The Meme Craze: A New Battleground for VCs—Opportunity or Trap?
TL;DR
- Memes underwent a slow developmental phase from 2013 to 2019, followed by a chaotic period of rapid changes from 2020 to 2022. By 2023-2024, they have entered a period of rapid growth, finally gaining widespread recognition and a solid audience base as a distinct category.
- The daily turnover rate for memes is approximately 11%, compared to 5% for DeFi, 7% for Layer 2, and 4% for Layer 1. This high turnover rate highlights the liquidity of memes and demonstrates the strong interest and high trading frequency among users.
- By the end of Q3 2024, meme market capitalization has increased from 0.87% of the overall crypto market two years ago to 2.58%, with continued growth expected. A simple linear regression suggests this market share could reach 3.54% by 2025 and 7.81% by 2030.
- Memes function as leveraged Layer 1 assets, meaning that when market conditions improve, meme assets can experience 5 to 10 times the price appreciation of traditional Layer 1 assets.
- Animal-based memes and Cult culture memes are more suited for long-term observation. In contrast, other meme categories often tie into short-term trends, with popularity spiking quickly before fading.
In 2024, amidst a market reshuffle where many VC-backed projects have faltered, memes have defied expectations, emerging as a new force in the market. The rise of PvP models, wealth effects from single-coin “moonshots,” and the meme-friendly environment fostered by Solana have all contributed to the phenomenon. The new generation of meme leaders, such as Murad, has rapidly gained attention, with his Supercycle talk propelling him to meme fame. However, what changes have meme assets undergone? From the perspective of venture capital, how should investors engage in this space? These are questions worth exploring.
The Meme Market Landscape: Origins, Evolution, and Market Data Analysis
Origins and Influence
Meme culture, as a form of cultural transmission, has deep roots in human history. Emerging from early social phenomena such as language, beliefs, and customs, memes spread within groups through imitation and learning. The internet accelerated the propagation of memes, which, in the form of images, videos, text, and emojis, spread rapidly among users due to their humor, satire, or resonance. Memes fulfill the human need for emotional expression, sharing of perspectives, and building communal bonds. They reflect societal trends, group psychology, and cultural changes, and their spread and popularity are influenced by factors such as content appeal, dissemination environment, community acceptance, and influencer impact.
In Web2, meme culture primarily developed on two platforms—4chan and Reddit. 4chan is the birthplace of Pepe the Frog, one of the most iconic memes. It has become a hub for Pepe memes and their derivative culture. Additionally, 4chan served as the incubator for Boy’s Club comics, providing an essential perspective on meme culture. On the other hand, Reddit is known for fostering iconic memes such as Dogecoin and Success Kid. Thanks to the active community atmosphere and solid user bases on these platforms, they remain the birthplace of many new memes. Apart from these, other major social media platforms, such as Twitter (X) and Telegram, have also been fertile grounds for popular meme creation. One such meme, Dogwifhat, features a dog wearing a pink knitted hat. This meme, with its distinctive imagery, quickly became a “totem” of the “hat culture” within the community, with numerous users and influencers sharing related images of the hat-wearing dog.
Evolution and Development
From Web2 to Web3, the Meme craze has taken on a life of its own. In this article, we refer to both memes and their associated tokens collectively as “Memes,” without distinguishing between them. Looking back at the evolution of memes, it is evident that they were once inconspicuous and not given much attention. Considering the cyclical nature of market booms and busts, we can divide the development of memes into three distinct phases: the Emergence Phase (2013 to 2019), the Chaos Phase (2020 to 2022), and the Rapid Growth Phase (2023 to 2024). By consulting historical snapshots from platforms like CoinMarketCap, individual token data from CoinGecko, as well as historical content from search engines and social media, we can gain a more comprehensive understanding of how memes have evolved.
Charts: The Evolution and Development of Memes
By December 31, 2019, during the Emergence Phase, Dogecoin was the only meme-based cryptocurrency in the top 100 market cap rankings, holding the 34th position. Looking back from 2013 to 2019, meme-based cryptocurrencies did not hold a significant position in the market. During this period, the industry was focused on rapid infrastructure development, with everyone exploring various new concepts. The mainstream new coins were typically those associated with more efficient transaction processing and faster confirmation times for payment-focused blockchains, or new blockchains with strong smart contract capabilities. For meme-based cryptocurrencies, the challenge was twofold: not only did they require higher costs to build supporting ecosystems, but their liquidity was also difficult to establish, resulting in low trading volumes. This limited their ability to gain widespread support from centralized exchanges. As a result, during the Emergence Phase, apart from Dogecoin, which was characterized by the “Doge” meme and its significant viral impact, there were few other meme tokens that survived in the market.
