TL; DR
1. As the dust of the US election settled, Bitcoin successfully exceeded $100,000 and Meme ushered in the Sunmmer season;
2. Memecoin was not originally based on speculation. The birth of DOGE is the original intention of Meme: frank, humorous and grassroots, and most of them are invested in charity;
3. A new trend is that Memecoin is gradually becoming a carrier to express support and belief;
4. At this stage, with the continuous improvement of infrastructure, Memecoin presents a new integration and two sides while the number surges;
5. Memecoin is a complex investment that takes into account narrative, community, marketing, risk, performance and smart money.
introduction
An animal image, an emoji Meme, an ICON, although meme in the Internet era has been everywhere, but the popularity into currency and assets, and pry up hundreds of thousands of times or even tens of thousands of times the huge increase, is a unique landscape of Web3. In the year that Bitcoin unlocked $100,000, Memecoin set off a grand symbol carnival in the currency market.
According to Artemis Terminal data, Memecoin has performed well since the beginning of 2024, with the Bechmark index rising from 1.2% at the beginning of the year to 372.9% on December 8. Leading DeFi, BTC, AI token and other encryption tracks by a large margin; At the same time, the total market value of Memecoin track has also increased from 10 billion at the beginning of the year to over 139 billion US dollars at present, and the number of Memecoin joining the 1 billion US dollar market value club has increased to 10, and the increase of head projects seems to have no ceiling, and Dogecoin has spent 1,487 days to reach 1 billion US dollars. The PNUT, released in November 2024, was achieved in 11 days.
The cornerstone of Web3, the public chain ecology, has also changed due to Memecoin.
According to Coingecko research data, during the period from January to November 2024, Solana and Base occupied half of the public chain ecosystem investor interest, surpassing Ethereum's only two public chains, which are inseparable from the outbreak of Memecoin ecology. Due to the feature of Meme, Base has become a new show in the Layer2 public chain ecosystem in just a few months, and the number of weekly active addresses has increased by 20 times compared with the beginning of the year, leading other L2 projects in TVL, transaction volume and user activity.
Image source: growthepie.xyz
Despite this, the controversy over Memecoin has never ended. It seems to represent the two vertices of the Web3 world axis, one is the simple but seductive wealth narrative, and the totem of the rebellious spirit of crypto culture; On the one hand, there is the reinforcement of external stereotypes: the futility of technology and the bursting of capital bubbles.
In this regard, this paper will make a brief review of the development stage of Memecoin, and try to deconstruct its two sides.
Part.1 Development stage of Memecoin
By definition, a Memecoin is a tokenized description of an Internet Meme or other humorous event or concept. They are blockchain native assets, transferable, available for blockchain-based applications, and traded on secondary markets such as DEX. Looking back on the development of Memecoin, the hot projects change very fast, and have evolved in number, theme, and on-chain, and this paper divides it into three development stages:
Stage one: DOGE stands for black humor
To tell Meme, it must be inseparable from the earliest Memecoin with the highest market value at present -- DOGE. It can be said that the development of DOGE has laid the cultural background of Memecoin -- directness, humor and grassroots.
In 2013, Jackson Palmer, who worked in marketing at Adobe Systems, and Billy Markus, a software engineer at IBM, met for fun to bring together two of the hottest topics on the Internet at the time: A Shiba Inu Internet meme called "doge" was combined with the cryptocurrency to create DOGE, affectionately known as Dogecoin in the Chinese context.
Unlike other projects in the cryptocurrency ecosystem, Dogecoin does not rely on grand declarations about the future or major technological breakthroughs to attract attention, on the contrary, it is uninnovative network topology and fragile, but it is frankly true: become the most interesting token in the world. The manifesto also went viral within the English forum Reddit community, and its tipping bot became an early mode of dissemination, allowing Reddit users to share back and forth to earn Dogecoin, further expanding its following.
