Student author | @shaofaye123
Instructor | @CryptoScott_ETH
Release time | 2024.5.31
Memes spread through imitation. Any information that can be copied through imitation can be called a meme; information in the form of words that spread is a variety of memes; it can be expressed in many forms, such as music, ideas or styles. The meme propagation process conforms to the life cycle theory, and the propagation mode is suitable for the infectious disease model, but its strong meme standard is still difficult to quantify.
MEMEs are presented in different forms in each cycle, and their characteristics and mechanisms vary with the changes in the cycle. MEMEs can reflect the mentality of investors and market hotspots in different periods to a certain extent, including the outlook for current new technologies and the direction of narrative.
This round of bull market MEMEs wave is jointly influenced by society, psychology, economy and technology. At this stage, MEMEs types can be roughly classified from the aspects of mechanism innovation, market narrative, market sentiment, meme culture, celebrity effect, hot copycat, etc. Its gameplay mechanism is diverse, and it is necessary to establish a reasonable strategy to make a profit.
The future of MEMEs is highly controversial, and institutional retail KOLs have different views. MEMEs must be interesting and meaningful, and cannot be reduced to a speculative tool.
From Ethereum to Solana, MEMEs have never lacked myths of benefit. According to the CoinGecko report, MEMEs was the most profitable cryptocurrency in the first quarter of 2024, with the highest average return rate of its top tokens at 1312.6%.
PANews once interpreted the investment returns of MEMEs from the perspective of Kelly's formula. By calculating the daily issuance of coins and the winning rate on Ethereum and Solana chains, it was found that their winning rates were extremely low, with Ethereum's winning rate being 3.28% and Solana's even lower at only 1.6%. They will eventually become slaughterhouses where players will always lose.
MEMEs is a high-risk, high-return investment game. How does it attract the public to participate and how is it spread? Value coins vs MEMEs, what is the future of MEMEs?
“When we leave this world, only two things remain: genes and MEMEs.”
——Richard Dawkins
MEME, also known as meme, meme, mime, meme, meme mother or meme, is the abbreviation of mimeme (derived from the ancient Greek μíμημα), which originally means to imitate or copy. The concept of MEMEs originally came from the book The Selfish Gene by British evolutionary biologist Richard Dawkins. He described memes as "units of cultural inheritance that reproduce themselves in the meme pool through... (in a broader sense) imitation."
The concept of meme has been colored by biological analogies since its inception, which equates memes with genes (both of which can replicate, inherit, mutate, and respond to selection pressures), and thus gave rise to a new discipline: memetics.
There are many dimensions for classifying memes. From the perspective of pros and cons, they can be divided into favorable memes and harmful memes. According to their expression forms, they can be divided into complex memes and simple memes. From the perspective of evolution, they can be divided into symbiotic memes and parasitic memes. According to their replication ability, they can be divided into strong memes and weak memes.
There are various interpretations of the concept of meme at present. The more recognized definition is mainly based on the synthesis of Dawkins and Blackmore, that is, memes are spread through imitation; any information, as long as it can be copied through imitation, can be called a meme; information in the form of words that spread is a variety of memes; memes have many forms of expression, such as music, ideas or style, etc.
The definition of MEMEs is even more different. There is a big gap between MEMEs in the eyes of different people. In the eyes of Web2, BTC may be the biggest MEME. In the eyes of mainstream currency players, altcoins may all belong to MEMEs. But summarizing their common points, it can be found that MEMEs refer to tokens that have no practical use in the eyes of investors, only exist for speculation, and rely on market sentiment pricing.
The meaning of a meme being "imitated and spread" implies its own iteration. Without the behavior of spreading, it cannot constitute a meme.
It can be seen that the successful replication of MEMEs is inseparable from dissemination. How do MEMEs spread?
A MEME goes through expression (E), transmission (T), assimilation by the recipient (A), and finally storage (R) by the recipient in the brain's memory system. After completing these four steps, the MEME finds a new host, thus completing a life cycle of MEME transmission.
Its transmission mode is similar to that of viruses, and the transmission path can be well revealed from the infectious disease model. The infectious disease model divides the population into susceptible, exposed, infected, and recovered to simulate the transmission mechanism. MEMEs transmission has a short incubation period, so it is usually deconstructed from the SIR model. The number of susceptible people decreases, the number of recovered people increases, and the number of infected people increases first and then decreases, with a peak. This peak is the apex of MEMEs. Polarization, opinion leaders, and emotional infection will have different effects during the transmission process.
