforms, those that did were traded on a number of CEXs, although some of the early platforms are now defunct. Each Memecoin is typically distinguished by factors such as name and brand, hashing algorithm, block time, and supply, which together make up their overall story, or “meme.”
In the first wave of tokens after Bitcoin, some were called “Memecoins,” meaning they didn’t offer much value other than a new idea. Here are some examples:
Among these tokens, except for Litecoin, all others are "dead" (low transaction volume and market capitalization, no exchange support, and vulnerable to 51% attacks). There may be several reasons for this: Meme inability to persist (lack of cultural longevity), and problems accessing these tokens (each Memecoin is a complete blockchain).
Litecoin's survival is likely due to Bitcoin's meme value ("digital gold" appeal), which predates other coins and continues to be supported by modern trading platforms.
Dogecoin: The First Memecoin
The original "doge" meme began spreading on 4chan and Reddit in the summer of 2013. Riding on this cultural trend, Jackson Palmer and Billy Markus launched Dogecoin on Bitcointalk on December 8, 2013. It is the first cryptocurrency based on Internet memes.
The success of Dogecoin has given rise to a new class of tokens that are irreverent, humorous, sarcastic, and use celebrities (such as Kanye West, Max Keizer), animals (such as pandas) coin (Pandacoin), or trying to attract the attention of a specific community. These are POW Tokens posted on Bitcointalk’s “Alternative Cryptocurrency” subforum. Specifications ("specs") become less important and "Meme" attributes become more important. Some examples include:
2) ICO boom and the rise of Ethereum The rise of Ethereum has brought a wave of innovation, enabling new use cases, better user experiences, and new users. Some specific improvements include:
Easier to launch Tokens (ERC20 standard)
Attracted new user groups (non-block producers) Token creators can earn more money (unlike tokens under POW, ERC20 tokens are sold through 1CO), which introduced interoperability and the need to have a wallet in an ecosystem. The 1CO era brought a wave of more "serious" projects: theDAO, Filecoin, Tezos, EOS, Cardano, Tron, and Bancor, which tried to have some utility or purpose beyond Meme value. There are some Memecoins with smaller numbers that are not particularly eye-catching, but still attract some attention. An example is Useless Ethereum Token, which was released in June 2017 to mock the concept of 1CO and raised 310 ETH. Dentacoin, although originally designed as a "cryptocurrency for dentists", is regarded as a Memecoin and reached a peak market value of $2 billion in January 2018.
Haycoin, the first ERC20 Token deployed to Uni v1, is also a Memecoin created in this era (2018). Hayden Adams, the founder of Uniswap, created the token as a test for the Uniswap protocol. It did not receive much attention or trading volume at the time, but has received renewed attention in 2023 due to its historical significance.
3) Collectible Memecoins and Early NFTs
Outside the field of encryption, some of Pepe the Frog’s jokes are called “Rare Pepes.” These jokes are not publicly released. If they are released, they usually have the watermark “RARE PEPE DO NOT SAVE”.
Between 2016 and 2018, a group of Counterparty developers (a smart contract protocol built on top of Bitcoin) and Pepe Meme enthusiasts created the Rare Pepe Wallet, Pepe Cash ) as well as a selection of "Rare Pepe Memes" to be traded on the Counterparty protocol.
Rare Pepe's, often considered the second wave of NFT collectibles, still retain value today, with some having sold for over $500,000.
With the release of CryptoPunks, MoonCats, and CryptoKitties, NFTs are beginning to enter the Ethereum space and can be associated with images and other media. EtherRocks is a collection of 100 colorful, cartoon-patterned stones posted as a joke on Reddit in 2017. The collection received limited attention at the time (only 30 were minted), but has since revived in popularity, with its lowest price reaching 305 ETH (equivalent to $1 million) in August 2021.
Another example of a memecoins collectible is Unisocks (SOCKS), launched by Hayden Adams on May 9, 2019. They produced 500 pairs of physical socks and exchanged them using 1 SOCK (an ERC20 Token). As of this writing, each pair costs $53,000, making them possibly the most expensive socks in the world.
4) DeFi Summer In June 2020, Compound Finance pioneered a new Token distribution method: liquidity mining or yield farming. Users lock their assets to provide liquidity and are rewarded with Tokens.
This new fundamental approach sparked the rise of “DeFi Summer,” which eventually evolved into ‘food token’ yield farms offering 10,000% APY (in the form of memecoins) in exchange for locking the token in a Yam or Pickle contract.
5) Meme Stocks and Dogecoin Meme stocks, interest rate cuts, cheap money, and COVID-19 lockdown measures have combined to create a high-risk market environment in 2021. In early 2021, retail traders gathered on Reddit and began widely spreading "Gamestock" jokes, posting pictures and videos, driving the stock's price to rise rapidly. Because of the user experience of Robinhood (a mobile app with free trading), many ordinary users are able to participate. The “GME” craze (the GME craze refers to the buying movement of GameStop stock initiated by retail investors on social media platforms in early 2021) has caused many people to start ambushing other assets, especially those who are also on Robinhood. tradable assets. DOGE was listed on Robinhood in 2018 at a price of 0.008 cents, making it very attractive to retail users. In early February 2021, Elon Musk began to publish a large number of tweets spreading Dogecoin. DOGE reached a peak market capitalization of $90 billion in May 2021.
