In-Depth Analysis of Memecoin: From a Joke Product to a k Billion Market Capitalization

Summary

1. With Bitcoin breaking through the $100,000 mark, Memecoin has entered a new wave of hype;

2. Memecoin was initially not primarily speculative; the birth of DOGE embodies the original intention of Meme: straightforwardness, humor, and grassroots spirit, and is often used for charitable purposes.

3. A new trend is that Memecoins are gradually becoming a vehicle for expressing support and belief;

4. Currently, with the continuous improvement of infrastructure, Memecoins are experiencing a surge in numbers, while also showing new multifaceted characteristics;

5. Investing in Memecoins requires a comprehensive consideration of multiple factors such as narrative, community, marketing, risk, market performance, and capital flow.

Introduction

In the internet era, Meme culture is everywhere. However, transforming popular elements into currency and assets, and achieving hundredfold, thousandfold, or even ten thousandfold increases, is a unique phenomenon of Web3. In 2024, when Bitcoin breaks 100,000 dollars, Memecoin will spark a symbol carnival in the crypto market.

Data shows that Memecoin has performed remarkably this year, with the benchmark index rising from 1.2% at the beginning of the year to 372.9% on December 8, far surpassing other segments of the crypto market. The total market capitalization of Memecoin has also increased from 10 billion dollars at the beginning of the year to over 139 billion dollars, with the number of projects exceeding 1 billion dollars in market capitalization increasing to 10. The growth rate of new projects is astonishing; for example, PNUT reached a market capitalization of 1 billion dollars in just 11 days, while Dogecoin took 1487 days.

The public chain ecosystem has also changed due to Memecoin. From January to November this year, Solana and Base have become the focus of investors, largely thanks to the explosion of the Memecoin ecosystem. Base has rapidly risen to prominence with its Meme features, becoming the leading Layer 2 public chain in terms of activity.

Despite this, Memecoin remains controversial. It represents two extremes of the Web3 world: on one hand, a simple yet compelling narrative of wealth and the rebellious spirit of crypto culture; on the other hand, it reinforces external stereotypes about cryptocurrencies, such as the argument of technological uselessness and the notion of a financial bubble.

This article will outline the development history of Memecoin and attempt to deconstruct its multifaceted nature.

Part One: The Development Stages of Memecoin

Memecoin is a product that tokenizes internet memes or other humorous elements. They are blockchain-native assets that can be used in decentralized applications and traded on secondary markets. Throughout the development of Memecoin, hot projects have evolved rapidly, with changes in quantity, themes, and public chain choices. This article divides it into three stages of development:

Phase 1: Black humor represented by DOGE

As the earliest and currently the highest market capitalization Memecoin, DOGE has established the cultural tone of Memecoins: straightforward, humorous, and grassroots.

In 2013, Jackson Palmer and Billy Markus combined the then-popular Shiba Inu meme with cryptocurrency to create DOGE. Unlike other crypto projects, DOGE does not rely on grand visions or technological innovations to attract attention, but rather frankly claims to be "the most fun token in the world." This idea quickly spread within the Reddit community, and its tipping bot became an early means of dissemination.

DOGE truly rose to fame in 2021 when Tesla CEO Elon Musk mentioned his support multiple times on social media, making it the best-performing asset of that year. Since then, whenever Musk posts relevant tweets, the price of DOGE tends to rise.

The common characteristics of early Memecoins include:

1. Often themed around animals, especially dogs and cats.
2. Charity is the original intention of most projects.
3. Avoid complex blockchain terminology, focus on dark humor, and rely on community dissemination.
4. Mainly issued on the Ethereum network

Phase 2: The Expression Carrier of Web3 Culture

The types of Memecoins in this stage have become more diverse, expanding from animal coins to various themes such as celebrity coins, political coins, emoji coins, and more. A new trend is that Memecoins are gradually becoming a medium for expressing support and beliefs, whether for a certain spirit or iconic figures.

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

Representative of mental-related Memecoin:

• BONK: Launched after the collapse of FTX, aimed at revitalizing the Solana ecosystem
• BOME: Aiming to preserve Meme culture indefinitely, exploring the combination of blockchain and cultural preservation.

Iconic Figures Memecoin:

• Political figure themes: such as TRUMP, MAGA, TREMP, etc.
• Influencer themes: such as Roaring Kitty, Murad, etc.

Phase Three: Memecoin New Form

With the increase in market capitalization of Memecoin and the emergence of token launch platforms, Memecoin is showing two different development directions:

1. Extremely depressed Memecoin market

   • Platforms like Pump.fun allow anyone to issue tokens at a low cost.
   • This has led to a surge in the number of tokens, but has also brought many risks and issues.

2. Application-based Memecoin combined with new narratives

   • As DEGEN evolves from a community token to an L3 public chain
   • Floki started as a Memecoin and has developed a diversified ecosystem.
   • The combination of AI and Memecoin, such as LUM and GOAT

Part Two: The Versatility of Memecoins

The Contradiction of Anti-Authority and Technological Nihilism

Memecoins are essentially a deconstructivist monetization that expresses the dissolution of authority through humor and satire. The Memecoin craze of 2024 extends this anti-authoritarian spirit from Web2 to Web3, challenging the traditional VC-dominated funding model.

However, as Memecoin becomes mainstream in the market, it has raised concerns that innovations in Web3 technology may be overlooked.

the duality of low cost high return and capital bubble

The appeal of Memecoins largely comes from the possibility of quick profits. However, the reality is that most Memecoins struggle to maintain their initial momentum over the long term, with 97% of projects having already perished, and an average lifespan of only 1 year.

The advantages and risks of the attention economy

The spread of Memecoin relies on symbolic content forms and community-driven communication media, which gives it an advantage in the attention economy. However, the instability of attention also means that the value of Memecoin can collapse instantly, and many projects have short lifecycles.

Part Three: How to Identify Quality Memecoins

When investing in Memecoin, you need to consider the following factors:

1. Narrative: Are there supportive stories of viral spread?
2. Community: Activity level on social media and community atmosphere
3. Marketing: KOL matrix promotion intensity, discussion heat
4. Risk Audit: Check the LP token burn status and smart contract ownership.
5. Market Performance: Expected market capitalization, liquidity, chip distribution, price trend
6. Capital Flow: Pay attention to the movement of "smart money".

Investment Principles:

• Familiar with various analytical tools
• Control risks and invest moderately
• Diversified Portfolio

Conclusion

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

Disclaimer: This article is for reference only and does not constitute investment advice. Investors should bear the responsibility for their own decisions.