Author: David Hoffman, Bankless; Compiled by: Bai Shui, Golden Finance
Meme coins have sparked intense discussions.
Some people see them as depraved distractions—inefficient, zero-sum games at the expense of others' interests. Others view them as a grassroots response to top-down elite and venture capital influence.
We all know this debate—countless such dialogues have occurred in the industry. However, like many aspects of cryptocurrency, the arc of Meme coins is dynamic, adaptive, rather than inert.
We have reason to be optimistic about the future of Meme coins.
The term Meme coin has been overused and is too broad. Not all tokens labeled as Meme coins fit the stereotype of hollow, inert hype. Some tokens were initially Meme coins but later evolved into more, yet due to inertia, people still label them as Meme coins.
Platforms like Pump.fun have already facilitated token creation, increased the number of tokens, and democratized it. Of course, due to the low barriers to entry, most of these tokens are easily created—a fun name, a quirky picture—created for entertainment and little else. However, amidst the noise, some Memes have gained substantive content in unexpected ways and driven value.
Pump.fun, Clanker, and token launchpads have made creating liquid tokens incredibly easy. Permissionless and accessibility is a core value proposition of our industry.
More convenient
The direction of development in the crypto industry has always been to increase the accessibility of token creation for ordinary individuals.
The history of cryptocurrency is one of increasing accessibility to token creation. Each bull market brings new mechanisms:
2013: People realized that forking Bitcoin's codebase and creating a new blockchain was not difficult.
2017: Ethereum introduced ERC-20 tokens without needing to launch a full blockchain.
2021: NFTs and minting mechanisms unlock another token standard and distribution mechanism, turning quirky images into speculative assets.
2024: Pump.fun combines token minting and AMM liquidity into a simple interface.
This model goes beyond tokens. Why are there so many L2s? Because Optimism's OP stack has lowered the cost of creating rollups. Conduit takes it a step further by creating a front end for L2.
The latest innovation in token creation is Clanker, which is an LLM Warpcast account where Warpcast users can simply tag Clanker with a stock code and image, and Clanker will automatically mint the token and launch a Uniswap V3 pool, completely bypassing the frontend.
Beyond Meme coins
Critics often confuse token launchpads like Pump.fun or Clanker with the tokens they produce. While many tokens that emerge from these platforms are classic Meme coins, the launchpads themselves are neutral tools.
For example:
GOAT is the token associated with the first AI agent, from Pump.fun. For those wanting to access the Truth Terminal IP, GOAT is now a viable investment. Is there cash flow? No. Is there a direct relationship between GOAT and the Truth Terminal? No, this relationship is weak and indirect. Will the token's price rise with the Truth Terminal brand's scale? I don't know, this is not investment advice, but it could be, and that’s why people buy GOAT.
ANON launches on Clanker, providing access to ZK anonymous Farcaster accounts. If you have enough ANON tokens, you can anonymously tweet from Anon Farcaster and Twitter accounts. This is utility.
We should learn to distinguish between tokens and launchpads. Pump.fun is not a Meme coin launchpad. It is a token launchpad. Good launchpads will only make it easier to issue Meme coins.
New creation mechanisms
Let's discuss the benefits of token launchpads. We can moralize about the products they produce later.
In 2023 and 2024, cryptocurrencies are plagued by high FDV, low floating token distribution elements.
Points + high FDV low float elements are unfortunately a combination of various factors, primarily excess venture capital and the most stringent regulatory environment in cryptocurrency history.
The result of this fusion is that points and airdrop elements emerge, adopted by complex and extractive airdrop witch recipients, creating toxic and illegitimate incentives, with almost no actual value allocated to the target stakeholders.
Meme coins represent a starkly different token distribution mechanism.
You could be the 7th person to purchase a token with a market cap below $1 million and a 100% liquidity supply.
This token generation mechanism has its merits!
On the first day, the entire supply of the token is on the market. That’s nice. It eliminates different categories of investors locking tokens. Everyone can get the same valuation. Everyone is on the same level as investors.
