From Dogecoin to WIF: How Have Meme Coins Become Symbols of Crypto Culture?

Memecoins, as cultural units transmitted among people, have become closely linked with crypto culture, a phenomenon that has been fully demonstrated over the past decade. The first memecoin, Dogecoin, was launched in 2014 as a fun derivative of Bitcoin. During the boom market of 2021, its market value once soared to a peak of $75 billion.

Recently, the memecoin market has shown explosive growth. In less than a year, the market value of the ERC-20 token centered around Pepe The Frog (PEPE) skyrocketed by 400%, reaching $2 billion. Another memecoin, DEGEN, which is symbolized by a purple top hat and was launched on the decentralized social network Farcaster, has already surpassed $1 billion in market value, exceeding Farcaster’s own valuation. Finally, a memecoin featuring a dog wearing a knit hat (WIF) has become widely known through viral spread on crypto Twitter. Since the beginning of this year, its price has surged more than 20 times, with a current market value of about $4 billion.

Memecoins will continue to exist, and this article delves into the reasons why. We will provide a framework to better understand memecoins, explore the infrastructure that supports their ongoing development, and discuss how they significantly enhance network engagement.

Key Insight: Memecoins Rely on Attention

A crucial realization is that the prosperity of memecoins depends on attention. In the ecosystem of memecoins, attention is crucial. It drives community interaction, hype behavior, and the fluctuations in memecoin prices.

It is common to see Twitter comment sections filled with people promoting memecoins. This phenomenon stems from a simple fact: the price of a memecoin ultimately depends on how much attention it receives. The more attention it gets, the more potential buyers there are. And if the associated meme is entertaining, these potential buyers are even more likely to participate.

Apart from sharing memes on social media, memecoin enthusiasts also come up with creative ways to draw attention to their tokens. For example, the WIF community raised $700,000 for a campaign to display their meme on the iconic Las Vegas Sphere.

As a result, because this publicity stunt was expected to cause a sensation, the token’s value surged by 25%.

Sometimes, memecoins capitalize on existing attention rather than generating it themselves. For instance, while prediction markets like PredictIt and Polymarket allow users to bet on presidential election outcomes, attention-based ‘Politifi’ memecoins around presidential candidates are developed to speculate on public interest in the candidates. As the 2024 election approaches, the speculation and prices of these ‘Politifi’ memecoins have risen sharply.

So, which memecoins perform well? The answer is those that people believe will attract the most attention.

Importance of Distribution

When evaluating memecoins, token distribution is a key factor for many potential buyers.

Some memecoin projects decide to reserve tokens for the team and other planned initiatives. In addition to airdropping to community members and developers, many projects also set aside a portion of tokens for marketing plans, the team, and DAOs.

Reserving part of the supply can create stronger incentives and increase the chances of long-term success. By allocating vested tokens to the team, they are motivated to engage more deeply with the project and ensure its long-term success. Secondly, DAOs can be used to fund large initiatives.

Other memecoins, like WIF, may be considered ‘more organic.’ While this strategy may mean that funding programs and project marketing are more challenging, fair distribution remains a key factor in the popularity of many memecoins.

Memecoin Trading Creates Huge New Market Opportunities

The memecoin market is becoming massive. Currently, the top 10 memecoins have a combined market value of over $50 billion. Memecoin’s on-chain trading volume is substantial, with over $1 billion in daily transactions on Solana, primarily driven by memecoins.

Thus, there are valuable market opportunities for developers. Tools and applications that facilitate the establishment and trading of memecoins have received widespread attention. For example, Bonkbot is a simple Telegram trading bot that allows easy memecoin trading on Solana. In just five months, its revenue has exceeded $23 million.

Platforms like Bonkbot not only make trading memecoins increasingly accessible but also build infrastructure to simplify the process of launching memecoins. To launch a memecoin, it typically involves establishing a token, using funds to create liquidity pools on decentralized exchanges like Uniswap or Raydium, and promoting the project.

