Written by: Asher Zhang
Compared with the previous bull market, this round of bull market is very different. In what aspects are they manifested? What kind of exciting game is staged between institutions, crypto majors, crypto exchanges, retail investors and project parties? Regarding this round of Meme craze, there are obvious differences in the market. How do you view the development of this round of Meme craze? In the future, how will the next stage of the crypto market develop?
Airdrops are becoming more professional, and project owners are competing with big investors
Airdrops were born in the last bull market. After development, project airdrops have gradually become professionalized, and a fierce game has been staged between project owners and big investors (professional airdroppers).
Recently, many well-known projects have started large-scale airdrops. The market is no longer applauding, and controversies have never ceased. Among them, ZKsync, Layerzero, and Taiko are quite representative.
Taiko chose not to publish the airdrop rules, which was criticized by the market and the project had to explain. Taiko co-founder and CEO Daniel Wang replied in a Discord post that the rules are not transparent because transparency cannot resolve differences. Everyone has a very subjective definition of "fairness". We cannot unify and do not try to reach a consensus.
ZKsync is the leader of the ZK system and the last to issue a coin among the four major Layer2 kings. It is the most anticipated, but it also bears huge controversy. A participant said, "The overall Sybil rate is very high. After all, there are less than 700,000 addresses left out of millions of addresses. The hit rate of individual addresses is around 15%, all of which are low-income, plus the ZK price is so low, it's not interesting." In addition, from the data, although zkSync has many bridged assets, its TVL is still relatively small.
Layerzero's "rumored reports" were even more criticized by the market, and the chaos of airdrops was fully exposed. According to LayerZero CEO Bryan Pellegrino, more than 3,000 witch reports and 30,000 complaints were received within a few hours of the start of the bounty campaign. Under the mutual exposure system, chaos also began to emerge. Some employees of the LuMao studio chose to resign and report internal accounts, the address of a large airdrop holder of a certain project was reported, and there were also users who targeted large holders/LuMao KOLs to report witch clusters in a concentrated manner. There was even a rumor in the market that a security agency submitted 470,000 suspected witch addresses to Layerzero at one time.
Meme season replaces alt season, the market is "not taking over each other", and crypto exchanges are in a dilemma
The direct opponents of the project party's airdrop are the project party and the big investors, but in fact, institutions, retail investors and crypto exchanges are also deeply involved. In fact, institutions, retail investors, and crypto exchanges are also engaged in an unusually fierce game.
Generally, well-known projects will have large institutional investors in the early stage. For example, ZKsync, Layerzero, and Taiko mentioned above have many well-known investors. Among them, Layerzero's investors include: Animoca Brands, SoftBank CEO Rene Marcelo Claure, Avalanche Ecological Fund, Polygon Ecological Fund, Fantom Ecological Fund, Dapper Labs, Kronos Research, Ethernity, ImToken Ventures, Matrixport, Gemini and other investment institutions, as well as angel investors such as American football player Tom Brady, singer Justin Timberlake and Nike Foundation Chairman Maria Eitel. Due to space limitations, this article will not list them one by one.
Generally, early institutional investors have a certain lock-up period for obtaining tokens. Previously, investing in well-known projects was a sure win in most cases, but now it is very different. This is because a large number of Lumao studios and others hold a large number of chips after receiving the airdrop, and their selling pressure will seriously suppress the long-term price increase. Before the project token airdrop, Lumao studios created a large number of false transactions, which is likely to cause institutional investors to misjudge the project valuation, and their chances of making money while waiting for unlocking are greatly reduced. According to Bitpush, the latest data shows that as soon as the airdrop ended, ZkSync Era's weekly revenue dropped sharply by 93.88% from $1.37 million at the beginning of the year to only $83,000.
For exchanges, many well-known projects have many institutional investments, good on-chain data, and many coin-holding users. Under the influence of these factors, they have to launch projects with high valuations. However, since many airdrop projects have few circulating stocks in the early stage, their valuations are very high. With the end of the lock-up period for institutions, the on-chain activity has fallen sharply after the airdrop, and the project's ability to make money cannot bear the huge selling pressure. This makes it difficult for retail investors in exchanges to make money from these projects.