Nevertheless, there are insiders and conspiratorial groups that may undermine tokens created through launchpads. Moreover, the agency problem between token creators and token buyers remains unresolved. A fully liquid token issuance does not address the fundamental human issues. Humans are imperfect and easily corruptible.
In any case, the ability to launch tokens with 100% supply and instant AMM liquidity in the market is a novel and valuable mechanism with strong advantages that we should not abandon, even though it can be easily abused.
We should add this to the toolkit of token creation mechanisms, alongside ICOs and NFT mints, as an effective way to launch and distribute tokens.
All tokens start as Memes.
I encourage people to consider the potential of using platforms like Pump.fun or Clanker to create tokens for your projects.
Imagine a founder having a promising idea for a product or service. They believe it has value and plan to work long-term to realize its potential. To support their project, they decide to launch a token, either to decentralize governance, manage systemic risks, collect fees, or for any other possible reasons.
This founder could:
Raise funds from venture capital firms
Conduct an ICO
Launch tokens on a token launchpad
All these are valid options, and every founder should consider the merits of each.
Let's specifically consider the last one. Suppose the founder also launched the token early in the project lifecycle. Perhaps because they could, they made the token before building any other part of the project. If this is the case, then the token is a Meme. The founder has an idea for the plan, maybe a document. They share it with others, trying to implant the Meme in others' minds, but still, it is a Meme.
Taking the recent Clanker token $NATIVE as an example. Derek requested a token for his Farcaster project, which is clearly intended to build a new type of Farcaster client.
Perhaps the story ends here! Perhaps Derek did not intend to build Native, he just requested a Clanker token with a one-tweet-long story about possibly building Native. Perhaps Derek has been working on Native for over a year. Who knows! I certainly don’t know. Derek needs to prove this to the market. However, the token has complete liquidity, allowing potential buyers to make their own decisions based on the information they have.
There is certainly a significant agency problem here. Founders can talk about their projects as a means of persuading people to buy the tokens they create, and then they can dump the tokens, which may have been the plan all along.
After finishing the above, Derek mentioned on Twitter that he has locked the token supply for a year! That guy minted his own token, bought his supply (cheap), and then chose to tie himself to the mast. Legitimate projects with legitimate efforts can emerge from token launchpads, even if they primarily launch worthless Meme coins!
This is what we saw in many ICOs in 2017, and the entire industry has become aware of the VC psychological warfare around spinning stories for worthless projects. Regardless of the token creation mechanism, the agency problem exists. It's just different groups of people conducting psychological analysis.
Nevertheless, Pump.fun and Clanker tokens initially were just Memes, and now represent effective efforts to build truly revolutionary things. Again referencing ANON and GOAT. People simply label these Meme coins based on their creation mechanisms, but they are not Meme coins!
Improve the mechanisms of meme coins
When using a token launchpad, there are various ways to improve the agency gap between token developers and token buyers.
What if developers did not hold a portion of the tokens as an upside risk mechanism, but instead had the right to the trading fee revenue?
This is the mechanism that Flayer is building using its incoming token launchpad Flaunch. They are building a Uniswap V4 Hook to add some extra features and mechanisms to their token launchpad.
1. Transaction fee management
Tokens launched on Flaunch distribute revenue between developers and the community. Like Pump.fun, Flaunch takes a certain percentage of all transaction fees through its platform. Unlike Pump.fun, Flaunch directly returns these transaction fees to token developers and token holders (the community).
The developers of the token control the revenue distribution between developers and the community. This is a parameter set at the launch of the token, which can be anywhere from 100% community, 0% developers to 20% community, 80% developers. The community must receive at least 20%.
Fees collected by the token community can be used to buy tokens and add them to LP, increasing the token's price and liquidity as trading volume rises. They call it a 'progressive buy wall', which is a nice narrative. The fees developers collect can be used to fund their Lambos or can be reinvested into the project to fund development and growth.
