Memecoins: Then vs. Now - From Dogecoin to Modern Meme Assets
What are the differences?
TL;DR
Rise and Evolution: Memecoins, originating from internet memes, have grown significantly since the early days of Dogecoin, with over 2,400 listed on CoinMarketCap and a combined market cap of $45 billion.
Strategic and Professional Approaches: Modern memecoins benefit from structured marketing, dedicated teams, and creative narrative, contrasting with the organic, community-driven beginnings of early memecoins.
Opportunities and Risks: Memecoins offer high-risk, high-reward investment opportunities but are also fraught with challenges such as volatility, speculative bubbles, and prevalent scams like rug pulls.
1. Introduction
Memecoins have carved out a distinctive niche within the cryptocurrency landscape, propelled by internet culture and humor. The memecoin market, initially popularized by Dogecoin, now encompasses a diverse array of tokens with varying cultural influences. As of now, CoinMarketCap lists more than 2,400 memecoins with a combined market capitalization of $45 billion.
However, as we discussed in our previous report, there has been high volatility, risk, and hype surrounding memecoins. In this report, we'll explore the changes by analyzing how today's memecoins differ from their predecessors and where they will be in 2024.
2. The Past Narratives Key Points
2.1. From Dogecoin to Dog-Coins
Dogecoin, inspired by the "Doge" meme, was launched in December 2013 by Jackson Palmer and Billy Markus, marking the inception of the first cryptocurrency based on an internet meme. Dogecoin's success sparked the creation of a wave of similar coins with a community focus, such as Pandacoin and Kanye West-themed coins. This phenomenon underscored a unique trend within the cryptocurrency market, demonstrating how the power of online communities and viral content can significantly influence the perceived value of these digital assets.
Following Dogecoin's surge to its all-time high (ATH) in 2021, dog-themed memecoins were introduced and gained massive success. Notable projects like Floki and Shiba Inu surpassed $1 billion in market cap and were listed on Binance. Moreover, dog-themed memecoins have become a part of many ecosystems, such as AIDOGE in Arbitrum.
2.2. ICO & Ethereum’s Parody
The period between 2017 and 2018 marked the so-called ICO Frenzy. During this time, Ethereum made it easier to launch coins. And ERC20 tokens, sold via ICOs, brought in a new user base and interoperability to the market. Notable projects like Filecoin and Tezos emerged, while memecoins like Useless Ethereum Token and Dentacoin also gained attention.
For instance, the Useless Ethereum Token was a parody of the ICO trend and served no real purpose. Despite this, the project managed to raise over $300,000 through its ICO, highlighting the surprising success of memecoins during that period.
2.3. The NFT Craze
Emerged in 2016 during the United States election campaign, Rare Pepes NFTs were the original digital collectibles launched on Counterparty before the term NFTs even existed. This predates famous collectibles like CryptoKitties (September 2017) and CryptoPunks (June 2017). Later, projects like EtherRocks (launched on Reddit) and Unisocks (launched by Hayden Adams) appeared, blending meme culture with collectible value.
Late 2021 marked the rise of the NFT market, with the total market value reaching $41 billion during this period. From original NFTs like CryptoPunks to the well-known Bored Ape Yacht Club, these digital assets have established a new category in the crypto world. Their skyrocketing prices became a trending topic, drawing significant interest from celebrities who began purchasing them.
2.4. Weird DeFi on DeFi Summer
In June 2020, Compound Finance introduced liquidity mining, sparking 'DeFi Summer' and the creation of high-yield memecoins, or as Coindesk has termed them, “weird DeFi” projects like Yam, Spaghetti, and Pickle.
2.5. Meme-Stock Frenzies
In early 2021, retail traders on Reddit fueled the 'Gamestop' meme frenzy. Other stocks, such as AMC Entertainment (AMC), Bed Bath & Beyond (BBBY), Blackberry (BB), and Nokia (NOK), were also part of this internet-driven phenomenon. This event birthed the term ‘meme-stocks,’ which continues to be used to describe stocks that gain sudden popularity and volatility due to viral social media activity.
3. How are Memecoins in 2024 Different from the Past?
Memecoins in 2024 have evolved significantly from their predecessors, showcasing creative and diverse narratives while retaining their roots in memes and parodies. Influenced by internet culture, memecoins are growing as rapidly as new trends in social media.
On the blockchain side, the role of memecoins has transformed dramatically. For example, the recent resurgence in Solana's popularity was fueled by memecoins. Despite the cooling hype, the total market cap of memecoins on Solana remains at $6.5 billion, with two projects exceeding $1 billion in market cap.
The parody narrative has also become more diverse. Initially, Dogecoin parodied Bitcoin, and Useless Ethereum Token mocked ICOs. Now, anything can be parodied and become a memecoin topic, from scandals like Will Smith's infamous slap to political figures such as Donald Trump.
The memecoin ecosystem itself has also evolved. Initially launched fairly without insider allocations and driven by the community, it is now characterized by strategic operations, including systematic marketing led by dedicated teams. This current state of memecoins mitigates past risks and enhances the likelihood of long-term success.
Ultimately, attention, narrative, and hype remain the key factors driving memecoin value. Successful memecoins need to stay relevant with a strong community, effective marketing, and compelling storytelling. While the methods may evolve, these fundamental principles remain unchanged.
4. Opportunities and Challenges
4.1. Opportunities to Create a Community Quickly
With a market capitalization of $50 billion and a weekly trading volume of $80 billion, memecoins command significant attention from all cryptocurrency users. Despite ongoing criticism within the industry, there are strategic ways to leverage memecoins from a community perspective.
Memes have the power to attract users faster than projects with intrinsic value. By harnessing the rapid appeal of memes, it is possible to quickly attract users and spread the intrinsic problem-solving value to the community afterward. In other words, if properly leveraged, memecoin's rapid growth and community mobilization can effectively deliver intrinsic value.
Nevertheless, due to its inherent volatility, memecoin is best suited for investors seeking high-risk, high-reward opportunities.
4.2. Risks and Challenges in the Memecoin Market
Despite their potential, memecoins are fraught with risks and challenges. Many investors are drawn to memecoins with hopes of quick wealth, often leading to high volatility and speculative bubbles. Additionally, fraudulent activities such as rug pulls and pump-and-dump schemes are prevalent in the memecoin market. According to Coinspaidmedia, rug pulls became the most popular scam scheme in Q3 2023, accounting for more than 65% of all attacks on crypto users during this period. Furthermore, Thailand's SEC banned memecoins that lack clear objectives.
Memecoins also risk losing value if they fail to maintain public interest and engagement, leading to potential financial losses for investors. To mitigate these risks, investors must conduct thorough due diligence, including checking the status of liquidity pool tokens, team allocations, and contract integrity.
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