In addition, the mechanism of Internet meme dissemination is also related to the social identity theory of psychology. Spears and Lea (1992) found that due to the anonymous nature of the Internet, members of virtual communities cannot effectively display their personal characteristics and identities. People must rely on society's definition of certain decisions and organizations to help define themselves and their interactions with others. Therefore, in the process of dissemination, memes are also shaping the sense of identity with community organizations. The stronger the community consensus and identity recognition, the stronger the meme dissemination.
An interesting phenomenon worth mentioning is that in the Solana chain Pump gameplay, MEMEs holders are worried that the serious project parties will not be able to withstand the decline and Rug, and will encourage and support Dev in the community. This reflects that a good community atmosphere will promote both parties, thereby strengthening community recognition and making MEMEs more likely to go viral.
Source: https://zhuanlan.zhihu.com/p/103974270
The strong meme indicator has a strong guiding significance. It can not only help individual traders determine whether a meme can be successfully spread and what stage of its life cycle it is in, but also help project parties create more popular MEMEs.
From the perspective of biological evolution, Dawkins (1998) proposed three indicators to measure the success of memes:
Copying-fidelity: The more faithful a copy is to the template, the more likely it is to retain its intrinsic characteristics after several rounds of replication.
Fecundity: The faster the replication rate, the wider the copies will spread.
Longevity: The longer a replica template of an entity survives, the more copies of it will be created.
Successful memes need all three. Strong memes spread widely, largely because they are memorable, rather than important or useful. So effective memes should be those that can evoke a high degree of authenticity and long-term retention of memory.
From the perspective of communication, Heylighen described 10 selection criteria in more detail, including coherence, novelty, simplicity, etc., and thus designed a simple formula for the fitness of memes.
F（m）=A（m）x R（m）x E（m）x T（m）
F(m) represents the ratio of the average number of MEMEs in a certain time unit t to the average number of MEMEs in the previous time unit t-1.
A(m) represents the ratio of assimilation rate before and after the moment;
R(m) represents the maximum preservation time ratio of assimilated MEMEs before and after;
E(m) represents the ratio of the expression times of a MEMEs preserved by the host at the previous and next moments;
T (m) represents the ratio of the number of copies of the expression transmitted to the host at the previous and next moments.
At a certain moment, A ≤ 1, R ≤ 1, and E has no upper limit. You can express a MEME 10, 20, or even hundreds of times. T also has no upper limit. If there are 10,000 listeners through broadcasting, it is equivalent to copying 10,000 copies of the MEME each time. If any factor in the above formula is zero, the product must be zero. To make the fitness F>1, one of the strategies is to make E>1 or T>1.
By observing the spread trends of most memes and rough statistics, Heiligen found that if a model meets certain criteria in the above table, it is possible to successfully realize the life cycle of the meme, thereby being replicated and spread to become a strong meme.
However, whether from the perspective of communication or biological evolution, it is difficult to accurately determine to what extent a meme that meets which criteria is a strong meme. Combining finance and mathematics-related disciplines, the winning rate of secondary trading indicators on MEMEs is about 30%, which will have a certain error. Liquidity, the proportion of the top ten holdings, the number of project Rugs, etc. will have an impact on the measurement of MEMEs, but the actual indicators are difficult to quantify accurately, and combining AI large model analysis may be helpful.
Since the birth of Bitcoin, MEMEs have existed in every cycle and performed well. From Litecoin to Dogecoin, to NFT and Zoo MEMEs. MEMEs are presented in many ways, and their characteristics and mechanisms vary with the changes in the cycle. Sorting out its development and current status will help to better discover the version answer.
Source：https://dogecoin.com
The concept of MEMEs did not cause a market boom when it was first created. It was not until Dogecoin (DOGE) in 2013 that MEMEs entered the public eye.
Doge is a meme featuring a Japanese Shiba Inu. The meme originated from a picture of a Japanese Shiba Inu Kabosu that appeared in 2010. After Billy and Jackson launched Dogecoin (DOGE), it received widespread attention on websites such as Reddit and was used as a currency for tipping. Two weeks after its launch, the daily transaction volume exceeded that of Bitcoin.
In 2014, doge was selected as the best MEMEs of the year by Time Magazine and appeared in mainstream culture. In 2021, with multiple promotions by Elon Musk, the price of Dogecoin soared. The success of Dogecoin (DOGE) created the foundation for the prosperity of MEMEs and brought new currencies. These new currencies were initially launched in the "Alternative Cryptocurrency" sub-forum of Bitcointalk as proof of work (PoW).
