Crypto leaders defend memecoins' role in crypto despite the controversy.
Memecoins are making millions overnight thanks to a new craze called memecoin presales. In just one week, these meme-based crypto projects managed to raise $150 million by selling tokens before they even properly launched.
Projects like BOME went from nobody caring about them to being worth over $1 billion in market value, almost instantly. This huge growth in memecoins has split the crypto community’s opinions.
Some think memecoins are a joke and a dangerous gambling addiction with no real use. But others believe memecoins allow people to truly own and trade digital assets freely.
The core of this memecoin mania is the presales, where developers raise millions by taking money in exchange for promised future tokens. Whether you love or hate them, memecoins are shaking up crypto in a big way.
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Why Are Memecoins So Popular?
Travis Kling, Chief Investment Officer of Ikigai Asset Management, believes memecoins will be central in the current crypto bull run. His thread titled "A Lack of Pretense That Any of This S--t Does Anything or Will Ever Do Anything" posits that Bitcoin and Ethereum will effortlessly reach unprecedented highs, and memecoins will benefit from that.
Kling points to a growing trend among young Americans to gamble on riskier, lower-market-cap assets to “make it.” This phenomenon, "shitcoining," is one of the main drivers of the memecoin rally.
He predicts that altcoin prices will skyrocket in the coming 12 to 18 months, propelled not by practical applications, but by this prevailing 'financial nihilism'.
Andrew Kang, another crypto VC tweeted that the memecoin ecosystem is similar to a worldwide lottery platform where skill contributes to success. He argues that the more individuals can convince others to invest in a specific memecoin, the greater the likelihood of winning.
Kang also pointed out that the previous cycle served as a "test pump" for memecoins. He anticipates that this cycle will witness the "real pump" for memecoins, outpacing the rest of the crypto market.
That has been especially true for BOME, which has become the fastest memecoin to reach a market cap of $1 billion.
What Is BOME?
BOME is an acronym for Book of Meme and is an experimental project that combines memes to redefine web3 culture. The project preserves evolving memes in a digital collection named the BOOK OF MEME on the blockchain.
BOME was launched in a presale, with the biggest investor in BOME, Sundayfunday.sol, initially investing 420 SOL, equivalent to $67,200.
Another participant in the BOME presale sold all their 347 million BOME tokens for 34,647 SOL, approximately $6.58 million, a 340 times gain from their initial investment of 102 SOL (about $19,000).
These developments have drawn significant attention to BOME within the crypto community, and its fast growth led to it being listed on Binance.
Another example of a fast-growing memecoin is SLERF.
What Is SLERF?
SLERF, another Solana-based memecoin, experienced explosive growth despite a significant blunder by the developer, leading to the loss of all presale funds.
The developer of the sloth-themed memecoin managed to raise $10 million in a presale. Unfortunately, the funds were mistakenly sent to a burn address, causing the loss of all the funds raised. The developer, known on social media as @slerfsol, was remorseful, stating, "I burned the LP and the tokens that were set aside for the airdrop. Mint authority is already revoked so I can not mint them. There is nothing I can do to fix this. I am so f—ing sorry."
Despite the initial hiccup, SLERF was eventually listed on Solana-based exchanges including Jupiter and Orca. The market shrugged off the blunder and traded SLERF in large volumes, causing SLERF to jump from around 3 cents to a peak of $1.4 within a few hours.
The launch of SLERF and BOME is part of a larger trend of developers raising large sums, often in SOL, with the promise of a memecoin airdrop.
What Are Memecoin Presales?
Memecoin presales are events where tokens are sold before their official release, predominantly on Solana. The funds are transferred to a crypto address, and a predetermined quantity of tokens is received at a future date.
BOME kicked off the presale trend, with daily trading volumes surpassing $100 million. The triumph of BOME has spurred other developers to launch their presales. Many of these have already generated millions of dollars in trading volumes, achieving market caps of up to $600 million.
However, this frenzy has attracted criticism from some market observers, with a notable Ethereum investor describing the trend as "bidding ponzis."
According to an investigation by crypto analyst Zach, over 796,000 SOL ($149.2M) has been collected from 33 presales on the Solana blockchain since March 12.
Zach's analysis only takes into account presales on Solana, leaving out those on other chains such as Ethereum, BSC, Base, and others.
In one case, 7000 SOL was transferred to a user who allegedly held onto 62% of SOL from the presale and did not distribute all the tokens. Another case involved 2100 SOL being sent to a fraudulent account. A third case saw 3300 SOL transferred to a user who is alleged to have scammed their presale, initially promising a refund which never happened.
These developments have sparked a heated debate in crypto circles as to whether memecoins are good or bad.
“Memecoins Are Bad for Crypto”
Ki Young Ju, founder of Cryptoquant, voiced concerns about the potentially harmful effects of memecoins on the crypto industry. He sees memecoins distracting attention from the work of teams developing genuine products.
Ju points out that the quick profits associated with memecoins do not contribute to the industry's growth. He draws parallels between memecoins and the "shitcoins" from the 2018 ICOs, questioning their societal value. He also criticizes those who argue that memecoins are beneficial to the industry, suggesting they are newcomers who have not witnessed the negative consequences of easy money.
Ju showed concern that this "last hurrah" could invite increased regulatory scrutiny of the crypto industry.
“Memecoins Are Good for Crypto”
Despite their controversial reputation within the crypto community, Yuga Cohler of Coinbase emphasizes the role of memecoins in upholding digital property rights in a free market.
He sees memecoins as a pure form of citizens' right to transact freely without any obligations. Any attempt to limit memecoin markets based on personal bias contradicts the principle of free markets.
Cohler also points to the market capitalization of Dogecoin during the 2022 bear market, which stood at $7.7 billion at its lowest, comparable to News Corporation's $9.1 billion during the same period. Memecoins are primarily a cultural phenomenon, serving as a medium for people to express collective humor, dissent, or camaraderie. Therefore, they can become symbols of shared identity or cause and derive value from market dynamics and the popularity of the values they represent.
Arthur Hayes echoes Yuga Cohler's perspective on the value memecoins bring to crypto ecosystems. Hayes contends that memecoins play a vital role in onboarding new users and developers to blockchain networks. Their often lighthearted and viral nature captures the attention and interest of those previously unfamiliar with or disinterested in cryptocurrencies. This influx of fresh engagement and talent ultimately benefits the underlying blockchain platforms that memecoins operate on.
Hayes cites examples like Solana, which experienced a surge in activity and the launch of numerous new projects.
Similarly, Ethereum has hosted many popular memecoin launches that likely contributed to its vibrant developer community and dapp ecosystem.
While meme coins are highly speculative and sometimes lacking in tangible utility, Hayes argues they shouldn't be dismissed outright. Their ability to attract fresh interest and talent to blockchains generates real value that forward-thinking platforms can capitalize on.
Conclusion
At the end of the day, memecoins may be a total joke to some crypto purists. But guys like Arthur Hayes and others make a fair point - all that hype and FOMO around new memecoins bring in a ton of new blood to crypto. Sure, a lot of those newbies get rekt participating in pump-and-dumps, but some of them stick around and end up being the next generation of developers, entrepreneurs, and diehards that keep building innovative stuff on chains.
So, in the end, memecoins may be an effective gateway for crypto to go more mainstream.
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