From the Previous Cycle

Since PEOPLE and SHIB in the last cycle, memes have always been a cultural expression of collective sentiment. From a community perspective, meme coins are symbols that best reflect retail investors’ emotions and community spirit. Let’s look back at the rise of PEOPLE: the community was initially formed to secure a rare copy of the U.S. Constitution at auction. Constitution DAO attracted 17,437 contributors and raised over $47 million. PEOPLE was the token given to contributors of the DAO. After the auction failed, PEOPLE became a community-owned token. The process of raising funds and participating in the auction brought together individuals who supported community autonomy and the U.S. Constitution, ultimately returning organizational control to the community itself. This origin imbued PEOPLE with strong political undertones, and the token demonstrated remarkable market performance during several political events. For example, during the U.S. midterm elections in June, PEOPLE surged nearly 600% in a short period. Moreover, its wallet distribution and token concentration reflected its nature as a “decentralized social experiment.”

Shiba Inu (SHIB), launched in August 2020, quickly became one of the most recognized meme coins, thanks to strategic branding and a robust community. SHIB’s founder, Ryoshi, initially locked 50% of the tokens on Uniswap and sent the remaining 50% to Ethereum co-founder Vitalik Buterin, who burned 90% of his holdings in May 2021 and donated the remainder to India’s COVID-19 relief fund. This event captured global media attention, driving SHIB’s market cap to exceed $40 billion in October 2021, ranking it among the top 10 cryptocurrencies worldwide.

The SHIB community, ShibArmy, has over 2 million members active on platforms like Twitter and Reddit, continuously expanding its influence. SHIB’s ecosystem includes the decentralized exchange ShibaSwap and tokens such as LEASH and BONE, as well as the Layer 2 solution Shibarium, aimed at enhancing transaction efficiency and usability. These developments have elevated SHIB beyond a mere meme coin to a community-driven project with real-world application potential.

Whether as cultural or political symbols, DAOs, and meme coins have consistently demonstrated surprising market impacts, leading many to believe that DAOs and digital currencies are naturally suited to the meme phenomenon.

The New Wave of Meme Coins

BRC20 and Inscriptions

The meme coin trend in this cycle exhibits distinctly different characteristics than previous cycles. Fueled by expectations of a BTC ETF, Bitcoin-related tokens such as BCH have become a new focus of market capital. Additionally, Ethereum-inspired designs are emerging within the Bitcoin ecosystem, including Bitcoin Layer 2 solutions, EVM compatibility, and the BRC20 token standard. The creation of BRC20 has enabled the issuance of tokens on the Bitcoin network, rapidly attracting significant capital.

Leading the charge in the BRC20 ecosystem, ORDI has driven the popularity of BRC20 tokens, while animal-themed meme coins like RATS have also gained traction, propelling the meme coin trend to new heights. Other blockchains, such as Ethereum, Avalanche, and Solana, have adopted similar inscription-based innovations, further diversifying and revitalizing the meme coin market.

The Role of Celebrities and Events

The meme coin market is often shaped by the influence of celebrities and headline-grabbing events. During the U.S. presidential election, Trump-themed meme tokens like “MAGA,” “Super Trump Coin,” and “FreeDum Fighters” generated significant buzz. FreeDum Fighters stood out by introducing the “PolitiFi” concept, which featured a fictional battle between Trump (“MAGATRON”) and Harris (“Kamacop 9000”), drawing considerable investor interest.

Elon Musk’s social media antics also fueled meme coin mania. When he updated his bio to “Chief Troll Officer,” TROLL coin saw its price skyrocket by 330% within 24 hours, attracting waves of speculative traders. This surge ignited a broader frenzy around TROLL and similar meme coins, enabling many traders to secure significant short-term gains.

AI-themed meme coins have also risen alongside the AI boom. GOAT (goatseus maximus), conceptualized by the AI bot “Truth Terminal” and refined using Claude-3 Opus, has become a standout example. Its success has inspired a wave of AI meme coins, such as SHEGEN, although GOAT remains unmatched in scale and impact.