Starting in 2020, more specifically from August 2020, the Chaos Phase was catalyzed by the DeFi Summer and the subsequent IDO (Initial DEX Offering) wave. The IDOs led by DeFi Summer allowed people to easily create liquidity on-chain at low costs, offering the ability to provide trading services and rapidly establish trading scenarios. This low-cost token issuance model, allowing direct circulation in the secondary market without the need for exchange listings, has given rise to many on-chain memes. During this period, surviving meme tokens like SHIB, FLOKI, and PEOPLE emerged. However, these early meme tokens did not gain serious market recognition and were largely driven by speculative hype.
Additionally, the popularity of memes during this chaotic phase often emerged in the context of market liquidity excess. They typically appeared as the final leg of a relay race, following a series of rallies across various sectors. It’s also worth noting that memes during this time gained widespread attention due to their association with celebrities. In particular, Elon Musk’s continued support of Dogecoin in 2021 led to significant price volatility and propelled Dogecoin to new market cap heights. The community also expanded considerably.
With the arrival of 2023, the meme coin craze continued to heat up, and a diverse array of meme tokens emerged, including BONK, PEPE, CHEEMS, and those related to Cult culture, such as BITCOIN (HarryPotterObamaSonic10Inc) and SPX (SPX6900), along with WIF and MOG. During this period, meme coins began to diversify and become more specialized, with newer blockchain platforms like Solana rising to prominence.
By 2024, the development of meme coins accelerated, with new tokens such as BOME, lowercase NEIRO, and GOAT continuously emerging, each with unique features. Meme coins have officially gained widespread recognition as a distinct category, developing a solid audience base and a clear path as an established asset class within the cryptocurrency market.
Charts: Key Data Indicators for Meme Tokens
By analyzing the market cap share and performance data of meme tokens in the top 600 cryptocurrencies from 2013 to 2024, we can observe the growth of meme market capitalization, as well as the expansion of categories and numbers. Over this period, meme tokens have not only experienced significant growth in market value but have also seen an increase in both variety and quantity.
As of the end of Q3 2024, the market share of memes in the overall cryptocurrency market has grown from 0.87% two years ago to 2.58%, with a continued upward trend. A simple linear regression model suggests that this market share could reach 3.54% by 2025 and 7.81% by 2030.
Perhaps we once doubted whether Memes were merely a passing trend, destined to fade away after the hype subsided. However, as we have deepened our research and understanding of Memes, it has become clear that our perspective has shifted. Memes will not disappear; on the contrary, they will continue to evolve and innovate. Each new era may bring about a new leading Meme. However, behind these prominent Memes lies a harsh reality, which reminds us that we must always stay calm and maintain a clear head.
Market Data Analysis
By analyzing the development and historical data of memes, we can gain a general sense of their growth trends. Studying the current market landscape, however, provides us with a more direct perspective on how market trends and capital flows are changing. Below, we delve deeper into macro-level indicators of the meme sector, including market capitalization, trading activity, and average daily trading volume. These analyses not only reveal the latest dynamics in the meme sector but also provide insights into its potential future trajectory.
Changes in market capitalization and circulating supply: The changes in market capitalization and circulating supply of meme tokens offer insight into the market’s demand and acceptance. Even though some meme tokens may have relatively low market caps, the growing number of new meme tokens indicates that the community’s interest in the entire sector is on the rise. Compared to other sectors (such as Layer1, Layer2, and DeFi), memes have outpaced them in terms of total market capitalization and the number of new tokens added over the past two years.
Trading activity: Meme tokens typically exhibit higher trading activity and turnover rates than other sectors within the cryptocurrency market. According to data from CoinMarketCap, the total market capitalization of meme tokens is approximately $50 billion, with a daily trading volume of around $5 billion. This level of trading activity is significantly higher compared to other sectors. On average, meme tokens have a daily turnover rate of about 11%. In comparison, DeFi tokens have a daily turnover rate of approximately 5%, Layer2 tokens around 7%, and Layer1 tokens about 4%. This higher turnover rate not only highlights the high liquidity of meme tokens but also indicates a strong level of user interest and frequent trading activity within the meme sector. For meme tokens that sit at the sector level or have higher trading volumes, they often become the target of market capital flows and investor interest.