It is for these reasons that many well-known projects have reached new highs as soon as they are launched, and the market is increasingly lacking in retail investors to take over. However, due to the low circulation of the projects, their valuations remain high, which has led to the phenomenon of retail investors not taking over. For retail investors, they have begun to turn to the MEME market. After all, fair launch and the get-rich-quick effect are very attractive. However, for institutional investors, Meme coins are mostly disdainful. Eddy Lazzarin, CTO of venture capital firm A16Z, tweeted: "Memecoin has changed the public, regulators, and entrepreneurs' views on cryptocurrencies. At best, it looks like a risky casino, or a series of false promises to cover up the casino." This has led to the phenomenon of "institutions not taking over."
What’s Really Behind the Meme Economy Boom?
Starting from 2023, Bitcoin took the lead in launching the MEME craze, among which ORDI issued based on BRC20 exploded, and then the BRC20 protocol token became popular; then, a series of derivative innovative standards such as ARC 20 and SRC 20 were launched, attracting a lot of market attention. In addition to the Bitcoin ecosystem, Solana also gave birth to the most MEME leaders in this round of bull market, such as WIF, BONK, BOME, GUMMY, MANEKI, etc. In addition to the Bitcoin ecosystem and Solana ecosystem, the recent NOT of the Ton ecosystem and the previous DEGEN of the Base ecosystem have also attracted market attention.
It is undeniable that retail investors’ reluctance to accept institutional orders is a major reason for their turn to the Meme market. However, why are the truly popular or profitable MEMEs mainly concentrated on Bitcoin and Solana, and partially concentrated on Base and Ton? What is the reason behind this? What is the real driving force behind the Meme explosion in this round of bull market?
This article believes that the fundamental reason for the prosperity of MEME on the chain is still the financial prosperity driven by technology. When the development of many public chains stagnated, Bitcoin and Solana brought new hope to the blockchain industry in terms of technology.
Bitcoin has a strong security consensus. If powerful applications are built on it, it will be enough to compete with traditional finance. This has been the idea of some people in the Bitcoin community. It is for this reason that Bitcoin has forked BCH and others. After the Bitcoin Segregated Witness upgrade, many years later, Bitcoin was upgraded to Taproot, and Bitcoin was further expanded. It was this technical "unblocking" that made it possible for the Ordinals protocol to emerge, which in turn triggered the inscription craze. Since DeFi and others have matured on the Ethereum network, it is relatively easy to migrate to the Bitcoin network, and Unisat and others will soon sweep the currency circle. New protocols continue to emerge on the Bitcoin network, and in fact, they all have certain technical breakthroughs. Although BRC 20 has a strong consensus and appears early, it will cause UTXO congestion, which will harm the BTC network in the long run; ARC 20 is well-liked by the technical community for its simplicity of colored coin transfer model and Bitwork's POW mining paradigm, but its reliance on isolated witness for data storage is not perfect, and the subsequent token splitting has also encountered some troubles; although SRC 20 can be independent of the indexer, the problem of its own data storage creating dust for the BTC network has not been solved. Runes is currently committed to solving these problems. Every technological breakthrough will have a corresponding leading token, just like Bitcoin had no use value at the beginning of its birth, and the same is true for it. The value of subsequent imitations and copies is often difficult to sustain.
Since 2023, although Solana has experienced the impact of the FTX collapse, its technical strength should not be underestimated. In terms of performance, it is expected to promote the development of Web3 applications. Among them, the DePIN track is the most promising, including Helium, Render Network, IO Net, Nosana and many other projects. On Solana, the latest hot topics are also these well-known projects. After they are at a high valuation, funds show an overflow effect, which also makes the MEME token on Solana take over the overflow effect of funds. Base relies on Coinbase, and Ton relies on Telegram to a large extent. Due to their large number of users, some MEME leaders have also gained market attention.
Application is king, welcoming the new era of Web3
After the upgrade from DenCun, the handling fee of Layer2 has been greatly reduced and the performance has been significantly improved. At the same time, ZKsync, as one of the most promising projects among the four kings of Layer2, has been launched. To a large extent, it can be seen that blockchain technology has actually entered the application stage. The false prosperity created by airdrops is meaningless. Whether the price of the currency can be supported by creating value is the fundamental solution to break the current market phenomenon of "no takeover". Only by creating real value can project parties, retail investors, institutions and exchanges form a joint force to create a real and huge blockchain revolution dividend.
