MEME is a double-edged sword, with community participation and hype at the core of their success
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MEME is a double-edged sword, with community participation and hype at the core of their success
Despite potential pitfalls, meme coins continue to attract those seeking high-risk, high-reward opportunities within the crypto community.
Navigating Web3 tides with focused insightsAuthor: Greythorn
OPENING REMARKS
Driven by the upcoming Bitcoin halving event, the surge of Bitcoin ETFs, and rapidly shifting market sentiment, Bitcoin has not only experienced extreme volatility but also sparked a resurgence of meme cryptocurrencies led by tokens such as $PEPE and $WIF. These coins have risen over 600% in just the past month alone.
According to data from Coingecko, meme coins were the most profitable crypto narrative in Q1 2024, with an average return of 1,312.6% across major tokens. Solana, followed closely by the newly launched Base, have emerged as key platforms for trading meme coins—thanks to their large daily active user bases on DEXs and low transaction fees, making them ideal venues for trading low-market-cap assets.
The chart below shows the performance of key meme coins relative to Bitcoin since early March.
Source: TradingView
Notably, meme coin profitability was 4.6 times that of RWA and 33.3 times that of Layer 2 (Layer 2 had the lowest return ranking in Q1 2024 according to Coingecko).
Source: Coingecko
If these charts seem confusing, don’t worry. Many find meme coins and broader crypto culture somewhat difficult to grasp. For the uninitiated, meme coins are essentially digital tokens that typically serve no practical purpose beyond evoking "emotion" and fostering a sense of community. While some may view them as valueless, the reality is they fit well within today’s experience-driven economy.
Markets have taught us that fundamentals often play only a secondary role in an asset's potential for explosive value growth. Meme coins represent internet culture—communities coming together to create value out of thin air through memes.
Source: Pepe on X
The GameStop phenomenon in 2021 serves as a perfect example, laying the foundation for the wild success of meme coins like $DOGE, $SHIB, and more recently, $PEPE and $WIF.
Those skilled at identifying cultural trends early may perform well with meme coins, as they can anticipate where attention might shift next.
In an era where our attention is constantly being competed for, it's no surprise that meme coins can quickly become highly valuable. However, our fleeting attention also means interest can fade as quickly as it arrives. This double-edged sword often leads to disenchantment when prices stop rising, typically resulting in sudden market downturns as everyone moves on to the next big thing.
THE SURGE OF MEMECOINS
Between 2020 and 2021, meme coins became major players in the cryptocurrency landscape. Leading tokens like $DOGE and $SHIB not only established themselves but also paved the way for newer, smaller entrants. Their popularity demonstrated the unique appeal of the meme coin market—a space driven by speculation, volatility, and passionate communities.
Take Dogecoin, created around the Shiba Inu meme, which now represents a significant cultural movement within crypto. It illustrates how an internet meme can evolve into a community-driven phenomenon, with supporters deeply invested in both the meme and the currency. As the first meme coin, $DOGE remains a key indicator of interest within the crypto community, despite failing to reach its “Doge to $1” goal. Elon Musk’s playful endorsements—and his announcement that Tesla would accept $DOGE—significantly boosted its profile, highlighting its influence and growth potential.
The meme coin market has evolved beyond dog-themed tokens, with cat-themed coins recently showing particularly strong performance. This shift highlights the dynamic nature and growing diversity of the meme coin ecosystem.
Source: Messari
Over the past four years, the development of more sophisticated L1 and L2 ecosystems has been notable, with some creating unique spaces for meme coins. Notably, Base has drawn significant attention—take $DEGEN, for instance, which reached an $800 million market cap within weeks.
Since its launch in August 2023, Coinbase’s Layer 2 platform has welcomed 5.03 million new users, experiencing particularly rapid growth in March 2024.
Source: DuneAnalytics
As of today, leading meme coins on Base—including $Brett, $Degen, $Toshi, $Normie, $Mochi, and $Doginme—have achieved a combined market capitalization of $1.6 billion.
Beyond Base, meme coins on mature L2 platforms like Arbitrum and Optimism have seen reduced enthusiasm and support. These platforms were primarily designed for DeFi, which remains their core focus. As DeFi regains momentum, they are expected to outperform accordingly.
Exploring other L2 alternatives, noteworthy meme coins include $ZORRO and $MEOW on ZkSync, and $SCROLLY and $LUBE on Scroll and Linea.
Outside the Ethereum ecosystem, Solana has emerged as a dominant force for meme coin trading among L1 networks. It leads in daily active DEX traders and trading volume, surpassing user liquidity in other major ecosystems. This makes Solana a vibrant hub for meme coins. The Solana community's enthusiastic engagement with meme coins and small-cap trading enables it to rival—and sometimes exceed—the daily USD trading volume of Ethereum-based DEXs.
Solana hosts several leading meme coins such as Dogwifhat, $Bonk, Cat in a Dog's World, Jeo Boden, Book of Meme, $Slerf, and $PopCat. The top 10 meme coins on Solana have a total market cap of $7.6 billion.
Source: Messari
Within the Solana ecosystem, Dogwifhat has become this year’s standout meme coin. This dog-themed token is raising funds to purchase an advertising spot on the Las Vegas Sphere, known for its immersive interior and exterior displays. So far, it looks likely we’ll soon see an adorable image of a dog wearing a knitted hat displayed on the Sphere. This campaign promises to elevate meme coin enthusiasm to a whole new level.