Subsequently, different MEMEs emerged in each period. Looking back at the ICO boom in 2017, most projects provided detailed white papers to attract investment with technological innovation as potential. Most MEMEs during this period were more serious, and their vision was to go beyond MEMEs and make practical innovations.
In the DeFi boom, projects focused more on explaining economic and liquidity advantages to attract participants. At that time, MEMEs were mainly animals, food, etc. In addition, NFT projects were also considered to be MEMEs in the early days. Some of the most representative NFTs include: CryptoPunks, Bored Apes, Pudgy Penguins, etc.
The current MEMEs craze is more driven by emotions. Projects no longer pursue technological innovation, but focus more on narrative direction and market hot spots. This phenomenon may reflect the fatigue of the market to a certain extent, that is, after a long period of technology orientation, investors gradually begin to seek more IQ50 ways to participate in the market. In this model, Pump rises, and the instant low-cost method attracts a large number of players to participate.
Looking back at the development of MEMEs, the characteristics of MEMEs can reflect the mentality of investors in different periods and the current market hot spots. MEMEs include the outlook for current new technologies and the capture of hot spots.
Source：https://www.MEMEsrace.xyz/
MEMEs can bring prosperity to public chains. From Doge to Bome, MEMEs have become a unique cultural symbol and communication method of Web3. All major public chains have a place for MEMEs.
Some of the MEMEs with higher market capitalization are currently mainly deployed on chains such as Ethereum, Solana, Base, Bitcoin (BRC20, etc.).
Among the top 500 MEMEs by market value, most are deployed on Ethereum and Solana chains. This reflects the prosperity of the MEMEs ecosystem on the Solana chain in this round of bull market. From the perspective of the types of MEMEs that have emerged, the Ethereum chain is mostly early MEMEs, such as PEPE, SHIB, etc., and the reasons for the rise of its top MEMEs still belong to the early narrative logic.
In addition to DOGE, Solana chain MEMEs have more diverse animal MEMEs, and their gameplay is more susceptible to market sentiment due to the emergence of BOME. MEMEs emerging on the Base chain tend to capture technology trends and revolve around social ecology.
Source：Coinmarketcap
Innovative advantages of gameplay mechanism
Representative cases include PEOPLE and SLERF. Web3 consensus is king, while MEMEs focus more on consensus. PEOPLE gathered nearly 20,000 people from all over the world through ConstitutionDAO at the time, which was an in-depth experiment of MEMEs on DAO.
It was planned by innovators Graham Novak and Austin Cain, with the goal of auctioning off a printed copy of the 1787 U.S. Constitution. This became the first crowdfunding project to protect world historical documents, and it also achieved a hundredfold return at the time. SLERF was due to the project owner's operational error, and the founder was forced to repay the loan, achieving a completely fair sale and triggering a craze.
Capturing the direction of the market narrative
There is a certain time difference between the primary market and the secondary market. And MEMEs themselves can reflect the pursuit of new technologies. When the secondary market's current narrative is AI, it can be found that AI MEMEs also soared rapidly, and AIDOGE, AIBB and other AIs soared one after another.
In addition, festivals such as Women's Day and the Spring Festival will also cause an increase in related tokens such as LADYS; the Nvidia conference and CZ's court hearing will also trigger the issuance and fluctuation of tokens such as NVEDUA and FREECZ. However, most of these MEMEs will quickly return to zero after the event.
The elusive market sentiment
This type is difficult to judge, but most of them trigger people’s consensus and ignite market enthusiasm. For example: the operation of the founder of BOME adding a pool quickly detonated the market.
Strong meme culture
DOGE was all the rage before the tokens were sold, and PEPE was widely used before the tokens were sold. These are examples of strong memes first and tokens later. In addition, MEMEs with artistic characteristics tend to be stronger, probably because artworks are inherently more unique in the assimilation stage.
The impact of celebrity
Musk called for Dogecoin, triggering "DOGE to the moom". Anatoly Yakovenko, founder of Solanaana, launched SILLY during Halloween, which also performed extremely well. Within two weeks of its launch, its market value reached 70 million US dollars, with more than 8,600 addresses holding coins and a pool of up to 1.2 million US dollars on the chain. Due to the Summer Olympics, national tokens have also emerged on the chain. Musk only mentioned Argentina in a tweet, and smart money immediately discovered and bought it on the chain to make huge profits.
Related hot spots
Most of this type of products are just trying to take advantage of the popularity of the best products. It is difficult to come up with a truly best product, but there is room for speculation in the short term.