The popularity of Dogecoin (DOGE) has spurred the emergence of many crypto memecoins, including Shiba Inu, Floki, and Safemoon, all of which have reached very high valuations in the following months.
6) NFT craze: “Memecoins with pictures” With the standardization of ERC-721 and the emergence of integrated marketplaces like OpenSea, NFT has created a new “category” of crypto assets: unique, visual works that represent “culture” or “Meme”.
Some of the most iconic NFTs include: CryptoPunks, Bored Apes, Squiggles, and Pudgy Penguins. NFTs are used as profile pictures on platforms like Twitter and Discord, spreading their virality by wearing them as their identities. These PFPs (Profile Pictures) symbolize prestige and "membership in the cultural club". Many collectibles make holders rich, but holders cannot sell their NFTs and "leave the community." In order to reward their loyal holders, some NFT project parties choose to release "Memecoin" (ERC20) components to their communities as a liquidity, utility and cultural "currency". During this period, some examples of NFT projects include:
7) In the recent period (2023 and beyond) as the crypto market recovers from the bear market, new memes, cultures, concepts and ecosystems have begun to emerge. But there have always been a handful of Memecoins that have remained attractive (trading volume, market capitalization growth, social interest), and only a few have recently developed rapidly and attracted market attention. Recently popular ones include:
1) Some common patterns Every cycle has some form of Memecoins: Memecoins manifest themselves in different ways, depending on the underlying technology (proof of work, ERC20, or NFT), they are the earliest "applications" of the new technology or form factor "one.
Although Memecoins come in a variety of different mediums, they accumulate value in the same way: they all require attention, narrative, and hype to survive and spread. While new mediums will always find initial early excitement, achieving long-term value retention requires sustained focus. It's not enough to just be an NFT; it's not enough to just be an Ordinal. Attention is highly cyclical, and after a medium’s first hype cycle, it requires more fundamental drivers of attention.
Meme preceded Token: For the most successful Memecoins, such as Dogecoin, Pepe, and Dogwifhat, Internet Meme preceded Token, and it was Token that capitalized on existing awareness and dissemination.
Memes from crypto are just beginning: Crypto natives are beginning to create memes that go beyond the Web3 circle. A classic example of this trend is the emergence of crypto native intellectual property, especially NFT projects like Pudgy Penguins.
Early memecoins were all priced relatively low: Since the earliest altcoins, users have liked to ambush tokens with low prices (due to large supply). There is a psychological appeal that a token with a seemingly insignificant price reaching $1 can make the holder rich overnight. The price itself has become a meme.
Strong community + marketing: Memecoins require a strong community, founder or “spokesperson” who can create content, promote the brand and spread the “meme”.
From organic launches to dedicated teams: The first batches of memecoins were launched organically, usually fair launches, with no internal personnel or team allocations. This organic launch brings many benefits, but also some risks, such as pumps and theft of funds. An emerging solution is a memecoin run by a professional team who is incentivized to attract attention, such as the PFP project.
Powerful images, derivative images and slogans spread Meme: Image is the main way Meme spreads on social networks. Usually, it starts with one main symbol, which is presented in many different ways.
2) Opportunities Memecoins now have a total market value of more than 60 billion US dollars and a daily trading volume of more than 13 billion US dollars, which has considerable financial value.
Since the only function of a meme is to spread into the minds of more other people, catching the next "meme" in its early stages can be a lucrative opportunity. Creators and investors “work for Meme” by expanding its reach, and in the process are rewarded for being early believers.
Whether it’s buying lottery tickets to gain wealth, following the choices of specific influencers, or speculating on social trends and ideas, Memecoins have been growing explosively since the beginning of the crypto market.
3) Objections and Risks Despite the opportunities, Memecoins are not without risks. Many Memecoins tend to appeal to users who are trying to gain instant wealth with minimal effort, viewing them as a lottery or form of gambling.
Another common trend are “Rug Pull” and “Swing Dump” schemes that appear almost daily on decentralized networks. According to a new report from blockchain analytics firm CipherTrace, rug pulls accounted for 99% of all crypto fraud cases in 2023, resulting in a total loss of $2.1 billion. It is important to check some key characteristics of Memecoins, such as the status of LP Tokens (are they burned or held centrally?), team allocation, transfer taxes and whether the contract is abandoned.
There is also a lack of clarity on the regulatory status of Memecoins. The most high-profile Memecoins regulation was the Thai Securities and Exchange Commission’s ban in June 2021 on tokens that had “no clear purpose or substance” and whose prices were influenced by social media trends and influencers.
Another big issue is that memes may not "survive" due to a lack of interest, attention, and mindshare, rather than due to any malicious behavior. These investment losses can result in a community that is hostile or indifferent to holders.