To summarize this section, it's worth noting that the total market capitalization of all meme coins currently stands at approximately $60 billion. Among them, Dogecoin, Shiba Inu, Dogwifhat, and Pepe rank prominently within the top 50 cryptocurrencies by market cap. However, this figure still falls short of the near $100 billion peak seen in the previous cycle, driven largely by Dogecoin’s significant rise in early 2021.
Source: Coingecko
ASSESSING SUCCESS IN MEMECOIN INVESTMENTS
At the beginning of this article, we mentioned that those adept at spotting cultural trends early may succeed with meme coins by predicting where public attention might shift. However, it’s clear that within an already volatile and risky crypto market, meme coins represent the most speculative segment. Thousands of meme coin projects exist, yet only a few gain any community consensus, and even fewer sustain long-term relevance. Most projects and investors are essentially gambling, hoping for a one-time windfall. Still, we cannot ignore the role they play in the industry or the opportunities that come from closely following narratives.
That said, here are some tips that may help you navigate these turbulent waters:
● While real-world applications and solid fundamentals are crucial for most crypto projects, meme coins operate differently. For meme coins, community engagement and hype are central to their success. The energy and excitement of the community—amplified through social media and other platforms—drive their popularity. A dedicated community committed to development and promotion is vital for ensuring stability and growth.
● Be prepared for price volatility. While such swings can offer profit opportunities, they come with significant risk. Also, watch out for pump-and-dump schemes that artificially inflate prices. Remember, negative sentiment can impact meme coins’ adoption and longevity more than other assets.
● As with any investment, research cannot be overstated when investing in meme coins. With hundreds of options available, it's crucial to ensure your money goes toward the right coin—or at least one with a higher chance of success. Carefully examine the coin’s history, team, and market positioning.
● Only invest what you can afford to lose, recognizing the speculative nature of meme coins. Always have a plan for both potential gains and losses. This is especially important because our short attention spans can lead to rapid disinterest and quick shifts to the next big trend.
● Get involved early. This may seem obvious, but given the behavior of meme coin investors and the speed at which these tokens rise, there’s a high likelihood someone will sell for profit. They rise as fast as they fall, especially when community sentiment is superficial. The earlier you join, the less likely you are to get caught in a wave of selling.
For example, the Greythorn team has recently begun closely monitoring meme coin developments on Monad, especially following Base’s rise. The reason is that it's a well-established and highly anticipated chain. While we’re still awaiting its official launch, signs suggest certain community members are already building momentum around the project via meme coins. Look for early indicators of growth—such as surges in social media interaction, holder count, and trading volume—and target tokens showing sustainable, organic growth.
THE RISE OF DOGINALS AND BITCOIN ORDINALS
Over the past year, the crypto scene has also been energized by the rise of Bitcoin ordinals, with Nodemonkes, Bitcoin Puppets, and others seeing substantial value increases.
The introduction of inscriptions made it possible to create NFTs directly on Bitcoin—known as BRC-20 tokens. Unlike NFTs, these tokens are stored directly on the blockchain and assigned an ordinal number based on mining order. This allows images or data to be attached to specific satoshis within the Bitcoin network.
Ordinals are viewed by some as a strategic expansion of Bitcoin’s utility, and they’re now gaining traction within the Dogechain ecosystem. Doginals, or Doge Ordinals, are becoming a popular narrative among those betting on DOGE’s growing meme value.
Acquiring Doginals isn't straightforward, as it requires navigating the slow Dogechain and deciding which ones to invest in. Nevertheless, for many, owning Doginals has become a symbol of commitment to the Dogechain community, and their rising value only enhances this appeal.
As meme coins gain momentum, some believe ordinals—especially Doginals—will follow suit, offering a unique way to display digital wealth. Dogechain is seen as an ideal platform for this trend.
Magic Eden is the go-to marketplace for trading ordinals, and rumors suggest a Doginal-specific market may be on the horizon. As DOGE’s value climbs, it boosts not only its own market but also lifts the value of all related meme coins.
CLOSING THOUGHTS
Unlike Bitcoin or Ethereum, which have clear purposes and mature technologies, meme coins typically lack significant real-world value or utility. Their popularity usually stems from social media and online forums.
Due to their instability and lack of solid backing, investing in meme coins is highly risky and speculative. While there are opportunities for quick profits, it's essential to approach these investments cautiously and with thorough research.
Despite potential pitfalls, meme coins continue to attract those seeking high-risk, high-reward opportunities within the crypto community.
A May 2023 Chainplay study titled “State of Memecoin 2023” revealed that 64% of investors had bought meme coins, while 36% avoided them. Surprisingly, although 70% recognized fraud risks, 79% viewed them as potential long-term investments. About 73% likened them to gambling. Additionally, 20% entered crypto through meme coins, and 32% of meme coin buyers were newcomers with less than a year of experience.
Growing interest in meme coins suggests they may become even more popular, attracting new investors as well as those already in the crypto space.
But remember, there are many scams and "rug pulls" in the meme coin space, where creators take funds and disappear, leaving investors with nothing.
Therefore, if you're considering entering crypto or the meme coin space, make sure to be extremely cautious and do your homework!
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