New meme kokens with high volatility and low success rate: The meme market continues to see a constant influx of new tokens, with some experiencing price surges that even exceed those of mainstream cryptocurrencies like Bitcoin. This indicates that the meme token sector offers significant volatility and speculative opportunities. However, among the many new meme tokens, using data from Pump Fun, we find that less than 2% of newly launched meme tokens successfully gain traction in the market. Furthermore, only 0.23% of meme tokens maintain a market cap above $1 million. This means that the probability of a meme token withstanding the test of time and surviving in the market is very small.
Massive trading volume and new users: Meme tokens not only drive substantial trading volume but also attract a relatively loyal user base. As a result, centralized exchanges (CEXs) have increasingly turned to meme tokens as a strategic move to attract traffic and new users. For instance, in Binance’s spot market, 20% of the top 30 trading pairs by trading volume are meme tokens.
Chart: Binance Spot Trading Data from CoinMarketCap
Blue-chip memes and their rarity: Blue-chip-level memes are notably scarce within the meme token market. Amidst the hundreds, if not thousands, of meme tokens available, fewer than 1% can truly be considered blue-chip. Taking the data from CoinMarketCap as an example, although new meme tokens emerge constantly, very few manage to withstand the test of time and rise to prominence. Additionally, the market capitalization distribution within the meme sector follows a clear 80/20 rule, or the Pareto Principle. The majority of the sector’s market cap is driven by fewer than 10% of the top-performing meme tokens. This concentrated distribution of market value makes it increasingly difficult to identify true value investments within the meme space. From the perspective of venture capital (VC) investments in memes, this aligns with the classic VC rule of thumb, known as the “2-8 rule.” In this case, approximately 10% of successful meme investments can offset the losses from the remaining meme tokens that do not perform well.
Summary
In light of the recent highly regarded Murad’s speech within the meme space, he predicts that the meme market cap could reach $1 trillion in the future, implying a 25x growth potential. He anticipates that more than 25 meme tokens will enter the Top 100 by market cap and that venture capital will increasingly focus on purchasing blue-chip memes. However, based on our data, we believe this prediction is overly optimistic. Currently, the meme sector is already a significant player in the industry, both in terms of token quantity and market capitalization. Future growth is more likely to break out on Layer1 blockchains, which will continue to serve as the crucial foundation for meme development. The growth of memes will, in turn, drive the development of Layer1, creating a symbiotic relationship between the two sectors. Given this, we lean toward a more conservative view: memes function as a leveraged Layer1 asset. In favorable market conditions, meme tokens could see a 5 to 10 times increase in value, mirroring the potential gains in Layer1 tokens. Nevertheless, it is undeniable that memes represent a sector worth observing and researching in the long term. Establishing a systematic trading framework will be essential for understanding and participating in this dynamic, high-risk, yet high-potential market.
Exploring and Researching Memes
As the wave of memes sweeps across the market, and combining our previous panoramic research on the meme market and future trend predictions, we believe that it is crucial to delve into and study memes in depth. Through this, we have found that the value of memes does not stem from technology or practical applications, but rather from the enthusiasm of the community and their identification with meme culture. This driving force creates uncertainty and volatility in the market performance of memes, while also bringing unprecedented vitality. By analyzing these characteristics, we have developed a clear framework to help understand and assess the potential value and risks inherent in the meme market.
Fundamental Characteristics of the Meme Sector
Analyzing a single meme can provide deep insights, but to fully grasp the development trends of the entire meme sector, a broader perspective is needed. Therefore, we first conducted a comprehensive study and analysis of the basic characteristics of the meme sector. In the current market environment, the meme sector has exhibited several distinct features:
Low Entry Barriers: The threshold for meme creation is extremely low. With just a social media account, a Telegram group, and a few creative images, a new meme can easily be launched. Unlike traditional crypto projects that require product development and application creation, memes themselves are the product. The entry barrier for memes is significantly lower than that of traditional projects, as it does not involve complex product development or app construction, making the token itself the core “product” directly facing the market.