It was Musk, CEO of Tesla and SpaceX, who really put Dogecoin on the map, tweeting in 2021: "Dogecoin is probably my favorite cryptocurrency" and frequently mentioned that under the huge appeal of this person, Dogecoin became the best performing asset that year and was deeply bound to it, indirectly extending the life of Dogecoin, and since then whenever Musk tweets, the price of Dogecoin will rise.
Image Credit: Crowthepie.ch
Before the early Memecoin tracks took shape, most Memecoin looked to the original blockbuster DOGE, which had the following in common:
1. around the theme of animals, dogs and cats are mostly.
2. Charity is the primary purpose of most Memecoin. In the first two years of DOGE's initial development, the Dogecoin community sponsored dozens of charity events, including the Jamaican bobsled team's participation in the Winter Olympics; Shiba Inu (SHIB) also donated 10% of its supply to the COVID-19 crypto Relief Fund in India when it was created.
3.Ditching the tongue-twisting terminology of blockchain, focusing on its biggest strength trait - dark humor - and relying on widespread dissemination by the community.
4. The main position is Ethereum.
Image credit: CoinGecko
The second stage: the expression carrier of Web3 culture
If the initial stage of Memecoin is just making a big deal about animals, then the types of Memecoin in the second stage have become more extensive, from the initial animal coin to everything Meme, such as celebrity coins, political coins, emoji coins, and so on.
A new trend is that Memecoin is increasingly becoming a vehicle for expressing support and belief, whether in a spiritual or iconic figure.
At the same time, Solana, with its high throughput and lower gas costs, has become a major foothold for Memecoin.
Spiritual Memecoin
The dog-themed Memecoin BONK was launched on Solana shortly after the cryptocurrency exchange FTX crashed in late 2022, and BONK was originally intended to reignite interest in Solana and catalyze on-chain activity, By airdropping free Memecoin to Solana developers, SAGA mobile users and NFT holders. And it did work. In addition to the massive price increase, since its launch, BONK has been integrated into the Solana ecosystem, including decentralized exchanges BonkSwap, BonkDex, unmanaged wallet BonkVault, and gamified fitness app Moonwalk. BONK's usefulness has been further enhanced.
BOME, in the image of the Sad frog, is Memecoin created on Solana in March 2024, and its founders have a vision to immortalize Memecoin, Claiming to perpetuate Meme culture on the blockchain with decentralized storage solutions such as Arweave and IPFS, exploring the intersection of Meme culture, blockchain technology, and decentralized finance is seen as an important step in blockchain's cultural preservation and digital expression.
ICON Memecoin
Most of the current classifications of Memecoin include political coins and celebrity coins, which are uniformly summarized as ICON memes here.
In 2024, with the warm-up of the 60th quadrennial presidential election year in the United States, political Memecoin has also emerged and received attention, especially the Memecoin with the theme of Doland Tremp, which has not only appeared in multiple versions: TRUMP, MAGA, TREMP, STRUMP, FIGHT, MVP, etc., are taking advantage of the heat of their related political events and their controversy on social media to be active in the cryptocurrency market; Memecoin inspired by US Vice President Kamala Harris has also appeared in different versions: KAMA, MAWA.
At the time of writing, CoinGecko has listed 83 PolitiFi tokens on its platform, with a total market capitalization of $500 million (down from the general election period), such political memecoins, which appeal to a specific audience through their subject figures, Increasingly, it is seen as a vehicle for supporting political campaigns, crowdfunding campaigns, and attracting voters through DeFi mechanisms.
Other ICONS are US retail trader Roaring Kitty, which led the "retail war on Wall Street" myth, and crypto KOL Murad, which drove shares of GameStop, a veteran US gaming retailer that has been roaring with losses for years, up tens of times. Destroyed almost all short-selling institutions, just because it was the first time in three years after Posting on the X platform, it made its related Memecoin KITTY and GME achieve triple-digit gains in 24 hours; The latter, due to the popularity of the presentation videos on Token2049, led to an increase in the list of recommended Memecoin.
