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A recent X post from ZackXBT revealed that numerous Solana meme coin projects have been abandoned after raising millions from investors. Meanwhile, Base has seen a surge in meme coin activity and transaction volume, fueled by the reduced fees from Ethereum's Dencun upgrade. Meme coins also continue to attract attention for their potential to engage and expand communities in the crypto space.
Solana Memecoins Dissolve into Thin Air
According to blockchain sleuth ZachXBT, at least 12 Solana presale meme coins have been abandoned over the past month after raising a total of $26.7 million from investors. One of the most costly abandoned meme coin projects was "I like this coin" (LIKE), raising 52,220 SOL, which is worth approximately $7.7 million. Despite launching with a market capitalization of $577 million on Mar. 17, LIKE's value plummeted by more than 90% in just the first eight hours.
The second-largest project, MOONKE, which was created by RockyXBT, also faced a similar fate. It started with a $500 million market cap but saw a drastic decline of over 99% very shortly after its launch on Mar. 20. Additionally, another project managed to raise 4,567 SOL worth about $812,000, but completely failed to launch its token at all.
The broader meme coin market has also been showing signs of cooling, with major tokens like Dogwifhat (WIF) losing more than 40% of their value since the beginning of April. At press time, WIF was worth about $2.95 after its price slipped by 5.31% in just the past 24 hours of trading, according to CoinMarketCap. This meme coin trend and the skepticism now surrounding these tokens are very similar to the Ethereum ICO boom in 2017, which also saw many projects failing to deliver after raising huge amounts of money from investors.
Another incident happened with the meme coin Slerf (SLERF), where the developer accidentally destroyed the entire presale allocation in a mishap, leading to a temporary surge in its popularity despite the major loss of funds.
Memes Are Fueling Base's Explosive Growth
On the other hand, Jesse Pollak, the creator of Base, believes that memes will be instrumental in attracting millions of users to the Coinbase layer-2 network. He shared his confidence during a meme coin hackathon in New York on Apr. 20, where Pollak pointed out the growing role of memes in the on-chain economy. According to Pollak, memes have already helped onboard thousands to Base, and he believes they have the potential to expand the network's user base even more.
Since the Ethereum Dencun upgrade in mid-March, which reduced fees on layer-2 networks, Base has seen a big increase in both meme coin activity and transaction volume. This surge caused a nearly 250% increase in Base's total value locked (TVL), reaching an all-time high of $1.61 billion on Apr. 21, according to data from DefiLlama.
Pollak believes that beyond mere speculation, meme coin creators are exploring very innovative ways to engage and grow their communities. This has resulted in a variety of onboarding experiments aimed at integrating more people into their cultural and economic structures. He believes that this ongoing creative outreach will be a key driver in Base's growth. He even predicts that memes will bring millions more users to the platform in the coming years.
Despite these optimistic views, a Cointelegraph investigation has cast a shadow over the meme coin ecosystem on Base. The report found that 16.7% of new Base meme coins were scams, and more than 90% had serious vulnerabilities. Nonetheless, the popularity of certain meme coins like BRETT, along with others like DEGEN and TOSHI, indicates a strong and growing interest in these digital assets.
What Exactly are Meme Coins?
Meme coins are cryptocurrencies inspired by internet memes or jokes, and they gained prominence with the launch of Dogecoin (DOGE) back in 2013. Meme coins are known for their high volatility and community-driven nature, and they often see rapid surges in value due to endorsements from online communities or influential people, only to experience massive price drops just as quickly. These coins typically have large or unlimited supplies, which keeps their individual token prices low, allowing investors to buy millions of tokens with a rather small amount of money.
The popularity of meme coins surged during the COVID-19 pandemic, partly influenced by the meme stock phenomena like GameStop and AMC, where retail investors drove prices up dramatically. A similar sentiment carried into the crypto market, especially after a Reddit group proposed making Dogecoin the crypto counterpart to GameStop. This led to massive rallies in meme coins, spurred on by social media and celebrity endorsements. However, their prices can also plummet quickly, which was very evident with Dogecoin after a public joke by Elon Musk in 2021.
Despite the potential for quick profits, investing in meme coins comes with a lot of risks. Many lack fundamental economic structures, robust use cases, or technological backing, making them more speculative and volatile compared to more established cryptocurrencies like Bitcoin. Their market is prone to manipulation, evidenced by events like the Squid Game token's rug pull, where developers completely abandoned the project, leading to massive losses for holders.
The Double-Edged Sword of Memecoin Popularity
The good and the bad aspects of meme coins have led to a lot of conversations about where exactly these tokens fit in. In an episode of The Agenda podcast, hosts Jonathan DeYoung and Ray Salmond discussed the impact of meme coins on the cryptocurrency sector with Andreas Brekken, the founder of SideShift.ai.
Brekken shared his insights on both the advantages and challenges presented by the meme coin phenomenon. He believes that meme coins serve as an accessible entry point into the crypto world, making it easier for the average person to engage with blockchain technology. This not only educates them about cryptocurrencies but also tests and potentially improves blockchain technology's capabilities in a real-world environment.
Brekken also pointed out that the meme coin frenzy, while congesting networks like Solana, still helps improve network speed and reliability, ultimately benefiting the blockchain infrastructure as a whole. He is also quite impressed by the ability of meme coins to quickly build strong communities and shed some light on the practice among meme coin developers of burning their liquidity provider tokens to show commitment to their projects, a strategy he even suggested could be adopted by more serious crypto initiatives.
However, Brekken also acknowledged the risks associated with meme coins, comparing investment in them to gambling. With many meme coins holding no intrinsic value and a high incidence of scams and rug pulls, investors often face the potential of losing their entire investment. He did point out that the huge number of people gambling on meme coins might actually reflect much broader societal issues, like distrust in the financial system and concerns about inflation and stagnant wages.
Meme Coins Take Center Stage at Token2049
At the Token2049 conference held in Dubai, a panel titled "Emerging Trends in Consumer web3 Apps" talked about the major role of meme coins in the landscape of blockchain technology. The discussion mostly centered around the concept of tokenizing user attention, a trend that is gaining a lot of momentum in the blockchain sector, especially in the meme coin industry.
Imran Khan from AllianceDAO pointed out that many recent blockchain projects are leveraging memes to broaden their user base, with tokens being used as incentives that align with user interests. Tristan Yver, founder of Backpack, also shed some light on the growing focus on meme coins in crypto, noting their effectiveness in attracting new users to the industry. Investor Santiago Roel Santos agreed with this and pointed out that while meme coins are often dismissed as fleeting or insubstantial, they actually hold a lot of influence and should not be underestimated.
Despite their shared recognition of the importance of meme coins in the crypto space, the panelists had a completely different view about the fundamental role of these tokens in consumer web3 applications and the broader concept of attention tokenization.
In addition to these discussions, a recent report by CoinGecko revealed that meme coins outperformed all other crypto sectors in the first quarter of 2024. The top ten meme tokens yielded an average return of 1,313%, surpassing other categories like real-world assets and AI-based tokens.