Exponential Growth: Due to the low barrier to entry, a large number of new memes emerge daily, rapidly expanding the token pool and leading to a sharp increase in supply. With the continuous influx of new memes, users are faced with more options, which also makes the process of selection more challenging.
Significant Wealth Effect: Despite the risks associated with the meme market, it offers enormous potential returns for early participants. The wealth effect of single-token moonshots and high-risk, high-reward investments acts like a magnet, not only attracting numerous users but also spurring heightened attention and active participation in the meme market.
Market Resilience: Memes have shown impressive resilience in the face of market fluctuations, quickly recovering and rebounding after downturns. This rapid recovery is primarily driven by community sentiment and the intense enthusiasm of investors.
Celebrity Effect: The involvement of celebrities has significantly boosted meme hype and market attention, further intensifying price volatility. This celebrity effect not only draws more attention but can also lead to information arbitrage, with top players potentially using their influence and informational advantages to gain improper benefits.
Low Liquidity and Limited Capital Capacity: During the early to mid-stage of memes—specifically the on-chain market phase—the liquidity of memes is relatively low. This means that a substantial portion of their market cap and trading volume is somewhat inflated. Due to insufficient liquidity, large funds face high slippage when buying or selling, resulting in increased transaction costs. Consequently, the capital capacity of the meme market is limited, making it difficult for institutions to enter or exit on a large scale without significantly affecting prices. This limitation increases the difficulty of trading and restricts the market’s depth and breadth, making the meme market more vulnerable to large-scale capital flows.
High Transaction Risk: Due to the lack of underlying applications and intrinsic value, the prices of many memes often behave like roller coasters—rapidly soaring and then crashing down. More concerning is the fact that many memes ultimately face the fate of zero, with their market value and trading volume dwindling to almost nothing. This high-risk trading environment requires careful caution when venturing into memes, as investors must fully understand the potential for financial loss.
Active Trading and Susceptibility to Manipulation: Meme trading is highly active, with substantial trading volume, indicating massive market interest. However, behind this trading volume, there may be hidden manipulation by certain large players. Unlike VC-backed projects, the meme market is more like an open, speculative gambling arena, where investors may be exposed to more volatility and manipulation risks.
After conducting an in-depth analysis of the basic characteristics of the meme sector, we can conclude that the meme sector indeed has some unique traits that distinguish it from other segments of the crypto market. The low entry barriers, exponential growth, low liquidity and limited capital capacity, high transaction risks, significant wealth effects, trading activity and susceptibility to manipulation, market resilience, and celebrity effect collectively form a distinct ecosystem for memes. Because of these characteristics, the meme sector is often seen as a PvP (Player vs. Player) battleground, which is not without reason. In this fiercely competitive field, participants need to act like gold miners, identifying true blue-chip memes and hidden gems among the vast array of meme tokens.
Characteristics and Categories of Memes
As the meme sector matures, we should no longer be confined by outdated views. Standing on the periphery and ignoring the deeper dynamics of memes only limits our understanding. Meme culture has now evolved far beyond simple image macros; it has become a multifaceted expression of market sentiment and an important tool for spreading awareness to those outside the community. Therefore, it is essential to have a basic understanding of the key characteristics and classifications of memes.
Memes possess a variety of characteristics, some of which can be quantified with data metrics, while others are more challenging to measure and are primarily qualitative. The following are the key characteristics:
Cultural Uniqueness: Cultural uniqueness is at the heart of memes. They often stem from specific cultural phenomena or social trends, establishing a unique identity and appeal. For instance, memes like the playful Dogecoin and the self-deprecating Pepe have attracted large communities even before entering the Web3 space, thanks to their cultural characteristics. Whether through emoticons or creative reinterpretations, these memes have built a strong following based on their cultural identity.
Continuity: Continuity is a key measure of whether a meme can sustain its presence in the market over time. A successful meme often transcends short-term trends and establishes long-term cultural significance. The idea is similar to the phrase “diamonds are forever.” Dogecoin, for example, has lasted for over a decade, growing alongside the cryptocurrency industry and becoming the origin of meme culture itself. For newer memes, we cannot expect them to undergo the same long-term tests as Dogecoin, nor can we expect every meme to be listed on Binance in just a few days, as happened with BOME. Therefore, we believe that a meme should demonstrate sustainability for at least six months to a year to be considered viable, which also aligns with the typical due diligence period for centralized exchanges when assessing new projects.