Pump.fun is a platform that allows users to launch memecoins with one click, and thousands of users have used their platform to launch and explore the latest memecoins.

Currently, this platform earns hundreds of thousands of dollars daily through transaction fees.

Memecoin Super Distribution

Memecoins combine the fun of sharing humorous images with economic incentives, transforming ordinary internet memes into ‘super memes.’ The community, motivated by token ownership, has elevated the Doge meme into a craze, attracting attention from individuals like Elon Musk. Understanding and applying memecoin’s incentivized mass distribution features not only enhances meme spread but also promotes other aspects of the cryptocurrency sector.

One area benefiting from memecoin attributes is NFTs. However, most NFTs currently perform poorly during bull markets. Why? Because they face a ‘distribution’ issue.

Although the rarity of NFT collectibles makes them excellent luxury asset investments, only a limited number of participants have the motivation to increase the visibility of the collectibles. For instance, avatar collections like Cryptopunks have a supply cap of 10,000, making it a highly prestigious status symbol. However, the same cap also limits the fan base to a maximum of 10,000 people, restricting the broader participation and visibility that memecoins enjoy.

The launch of ERC-404 offers an innovative solution to the NFT distribution problem. This standard promotes the realization of partial ownership of NFTs, opening a new field. Projects such as Pandora, DN-404, and Asterix are leading the development in this area, allowing NFTs to be divided into multiple shares, sometimes humorously referred to as ‘memecoins.’ This division allows a broader group of people to access NFTs, motivating them to create more visibility for the collectibles while maintaining the uniqueness of owning an entire NFT.

Memecoins Enhance Activity on Blockchains and Applications

In November 2022, the collapse of FTX led to a sharp decline in activity in the Solana ecosystem. Many teams suffered financial losses on FTX, and the close association with FTX reduced community confidence and activity. However, on December 25, 2022, a memecoin depicting a mischievous orange Shiba Inu was airdropped to existing developers and users on the Solana network as a way to revitalize the Solana community and as a reward.

This strategy was successful. The memecoin became a focal point for the Solana community, quickly integrating into hundreds of DeFi protocols and applications on the platform. Users found that they could earn profits through memecoin, use it as collateral, or even spend it in Solana-based games. As activity and prices around memecoin soared, community enthusiasm also skyrocketed, enhancing developer activity and allowing Solana to maintain itself during a bear market.

These stories are not isolated incidents but reflect the crucial role memecoins play in stimulating network activity. For example, the memecoin DEGEN, originating from Farcaster and valued at $1 billion, serves as a way to reward users for posting. The launch of DEGEN provided additional incentives for people to post, significantly boosting Farcaster’s activity. Memecoins have the capability to enhance community vitality and stimulate interactions within platforms.

People increasingly recognize memecoins as tools to stimulate network activity. For instance, the blockchain Avalanche has established a $100 million ‘Culture’ fund, and Blast rewards users with Blast Gold for using memecoins. Social platforms like the short video platform Drakula have integrated Farcaster DEGEN to drive user activity. I believe more networks and platforms should consider how to leverage memecoins to enhance activity.

Final Thoughts: A Trojan Horse Disguised as a Toy

Firstly, memecoins are not likely to disappear anytime soon. The next generation sees memecoins as a highly entertaining social activity. Our current Generation Z interns at Pantera and their friends have great fun using newly launched memecoins for simple, enjoyable social interactions, experiencing both their benefits and drawbacks together.

Secondly, memecoins greatly enhance the appeal of platforms and applications. Although they are a mechanism that helps spread memes, memecoins can significantly enhance the appeal of NFT projects, social protocols, and the entire blockchain industry.

Ethereum founder Vitalik Buterin has proposed some interesting ideas about the uses of memecoins in his recent articles, particularly focusing on their applications in charitable causes and Robin Hood-style games.

Memecoins’ role extends far beyond this. Ultimately, although memecoins appear to be toys, they are actually crypto’s Trojan horses. They are the simplest way for the next generation to experience the latest DeFi applications and to be introduced to Web3.