Only when the above conditions are met can it become a strong MEME. Although MEMEs may seem like a local dog game, they still require a very high market sense.
The emergence and existence of MEMEs are influenced by society, psychology, economy, and technology. The mentality of speculation and getting rich quickly, powerful marketing methods, professional financial teams, and barbaric growth environments are all reasons for the growth of MEMEs.
The reasons why MEMEs have attracted so much attention in this bull market can be briefly explained from the following points.
The need for mainstream narratives. Analyzing this round of bull market, we can see that the market lacks a mainstream narrative that can take over the popularity of Bitcoin ETFs. The rise of value coins is not satisfactory, and BOME was listed on Binance in three days. MEMEs can continue the enthusiasm of crypto players to a certain extent and become a potential melody.
Improvement of infrastructure. The development of decentralized exchanges and the continuous upgrading of public chain performance have greatly reduced the cost of token issuance and player participation.
Official support from public chains. The public chains have further attracted a large number of active users to participate by leveraging the wealth-creating effect of MEMEs, increasing their own popularity and expanding the ecosystem. However, it also brings many negative impressions caused by wild growth. Solana chain cools down MEMEs, while BASE chain chooses to support it. Behind this, we can see the differences in the development stages and strategies of the two public chains.
The rise of MEMEs is closely related to Fair Launch. This fair sale method is more in line with the value concept of Web3.
The market is full of FOMO. The hype on social media and highly contagious pictures attract users to participate. This FOMO sentiment is also accompanied by retail investors venting their dissatisfaction with institutions.
The influence of the wealth-creating effect. The legend of getting rich overnight is widely circulated in MEMEs, attracting countless players to participate. Moreover, MEMEs are simple and easy to understand, without the need to understand complex technical principles, which further lowers the threshold for players to participate.
This round of bull market is a bull market where no one buys in. MEMEs are a mismatch of funds on a time scale, which is more in line with this round of narrative and retail investor psychology.
MEMEs restore the wild nature of the unregulated financial jungle and face many problems. However, as a cultural phenomenon and hot investment, MEMEs have become an indispensable part of the crypto market. In the face of a complex market environment, it is important to know that profit is a reward for good risk management, and bets based on luck will eventually be returned to the market.
As MEMEs have developed, their gameplay mechanisms have become more diverse. Some people have made a lot of money, but most players have ended up with nothing. MEMEs are not just a game of luck. Only by mastering a good strategy can you make a profit in the cruel financial market.
On-chain transactions are based on security. When interacting on the chain, it is most important to pay attention to the security of wallets and contracts. There are many tools that support contract security detection, and some basic market-watching applications have integrated these functions. In addition, we must also guard against project Rugs, false positives from burning pools, Pixiu disks, etc.
The initial MEMEs gameplay is mainly to discover early Alpha. The project issuance and user participation costs are still relatively high, and players mainly focus on improving their winning rate. Basic judgments can be made by observing the pool size, market value, liquidity, and the proportion of the top 10 holdings. A comprehensive analysis is conducted based on the number of Twitter followers, community popularity, and website completion.
With the rise of Solana chain MEMEs, the gameplay has become more diverse, and the number of Twitter followers and community popularity cannot be used as a single evaluation indicator. In addition, MEMEs transactions are faster and the frequency of issuance is extremely high. The trading robot market has also become hot again because of MEMEs.
As Pump continues to be popular, hot topics such as national currency, fruit currency, vegetable currency, and TRUMP have continued to appear, and the conversion speed is also very fast. The rise of MEMEs has also had a certain impact on the activity of Tg Bot.
Source: Dune（@whale_hunter）
As a platform that focuses on creating and trading MEMEs on Solana and Blast, Pump continues to gain popularity. The popularity of Pump gameplay, to a certain extent, reflects the project's demand for quick coin issuance and players' demand for social interaction.
Source：Pump
Pump, as a Dex, currently uses a bonding curve mechanism. Compared with AMM, it is more suitable for the issuance and trading of new tokens, directly linking the token price to the supply through a mathematical function without relying on the two assets in the liquidity pool.
Pumping coins or transactions is very simple. When the market value of MEMEs reaches 69K, the platform will automatically deposit 12K of liquidity into decentralized exchanges (such as Raydium) and execute a burning mechanism to stabilize the coin price and increase scarcity.
Pump's extremely low participation cost has attracted a large number of players, and its profits are considerable, with daily revenue exceeding US$400,000. However, the platform lacks technical barriers and currently only makes profits based on scarcity.