The third stage: Memecoin new mode
With the further increase in the value of Memecoin in the capital market and the birth of Pump.fun, the token launching platform represented by Pump.Fun, Memecoin presents two completely different but identical trends while the number of Memecoin grows exploitously. One is the extremely sinking Memecoin wet market. One is the combination with the new narrative, trying to give Memecoin application value.
Mixed Memecoin market
Issuing tokens early on is mostly expensive and requires the technical ability to write or adjust contracts, issue tokens on the blockchain and create liquidity pools on the DEX for people to trade. Pump.fun on Solana breaks this boundary with its extremely low distribution cost (just $2), allowing anyone to generate their own tokens on the Solana network.
Once Memecoin is generated in the platform, it can be traded directly on the platform's internal market and faces two stages: after reaching a market cap of approximately $69,000, it is automatically deployed to Raydium, the Solana decentralized financial protocol; Once MemeCoin, which has a relatively high market value, an active community, a large trading volume and a high degree of topic in DEX, is expected to be listed on a centralized exchange such as Binance.
The immediate impact of Pump has been a surge in Memecoin numbers. Since its inception in March 2024, Pump.fun has deployed more than 4 million tokens, making it the fastest Web3 application in the history of the entire crypto industry to reach $100 million in revenue. But at the same time, because everyone in the chain can issue coins, there have been many malicious fraud tokens and contract loophole tokens, the vast majority of the outcome is rug or zero, only a very small number of MemeCoin may advance to DEX, and it is very small to walk into CEX.
However, under the Pump effect, subsequent public chains have followed suit, whether it is TRON's SunPump, BSC's Four.Meme, Base's popular Virtuals, Clanker, etc., All provided the soil for the explosive growth of Memecoin.
Source: Dune
Memecoin + application
With the explosion of Memecoin numbers, the proliferation of similar tokens and the exhaustion of innovation, Memecoin needs a new story. The market realizes that in the long run, if Memecoin wants to live longer, it needs to be attractive to a large enough consumer group for a long time, at this time, "applied Memecoin" came into being, and the introduction of AI injected new vitality into Memecoin.
Memecoin does the application
For example, the leading Meme DEGEN on the Base Chain initially arose from the /degen channel on the decentralized social protocol Farcaster, and then the development team launched L3 - Degen Chain based on the Base chain. In order to realize the transformation from community Memecoin to crypto assets with practical application value and market competitiveness, it extends its life in time.
Floki also started out as Memecoin and has since transitioned into a utility project with a fairly large project ecosystem. It is involved in 3D NFT Metaverse, DeFi, real world assets (RWA), and even prepaid cards.
Application to do Memecoin
For example, two AI agents, aethernet and clanker, jointly issued Memecoin LUM. And the rapidly popular GOAT, is also the AI Bot "Terminal of Truth" came up with the idea ina self-talk.
Part.2 Two sides of one Memecoin
Looking back on the development of Memecoin, it is difficult to imagine that the birth of a joke coin could develop into such a prosperous situation in the past 10 years and be officially accepted as an option for crypto assets. Behind this change, we can't help but think about the reason behind it: Memecoin What fuels Memecoin's passion? And how we see Memecoin in other shades.
Anti-seriousness, dissolving authority VS technological nihilism
In essence, Memecoin is the monetization of deconstruction. Behind it, memecoin creates Meme images and stories with unique charm through creative adaptation of popular culture and network culture, as well as humorous and ironic expression of news events: Dispel authority, absurdity, anti-seriousness, and attract investors' attention and participation through the fanatical performance of the market.
The Memecoin craze in 2024 has shifted the goal of dissolving authority from Web2 to Web3 and carried out iconization.
VC Token, which was regarded as blue chip in the last bull market cycle, has now lost its appeal to secondary market investors, the increase in market access threshold makes the opportunity for retail investors to buy pre-issued tokens close to 0, and the status quo of high FDV (fully diluted value) and low circulation also makes the valuation upside down and "opening price is the peak" become the norm. In addition, the airdrop income is not as expected, retail investors urgently need the redistribution of rights and wealth, and Memecoin's explosion is also seen as the community's expression of resistance to VC, that is, no dealer manipulates the odds, and all participants have a fair and equal opportunity to profit.
