The light-hearted nature of crypto has bounced back into the limelight during crypto’s latest purple patch, with the rise in crypto prices this year accompanied by a resurgence in so-called memecoins, led by the likes of Dogecoin, Pepe and Shiba Inu.
According to data from BDC Consulting, the number of meme-related projects in the crypto space has jumped more than 440% in the last couple of years, making memecoins the fourth-most valuable sector in the industry, ahead of both decentralized finance and blockchain services.
However, a more recent report from Chainplay notes that anyone thinking of dumping their life’s savings into the latest memecoin should proceed with caution. The State of Memecoin 2024 report notes that the average life expectancy of such projects is less than one year – around a third of the lifespan of more purposeful crypto projects. This aligns with the fact that almost 60% of investors in memecoins see these tokens as short term bets. It also explains why a whopping 97% of all memecoins have already ceased to exist.
The Rise Of The Memecoin Trend
Before they die, a lot of new memecoins tend to explode in popularity, and much of the enthusiasm for new projects stems from the incredible success of the original memecoin, known as Dogecoin. It was created back in 2013 as a joke based on the then-popular Doge internet meme featuring a Shiba Inu dog. The coin featured a humorous image and attracted a wildly enthusiastic fan base that often used it for charity, tipping and fun. In addition, its popularity was boosted no end by the one and only Elon Musk, who has tweeted about it numerous times over the years, hailing it as a potential world currency and boosting its price.
The success of Dogecoin led to the emergence of a glut of memecoins that followed in its wake, either trying to replicate the formula it used or creating their own. Some were very similar, such as the Dogecoin clone Shiba Inu, while others, like Dogelon Mars, tried to cash in on Elon Musk’s close association with crypto. Floki Inu and Samoyedcoin were other dog-inspired memecoins, and others have since emerged that are based on pop culture, such as the irrepressible Pepe, the adult-themed token CumRocket, and HarryPotterObamaSonic10Inu.
There are manifold reasons behind the surging popularity of some memecoins. For one thing, they’re funny and appealing, and they’re also very cheap and easy to buy, lowering the barrier to entry while having a lot of potential for big returns. Some also benefit from network and bandwagon effects, as more people buy into the hype, driving up demand for the coins.
Why Do So Many Die?
Although many memecoins have seen their value surge, a lot of them have proven themselves to be unsustainable. Some of the challenges they face, and the reason for their decline, include a simple lack of innovation. Many memecoins are basically just clones, or forks, of existing tokens, and they don’t offer any novel features or compelling use cases. Their appeal is based solely on the meme they represent, which is not enough to sustain interest in them.
Others have been encumbered with poor tokenomics and governance models that left them vulnerable to dilution, inflation, manipulation and scams, while others were plagued by low liquidity and high fees that hindered the ability of users to trade them.
As a result, the crypto industry has had a mixed reaction to the rise of memecoins. According to Chainplay’s report, one in six investors describe memecoins as a “must-have” in their crypto investment portfolios.
Proponents of memecoins say they represent the simplest and purest examples of crypto’s promise to democratize finance. The great thing about memecoins is that anyone can launch them, based on any kind of meme. Some of the more humorous examples include Smoking Catfish and Kamala Horris. In addition, a lot of celebrities and influencers have attempted to cash in on the concept, with the likes of Iggy Azalea, Caitlyn Jenner and even Andrew Tate launching their own memecoins.
On the other hand, some of the more serious voices in the crypto world have called out memecoins for perpetuating the “pump-and-dump” stigma that has long plagued the industry and arguably hindered its mainstream adoption. They include Ethereum co-founder Vitalik Buterin, who criticized memecoin culture in a post on X, adding that if they want to be beneficial, they should create some kind of “public-good goal”. He stated his belief that new tokens, memecoin or not, should be made to last for decades rather than simply bubbling around for a few months until they’re forgotten.
Building A Lasting Impact
Some memecoin projects appear to have heeded those words and are making extra efforts to have a more lasting impact on the crypto world. The finest example is, of course, Dogecoin, which has become accepted by more than 50 established brands globally, after getting traction as a currency for tipping and charity.
A more recent example is LADYS, which is a memecoin founded last year as a homage to the popular Milady NFT collection. LADYS benefited immensely from a tweet by Elon Musk shortly after it launched, boosting its availability on numerous well-known crypto exchanges, and at one point its market capitalization exceeded $100 million.
LADYS, which bills itself as a “tokenized, fully memetically optimized white pill”, is a shining example of how a memecoin community can come together to make something out of nothing. While the team behind it continues to caution that LADYS has “no intrinsic value or expectation of financial return”, they have established a vision that aims to build upon the token’s brand and create a “lively, engaging environment” where its community will thrive on “playful interactions” and a shared enthusiasm to keep the project alive. It also wants to create more unity among memecoins through friendly rivalries, fostering a healthy spirit of competition that, hopefully, will encourage other memecoin projects to up their game.
To that end, LADYS has set about moving from the digital realm to the physical world, with plans to launch a selection of LADYS-branded merchandise that will be sold via its website, giving more utility to the LADYS token and increasing its brand recognition.
This plan mirrors a growing trend in the memecoin space, which has seen a number of tokens attempt to tap into their community’s enthusiasm through merchandise. For instance, the biggest cat-themed memecoin on Solana, Wen Coin, recently partnered with Adidas to create its first product, a series of adorable Wen Cat plushies. They’re following a model first claimed by popular NFT projects, such as Pudgy Penguins, which generated a remarkable $10 million in revenue from the sale of its own plushies.
Other memecoins have opted to pursue different strategies in an effort to make themselves more meaningful. For instance, Floki Inu has announced it’s supporting a charity co-founded by Kimbal Musk, the brother of Elon. Through this partnership, designed to appeal to environmentalists, a portion of its transaction fees will be donated to urban gardening projects across the globe.
Some Memecoins Can Thrive
While some memecoins are clearly becoming more organized and trying to establish some kind of meaning beyond the meme itself, their future will inevitably be defined by market demand and community sentiment. Lest we forget, memecoins are driven primarily by their memes and the hype they generate.
These projects can be exciting, fun and entertaining, but investors should remember that such investments are also fraught with risk. However, those memecoins that can maintain the interest and enthusiasm of their communities, whether that’s through merchandise, partnerships or other kinds of initiatives, have a good chance of carving out a long-term and sustainable future.
