Memecoin: From a Joke Product to a 100 Billion Market Capitalization

Introduction

In the era of the internet, memes are everywhere, but transforming popular elements into currency and assets, achieving increases of hundreds, thousands, or even tens of thousands of times, is a unique phenomenon of Web3. In the year 2024, when Bitcoin breaks 100,000 USD, Memecoins sparked a symbolic carnival in the cryptocurrency market.

According to the data, Memecoin performed exceptionally in 2024, with the related index rising from 1.2% at the beginning of the year to a peak of 372.9%, significantly outperforming other crypto sectors. The total market capitalization of Memecoin grew from ten billion dollars at the start of the year to over 139 billion dollars, with ten projects surpassing one billion dollars in market capitalization. Some new projects even reached a market capitalization of one billion dollars in just 11 days.

The rise of Memecoins has also impacted the ecosystem of public chains. Data shows that in 2024, Solana and Base surpassed Ethereum in investor attention, which is closely related to the explosion of the Memecoin ecosystem. In particular, Base quickly became a new star in Layer 2 with its Meme characteristics, leading in various metrics compared to other L2 projects.

Nevertheless, Memecoin has always been controversial. It represents the two extremes of the Web3 world: on one hand, the simple yet highly attractive wealth story and the rebellious spirit of crypto culture; on the other hand, it reinforces the negative perceptions of cryptocurrency from the outside, such as the argument of technological uselessness and the theory of financial bubbles.

This article will outline the development history of Memecoin and attempt to analyze its dual nature.

Stages of Memecoin Development

Phase 1: The dark humor represented by DOGE

DOGE is the earliest and currently the highest market capitalization Memecoin, establishing the cultural tone of Memecoin: straightforward, humorous, and grassroots.

In 2013, Jackson Palmer and Billy Markus combined the popular Shiba Inu meme with cryptocurrency to create DOGE. It does not attract attention with grand visions or technological breakthroughs, but rather frankly claims to be "the most interesting token in the world." This concept quickly spread within the Reddit community.

DOGE's rise to fame is truly thanks to Musk's promotion. In 2021, Musk mentioned DOGE multiple times on social media, making it the best-performing asset of the year.

The common characteristics of early Memecoins are:

1. Themed around animals, especially dogs and cats.
2. Most are initiated with the intention of charity.
3. Avoid complex blockchain terminology, focus on dark humor, and rely on community dissemination.
4. Mainly issued on the Ethereum network.

Phase Two: The Expression Carrier of Web3 Culture

The theme of Memecoins in the second phase has become more diverse, expanding from animals to celebrities, politics, emojis, and more. A new trend is that Memecoins have become a medium for expressing support and faith, whether for a certain ideology or iconic figures.

At the same time, Solana has become a major platform for Memecoins due to its high performance and low fees.

Representatives of mental Memecoins include:

• BONK: Launched on Solana at the end of 2022, aimed at reviving people's interest in Solana.
• BOME: Created in March 2024, plans to utilize decentralized storage technology to permanently preserve Meme culture.

Iconic figures of Memecoin include:

• Tokens themed around political figures, such as TRUMP, MAGA, KAMA, etc.
• Tokens themed around influencers or opinion leaders, such as KITTY (Roaring Kitty) and GME.

Phase Three: Memecoin New Modality

With the increase in the market capitalization of Memecoins and the emergence of token launch platforms, Memecoins are showing two trends:

1. Extremely depressed Memecoin market:

   • Platforms like Pump.fun have significantly lowered the issuance threshold.
   • The number of Memecoins has surged, but most are of low quality.
   • Various public chains have launched similar platforms, such as TRON's SunPump and BSC's Four.Meme.

2. Memecoin and Application Integration:

   • Some Memecoins have started to develop real applications, such as DEGEN launching Degen Chain.
   • Some application projects issue Memecoins in return, such as LUM issued by AI Agent.

The Duality of Memecoins

Anti-authoritarianism vs Technological Nihilism

Memecoin is essentially a monetization of deconstructionism, using humor and satire to undermine authority and challenge seriousness. The Memecoin craze of 2024 is, to some extent, a challenge to the internal authority of Web3, such as a rebellion against the VC-led model.

However, the prevalence of Memecoin has also raised concerns about Web3 falling into technological nihilism. The enthusiasm for technological innovation and the development of practical applications may be affected.

low cost high return vs capital bubble

The appeal of Memecoins mainly comes from the possibility of quick wealth. However, studies show that 97% of Memecoins have already disappeared, with an average lifespan of only 1 year. More than half of Memecoins are considered malicious projects, and nearly one-third of investors have suffered losses due to scams.

Attention Economy vs Loss of Control and Transience

Memecoins rely on attention economy for rapid dissemination through symbolic communication and community-driven efforts. However, the instability of attention also causes the value of Memecoins to potentially collapse in an instant. Some extreme behaviors (such as self-harm and animal abuse) to gain attention raise moral controversies.

How to Identify Quality Memecoins

1. Narrative: Is there a supporting story for viral spread?

2. Community:

   • Check the real activity level of social platforms.
   • Evaluate community potential and cohesion.

3. Marketing:

   • Pay attention to the promotional strength of the KOL matrix and the trends in social media discussions.
   • Be aware of the celebrity effect.

4. Risk Assessment:

   • Check if the LP tokens have been burned.
   • Check if the developer has relinquished ownership of the smart contract.

5. Market performance:

   • Estimated market capitalization potential.
   • Assess liquidity.
   • Analyze chip distribution.
   • Observe price trends.

6. Smart Money:

   • Use on-chain data analysis platforms to track the movements of large holders.
   • Be aware that some projects may use "smart money" signals to deceive retail investors.

Investment Principles:

• Proficient in using various technical tools.
• Only invest what you can afford to lose.
• Diversify investments and allocate assets according to risk preference.

Conclusion

Memecoin is like a carnival in the crypto world, challenging traditional notions in a humorous way and becoming an undeniable force. In the second half of 2024, we see the potential for Memecoin to integrate with the Web3 ecosystem. With the advancement of AI technology and the emergence of new narratives, Memecoin may transcend short-term speculation and bring a new face to Web3.

Disclaimer: This article is for reference only and does not constitute investment advice. Investment carries risks, and decisions should be made cautiously.