However, as Memecoin absorbs most of the traffic and capital, and becomes a staple food rather than a side meal, Web3 will inevitably fall into the worry of technological nihilism. "I'm not against meme, but Memecoin is getting a little weird now, let's use blockchain to build real applications," I believe this is not just the voice of Binance founder CZ.
Will the failure of the technology story and the erosion of the cake reduce the enthusiasm for the development of technology construction and innovation use cases in the Web3 industry?
In addition, Memecoin dispels the authority of the dealer, and invisibly crowns the authority of the KOL opinion leader. Under the psychological expectation of no dealer control, is it also weakening the image of the underwater cable group?
Low costs and high returns VS bubbles
Much of Memecoin's enthusiasm comes from the wealth narrative that quickly doubles, hundreds and thousands of times the myth. For example, GMGN data on November 24 showed that a smart money invested 1 SOL in memecoin Mustard early on and has now gained 4,424 times its return. Being the protagonist of the next get-rich-quick story at the lowest investment cost is the biggest appeal of Memecoin, which acts like a new crypto lottery, in a cash-rich bull market - a time when Fomo mentality is greater than narrative.
But on the other side of the wealth myth, the sobering reality is that most memecoins fail to sustain their initial momentum, leaving only a series of dashed hopes. Research from ChainPlay shows that 97% of Memecoin are dead, and the average life of Memecoin is 1 year, which is one-third of the life of the average crypto project. In addition, malicious activity heavily impacted the Memecoin market, with more than half of Memecoin (55.24%) considered malicious and nearly a third of investors (28%) reporting losses due to Memecoin scams.
Attention economy vs. out-of-control and ephemeral
The essence of Memecoin is based on attention, and the composition of attention includes:
1. Symbolic form of communication: The symbolic form of content itself gives it outstanding communication advantages. An Internet meme, a well-known animal or cartoon image is obviously a labor-saving medium, which can establish contact with the audience and promote natural participation. Pump.fun on Solana once launched a live-streaming feature that maximizes the attention economy, allowing token issuers to showcase their ideas or actions in real time, capturing the attention of viewers and driving token transactions.
2. Community-driven communication media: Memecoin's communication is driven by the community. This decentralized communication mode is both efficient and has strong penetration, such as reddit forum, 4chan, Twitter and TG group.
At the same time, however, attention is extremely volatile, and the rapid shift in market attention also means that the value of Memecoin can collapse in an instant, and many new projects have a short average life cycle and very low success rate. In addition, some Memecoin, such as political Memecoin, have timeliness, and once the event is over, the news will weaken and the popularity will end.
Similarly, when there is no lower limit to hype and people will do anything for attention, the bottom line can become blurred or even disappear, and when Pump.fun livestreamers begin to compete for more extreme behaviors, from self-harm and suicide to animal cruelty and even Nazi parody performances, the livestreaming function is turned off. It is also predictable that Memecoin lives are short.
Part.3 How to identify high-quality Memecoin or shitcoin?
Although most memecoins have a short life span and a high failure rate, they still attract a large number of investors due to their potential for quick profits, and detailed investigations are particularly important. It should be noted that the author is not an expert, but based on the public research conclusions and community wisdom, the following three concerns are summarized, in order to provide some reference value for readers to exclude shitcoin.
1. Narrative
A Memecoin hit requires a viral supporting narrative, such as a news event, a political theme, a watchable story, or an ICON.
When the old narrative is saturated, it is also important to judge whether the new narrative has enough humor or irony and whether it can divert the trend.
2. Community
It is important to check the real activity of the Memecoin team's social platforms, such as Twitter, Telegram, Reddit, Discord, etc. Memecoin relies heavily on the power of social media and online communities. The more attention it receives, the more likely it is to attract new investors. A Meme that is easy to spread and has a good transformation effect can attract a lot of attention in a short time.
