Industry veteran Federico Variola discusses the future of crypto utility, centralized exchanges and SocialFi

A lot has happened in the crypto space since Phemex CEO Federico Variola last visited this space, and he continues to keep his project focused on the road ahead.

“To keep delivering what our users expect, we continually innovate with unique features exclusive to Phemex,” the executive, popularly known by his nickname Fed, says. “We are committed to listing the latest narratives and meme tokens, staying attuned to emerging trends as an exchange. We continually add unique new products as well as awaited launch pools, to help users stay informed about the latest innovations in the space.”

Those latest innovations align with the evolution of meme coins, the future of social finance and the limits of exchange decentralization.

From here to utility

Market bubbles – in which the price of an asset far exceeds its fundamental value – have been documented for almost 400 years. Economists have long considered them aberrations, but then came along memes. Meme stocks, which took off during the pandemic starting with GameStop’s summer 2020 run, had bubbles baked into their recipe. By then, though, meme coins had been around for seven years, starting with DogeCoin’s consciously pointless debut in 2013.

But how long can any asset – stock, coin or whatever – rely on nothing but sentiment? For quite some time, as it turns out, particularly if its issuer knows when and how to pivot. That’s why DogeCoin and its imitators have consistently held their value while NFTs – which can boast scarcity and occasional utility – have cratered.

“The meme coin market has stayed strong because it’s so closely tied to internet culture, humor and community involvement,” according to Fed. “Unlike NFTs, which rely on the uniqueness of digital assets and the creator's reputation, meme coins thrive on group participation and viral trends. Meme coins have also become more accessible and easier to understand compared to the relatively complex world of NFTs.”

Liquidity is a significant factor as well. You can easily buy one dollar’s worth of a meme coin. This narrative of low market caps with the potential for significant growth is particularly appealing to retail investors.

Lately, meme coins have been adding more utility to stay relevant and extend their lifespan. Some now offer features like staking rewards, play-to-earn gaming platforms or governance options. Shiba Inu, for example, allows holders to vote on important project decisions through decentralized governance. Of course, this is still ironic to some because the holder gets a voice in the management of a coin that still doesn’t have any utility.

“Meme coins can occasionally perform better once they add utility, as they begin to transition into being real tokens. However, the core value of a meme coin often comes from the meme itself,” Fed says. “The team must focus on virality, maintaining conversations, creating content around the memes and keeping the community active. Adding utility introduces product promises to fulfill, which also carries risk. Not all meme coins will incorporate utility.”

Social work

Because meme coins are so reliant on popularity within a community, they are natural symbols of the entire SocialFi sphere. While SocialFi leverages the community-driven culture of meme coins, it isn't entirely dependent on them.

Phemex has taken a leading position in this space through Pulse, a SocialFi platform that seamlessly combines trading with social interactions. Pulse has reached nearly 300,000 users since its launch in June and offers a space where users truly own the platform, with 65% of platform tokens set aside as rewards for members and 265 million $PULSE already distributed. Users can not only engage in meaningful conversations, but also trade and swap cryptocurrencies instantly. It connects crypto markets with social engagement, offering a dynamic space for users to learn, create, share and profit. On the meme token front, Pulse empowers communities to create their own tokens.

The lynchpin of any SocialFi platform is its cadre of key opinion leaders. Becoming a KOL in the crypto world takes more than just good presentation skills.

“It's about building credibility through informed insights, accurate predictions and being transparent with your community,” Fed says. “You need to really know the crypto markets, understand trends and offer valuable analysis to earn trust and influence.”

Successful KOLs excel at breaking down complex topics so both beginners and experienced investors can understand.

“On Pulse, what I observe is that KOLs and thought leaders drive meaningful discussions on real-time crypto topics and aim to profit together with their communities,” Fed continues. “Those who focus on personal growth, understanding their audience and anticipating their needs tend to thrive in the long run.”

Defying DeFi

Phemex started out as a centralized exchange and then, as it approached its fifth year of operation, took steps to decentralize. The result is a hybrid exchange which, according to Fed, features the best characteristics of both CEXes and DEXes.

“Centralized exchanges attract users with their ease of use, liquidity and regulatory protection, while decentralized exchanges appeal to those who value autonomy and lower fees,” Fed says. “I believe a hybrid solution that combines the best of both worlds is what users are seeking right now.”

Six million traders worldwide rely on Phemex, which consistently exceeds $1 billion in trading volume across over 300 spot and contract pairs.

Through its Web3 ecosystem, Phemex lets users stake Phemex Token for trading fee discounts and participate in revenue-sharing. This mix of decentralized governance with centralized efficiency, according to Fed, means users get the security, liquidity and accessibility of centralized exchanges, along with the autonomy and control of decentralized ones.

Building the future together

Phemex’s hybrid exchange, its Pulse SocialFi platform, its Phemexia Web3 colony and other innovations will likely be creating buzz in the crypto space for a long time to come.

“As an exchange, we are committed to listing the latest narratives and meme tokens, while staying attuned to emerging trends,” Fed says. “We continually add unique new products as well as awaited launch pools, to help users stay informed about the latest innovations in the space.”