Source：Pump
The Pump interface is simple but very magical, and the hot spots change very quickly. Michi (michi), USA (American Coin), SC (Shark Cat), etc. are all MEMEs that appeared on Pump. The wealth effect on it attracts many players to participate.
There are many indicators that can be used for trading in MEMEs, but there is no golden indicator. Indicators that follow the framework more strongly may increase the winning rate, but they may also lead to missing the golden dog.
Trading strategies driven by public opinion. Judging from the degree of FOMO in each link of the communication chain. In the actual operation, you need to have extremely high sensitivity, as well as high-quality communities and KOL lists.
Technology-focused trading strategies. Signal trading and on-chain data analysis run in parallel with bot tools. These include several strategies: Smart Money Tracking, which is suitable for trading big moves. But a personal investment strategy can be formed through the trading style of smart money. For scientists to snipe, they need to establish screening criteria for targets and use robots to assist transactions. The robot's strict execution of the strategy can significantly improve the winning rate, but may result in missing the golden dog.
Financial mathematics-based trading strategies. Mainly judged by K-line, chip distribution, etc. Different pool sizes and fund volumes have different playing methods. Common ones include: day-line players, usually participating in medium-sized pools to ensure that the project party will not Rug overnight. Long-term holding or swing trading. Ultra-short-term players, mainly observe K-line, the quality of the target, etc. to participate. With the popularity of Pump, there are also players who ambush hot targets early and trade through the Senepan Pump.
Risk Warning: MEMEs participation is extremely risky and you may lose all your capital.
MEMEs' outstanding performance in this round of bull market has attracted much attention. Major institutions have different opinions, and MEMEs VS value coins have become a hot topic of discussion in this round.
Source：https://x.com/eddylazzarin/status/1783149288471617661
A16Z CTO has explicitly criticized MEMEs, saying that "MEMEs undermine the long-term vision of keeping many people in the crypto space, are technically unattractive, and are not attractive to builders." Looking at its positions, there may be further interpretation. According to on-chain address data compiled by Scopechat and Rootdata, the largest position of A16Z's public address is Uni, followed by COMP and ETH.
However, many institutions and KOLs have a positive attitude towards MEMEs. Pantera partners believe that MEMEs, as an interesting social activity, can attract more people to join Web3 with a low threshold, and as an introducer of the early public chain ecosystem, it is the easiest way for the next generation to experience the latest DeFi applications and introduce them to Web3. And for applications, MEMEs can add NFT projects, social protocols, etc. for further development.
V God also has a vision for the future of MEMEs, believing that MEMEs should be interesting and meaningful, and should not be reduced to speculative tools. He believes that MEMEs can be further developed in charity and Robin Hood games. In fact, as the largest MEME, Dogecoin has always been committed to charity, supporting the Jamaican bobsled team to participate in the Sochi Winter Olympics, building clean water wells in Kenya, and planning to remove 30 million pounds of garbage from the ocean.
MEMEs are controversial in this round, and the reason is the impact of the gap between the true value of MEMEs and the current market value. However, it is still difficult to reach a consensus on how to define a high-quality MEME and what kind of project is considered a high-quality MEME.
As the largest meme coin in Web2, who is willing to pay for Bitcoin in the first place? Are they gamblers who want to get rich quickly, or investors who believe in blockchain consensus? It is worth looking forward to whether the wild land of the unregulated financial forest will eventually give birth to MEMEs under capital consensus or meme coins that track equality and freedom.
Finally, before you learn to construct, don’t take what you deconstruct as the final answer to the problem.
references
[1] Richard Dawkins. The Selfish Gene [M]. Translated by Lu Yunzhong. Beijing: CITIC Press, 2019: 224.
[2] Susan Blackmore. The Mystery Machine [M]. Translated by Gao Shenchun et al. Changchun: Jilin People's Publishing House, 2011: 25.
[3] Lü Peng, Zhang Haopeng. Research on Internet Memes: Concept Definition, Theoretical Practice and Value Enlightenment [J]. Frontiers of Foreign Social Sciences, 2023(02):18-46.
[4] Yue Xue. Study on the phenomenon and process of de-terminology of terminology from the perspective of meme theory [D]. Northeast Normal University, 2012.
[5] Sha Deyu. On the theoretical and practical value of memetics [D]. Fujian Normal University, 2007.
[6]https://foresightnews.pro/article/detail/57407
[7]https://www.theblockbeats.info/news/53261
[8]https://vitalik.eth.limo/general/2024/03/29/memecoins.html
[9]https://www.techflowpost.com/article/detail_17708.html