Assessing community potential is also critical. Crypto KOL murad came up with the concept of "cult Meme", emphasizing that the ultimate form of Meme is the next religion, and therefore the need to hang out in their social space to see how Cult, passionate and religious that community is.
3. Marketing
Marketing capability is different from community building, and marketing capability represents the subsequent development capability of Memecoin. Reflected in the promotion of the encryption KOL matrix, the discussion trend of Twitter, the number of Telegram transmissions, etc., can be queried through relevant tools, such as Twitter advanced version can understand the number of relevant posts through search keywords, to judge the overall trend up or down.
Celebrity effect: If there are related celebrities such as Vitalik, Musk, head KOL and its linkage, the transmission potential is greater, and it is expected to attract more attention and funds, it should be noted that the endorsement effect of crypto KOL is limited, and it cannot be blindly followed.
4. Risk audit
Checking that LP tokens are destroyed ensures that project developers cannot withdraw liquidity and rug pull.
Check whether the developer relinquishes ownership of the smart contract. When a Memecoin developer transfers ownership of a smart contract to an empty address, the relinquishment of ownership means that the developer can no longer modify the supply of tokens or manipulate the code, ensuring that the risk of malicious changes and damage to investors is reduced.
5. Disk performance
Expected market value: The estimate of narrative value determines the expected profit margin. If it is judged that the current market value of memecoin is far from the market value of narrative value, then there is still room to obtain alpha. To estimate the value, it is necessary to combine the three points mentioned above: narrative, community and marketing.
Liquidity: High liquidity allows investors to enter and exit quickly without a significant impact on the price, which is reflected here in the depth, trading volume of the Dex. It should be noted that the trading volume and depth can also exist the possibility of fraud, which can be compared with the matching degree of FDV
Chip distribution: Using tools like Dexscreen to look at the proportion of topholders, chips should not be concentrated in a few hands. Ideally, the top 10 holders should hold a maximum of 20%-30%, excluding addresses that provide liquidity (Binance, Raydium, etc.).
Trends: Keep an eye on price action and market volatility, which are barometers of Memecoin risk and timing.
6. Smart money
Insights into market trends through Memecoin on-chain data analytics platforms such as GMGX, or trading bots tracking the movements of "smart money," are expected to improve the odds of successful trading.
It is important to note that smart money wallets are not always reliable, and some Memecoins specifically rely on smart money buy signals to rug out retail investors.
To sum up, the following principles should be followed when investing:
Master the use of technical tools, such as trading platforms, on-chain browsers, on-chain data analysis tools, trading robots;
Invest only what you can afford to lose and set a stop loss;
Put your eggs in multiple baskets and match your assets according to risk appetite.
Conclusion
The Soviet thinker Bakhtin once got inspiration from the western carnival and put forward one of the crystallization of his thought - carnival theory. Its broad and inclusive explanation power can completely break through the limitations of time and space and be deduced to Memecoin. In its theory, it emphasizes the spiritual core of liberation and freedom, the core is the universality and the mockery of the sacred, that is, everyone is an active participant, in the carnival people in a laughing way to elect the king and crown him.
Similarly, Memecoin is also like a carnival ceremony in the crypto world, born in banter, disenchantment of the blockchain terminology, VC pulled down the altar, and become one of the forces that cannot be ignored in the crypto world. The founder of DOGE, who once mocked the cryptocurrency "bubble" market with his playful indifference, did not expect to open up one of the largest "bubble" markets in cryptocurrency, which is not a funny thing.
In the second half of 2024, we see the potential for Memecoin to combine with the Web3 ecosystem. The arrival of AI technology and the innovation of Web3 narrative have attached a new cloak to Memecoin. We hope that Meme will not be satisfied with short-term speculative positioning in addition to the spirit of rebellion, and will bring a new look to Web3 by playing digital games in the asset market.
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