Public Chains and Meme Ecosystem Growth

Initially seen as lighthearted or topical, meme coins have significantly driven user growth and ecosystem development in crypto. Their high trading activity attracts new users, boosting wallet creation and transaction volumes. Ethereum’s ERC-20 standard has made it a go-to platform for meme coin launches, while Solana’s low transaction fees have appealed to cost-conscious traders. Meme coins amplify user engagement and ecosystem visibility across different chains.

Platforms like Pump.fun have emerged to capitalize on this trend. Designed to simplify meme coin creation and trading, Pump.fun boosts Solana’s ecosystem activity through gamification and social features. Its straightforward mechanism allows users to launch new meme coins using a bonding curve pricing system. These coins are listed directly on Raydium, and liquidity is injected once market value thresholds are met, with token burning enhancing stability. At a low setup cost (0.02 SOL) and migration fee (2 SOL), Pump.fun offers an accessible launchpad for project creators, increasing community engagement within Solana.

Public chains are also adapting to the meme coin wave, introducing features like faster transactions and new token standards. Solana has gone so far as to label meme coins “cultural tokens,” emphasizing their role in spreading blockchain awareness and fostering community growth. This highlights the broader potential of meme coins to serve as cultural bridges and onramps for new users.

Why Meme Coins Thrive?

To understand the success of meme coins in this cycle, let’s analyze their appeal from a trading perspective. The core reason lies in the absence of other undervalued assets capable of absorbing market capital. In an ideal bull market, ETH and BTC would lead to a synchronized rise across altcoins. However, in this cycle, most altcoins have lagged behind BTC in terms of returns.

New projects have also failed to deliver the expected wealth effect. The sheer volume of new launches has diluted market capital, and top-tier projects, often overvalued in early fundraising stages, have seen their valuations swing dramatically post-IEO/IDO. This has left retail investors on exchanges with modest returns, pushing them toward meme coins as a decentralized alternative.

Moreover, emerging narratives like Intent, zk, and FHE have yet to gain widespread traction. Many traders remain skeptical, viewing these concepts as too distant to yield immediate returns. In such an environment, the market craves a new narrative to spark speculative enthusiasm, and meme coins have filled this void.

Successful meme coins share several distinguishing features:

• Distinctive Identity: They must have a unique symbol and viral potential, making them easy to share and recreate. Shiba Inu exemplifies this perfectly.
• Community Connection: A motivational story or vision that resonates with the community and inspires collective action.
• Strategic Management: Strong community governance and effective use of social media to build and sustain user engagement. Empowering members to participate in decision-making enhances cohesion and loyalty.
• Strong and Stable Whales: A group of powerful and committed backers willing to support the project long-term, providing price stability. These holders’ sustained trust and belief are crucial for the steady growth of meme coins.

Meme Coins: Speculation or Self-Expression?

Market Manipulation and Risks

The meme coin market is currently valued at approximately $58 billion, accounting for 2.5% of the total crypto market cap. While its footprint is noticeable, it remains relatively small. By the end of 2024, the top 10 meme coins control most of the sector’s market value. Dogecoin ($11 billion market cap) and Shiba Inu ($6.5 billion market cap) are the leaders, with other popular coins like Floki Inu, Dogelon Mars, and Baby Doge Coin accounting for about 80% of the meme market cap, collectively reaching $39.7 billion.

This concentration makes the sector highly dependent on a few dominant tokens, often controlled by whales who manipulate large portions of the supply. Such dynamics result in extreme volatility, making meme coin trading a speculative gamble.

Balancing Creativity and Value

Meme coins’ true allure lies in their anti-mainstream ethos, rejecting traditional narratives and centralized capital dominance. They originate from communities as symbols of shared expression, reflecting the individual creativity of every participant.

However, there’s a disconnect between the organic nature of memes and the deliberate creation of meme coins. The calculated pursuit of new narratives and reliance on celebrity promotions or market-making often conflict with the authenticity of memes. Critics argue that meme coins represent trivial innovation, wasting blockchain resources and undermining the ecosystem. On the other hand, proponents see them as a natural outlet for speculative energy, aligning with crypto’s ethos of community-driven evolution.

Regardless of perspective, meme coins continue to influence blockchain’s trajectory, showcasing the market’s complexity and diversity. The challenge of balancing genuine innovation with sustainable value remains a pressing issue for the crypto community.