This is a more consistent mechanism that helps bridge the gap between the principals and agents. Through this mechanism, developers can monetize transaction fee revenues. They no longer need to sell a certain amount of tokens to fund development. This is highly consistent with NumberGoUp, as transaction fee revenues increase correspondingly with the token price.
2. NFT ownership
Who the 'developer' of the Flaunch token is determined by the NFT owners. Each token release on Flaunch comes with a 1/1, which is the source of developing trading fee revenue.
This NFT becomes a composable object around which further structures can be built. You can place this NFT in a multisignature and have it managed by a team. Alternatively, the NFT can be managed by a DAO token vote, which can be from previously launched tokens or new governance tokens.
Possibilities will only expand from here.
So, has my stance on Memecoin changed?
Recently, I received some criticism on Twitter for my apparent shift towards Meme coins. Indeed, aside from the occasional appreciation of Dogecoin, I have never expressed support for meme coins, and I have repeatedly stated my preference for productive assets over the inertness of Meme coins on Bankless.
I do believe that Dogecoin may represent the best case for Meme coins. Dogecoin is a healthy story about a community coming together under the banner of funny dog pictures, collectively raising the market value of Dogecoin in the name of good vibes. Furthermore, Dogecoin has donated significant funds to various charities, including clean water projects in Africa, bee conservation efforts, the American Cancer Society, education, animal welfare, support for the homeless, and of course, my favorite, sending the Jamaican bobsled team to the Olympics in 2014.
Nevertheless, there will still be normal, ordinary, inert Meme coins. These tokens will continue to provoke anger in many because they are hard to convince anyone that they are not just a speculative PvP internal game, and they face major agency issues that are difficult to maintain.
I maintain my preference for productive assets with a development arc, but my appreciation for the broader potential of Meme coins has expanded.
First, I began to envision a world where Meme coins play a much larger role in the internet economy than most people currently imagine.
What if the scale of the meme coin economy grows to rival traditional stock markets? Crypto protocols and markets are designed as a superset of the existing financial system, offering unprecedented flexibility and coverage. Meme coins could leverage this foundation to become a massive economic ecosystem on their own. Just listen to the vernacular of Zoomers and Generation AI: Memes are at the core of internet culture, and Meme coins will naturally play a significant role in internet finance.
Although Meme coins are currently in a speculative hype cycle similar to ICOs or NFTs and may face market liquidation, they will remain permanent fixtures in the cryptocurrency space. The demand to engage with new and exciting things will never fade. In this sense, I have begun to embrace the long-term potential of Meme coins and have changed my perspective.
Secondly, as this entire article shows, I see increasingly more opportunities for meme coins to evolve into something greater than the Memes they were born from. Through additional mechanisms, these tokens could transform into foundational 'currency Legos' supporting more tangible systems. As meme coins have the potential to develop into something more sustainable and productive, their palatability for me has also increased.
Let's explore meme coins together.
We are the ones with agency. I choose to believe that we can harness the power of Meme coins that people evidently enjoy and build mechanisms that steer Meme coins towards the light rather than towards the repulsive.
When Pump.fun added live streaming features, it began optimizing for attention and virality, and we all know the costs of optimizing for that outcome. When Pump.fun removed the live streaming feature, the platform made significant strides towards health, away from decline. Through this simple trick, it weakened the incentives for sad behaviors and created space for more productive outcomes.
I believe there are more tricks and mechanisms that can continue to improve the nature of Meme coins. The meme coin industry is vast and will persist. There are still abundant resources in the meme coin realm to be extracted to create sustainable value.
So, this is a call to startups! Build Meme coin infrastructure that helps Meme coins become more valuable. Help solve the agency problem that exists in all token creation events.
Clanker and Pump.fun both produce indestructible Meme coins. These tokens have no backdoors—no one can mint more tokens, and no one can create honeypot traps. These are examples of token infrastructure that helps protect users' safety.
There are more similar mechanisms. Let's find them!