Spreadability: Spreadability refers to a meme’s ability to rapidly gain traction and be widely accepted. A meme that is easy to share and has high conversion potential can attract considerable attention in a short amount of time. Indicators of spreadability include the level of discussion on social media and the rapid growth of the meme’s community. For example, a meme’s Twitter account should ideally have tens of thousands of followers, with a more impressive benchmark being several hundred thousand or even millions.
Stickiness or Loyalty: Stickiness, or loyalty, refers to the level of commitment and engagement from the meme’s community. A meme with high community loyalty can maintain long-term participation, even during market fluctuations. This loyalty is essential for the meme’s sustained success.
Dogecoin, initially popular for its cute animal imagery, has maintained a committed following, and this loyalty is central to its ongoing relevance. As meme culture continues to evolve, new subcategories have emerged, blending traditional meme types and greatly expanding the diversity of the meme space. Below is a simplified classification of different meme types, with some categories potentially overlapping or combining:
Animal Memes: Animal-based memes use adorable or humorous animal imagery to express emotions or ideas. These memes are widely beloved for their cuteness and approachability. The most famous examples are Dogecoin (dog) and Pepe the Frog (frog), both of which became iconic for their charming animal representations.
Celebrity-Driven Memes: Celebrity-driven memes leverage the influence of public figures, capturing their words and actions and creatively reinterpreting them through parody, imitation, or satire. A well-known example is the meme culture surrounding Elon Musk, where his tweets, profile pictures, and other public elements have inspired a variety of memes, such as the Troll meme, which humorously critiques or mimics Musk’s online presence.
Political Memes: Political memes humorously or satirically reference political figures or events, often serving as social commentary or expressing political opinions. These memes thrive on the controversies and absurdities surrounding political figures or events. Examples include memes based on Donald Trump’s campaign slogans like MAGA or FIGHT, as well as memes poking fun at the names of Trump and Biden.
Cult Culture Memes: Cult culture memes emerge from specific subcultures or niche communities, often incorporating symbols or references that only insiders understand. These memes appeal to a sense of exclusivity and insider knowledge. A notable example is PEOPLE, a meme related to a group’s effort to purchase the U.S. Constitution, which later evolved into a decentralized identity meme for the masses.
IP-Driven Memes: IP-driven memes are based on established intellectual properties, such as traditional anime characters or popular NFTs. By leveraging the existing fame of these IPs, memes attract the fanbases of those franchises. A prominent example is the mfer meme, which originated from an NFT project with a “doom culture” aesthetic.
Mechanism-Based Memes: Mechanism-based memes are defined by unique operational features, such as fair distribution, token burning, or buyback taxes. Recently, these memes have incorporated emerging technologies like AI. One of the hottest examples is the GOAT meme, created by Terminal of Truths.
Dogecoin/Troll/Maga/People/mfer/GOAT
Memes exhibit unique cultural characteristics and audience bases in different categories, which affects their persistence, spread, and stickiness to the community. Among these categories, animal Meme and Cult culture Meme are the types that we believe are suitable for long-term attention due to their deep cultural roots and loyal fan base. In contrast, other categories of memes tend to be associated with short-term hot spots, and their attention and popularity may rise quickly and then fall back. In order to quickly identify and understand the core characteristics of various Memes, we provide the following evaluation framework.
Primary Market and Launch Platforms
A deeper observation of the primary market and the launch process of memes can provide valuable insights into understanding their dynamics, especially for those memes based on public blockchains. Even after several years, it is still possible to examine the initial liquidity build-up. Taking SHIB as an example, by reviewing the initial trades where liquidity was added to the SHIB pool, we can observe the astonishing growth of its market capitalization. Initially, SHIB’s market cap was only equivalent to 20 ETH, which at the time was valued at around $10,000. When converted to the current price of ETH, the initial market cap of SHIB was merely $50,000. For a meme that grew to a market cap of over a billion dollars within just one year, the wealth accumulation effect is undeniably attractive and holds significant promotional value.
https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
As a leader in meme culture, SHIB’s remarkable success has inspired the creation of many other memes. However, not all memes have been able to sustain their development in this wave. Users have faced numerous challenges when engaging with these memes, such as bizarre circulating volumes, odd initial market caps, and a range of security issues like sudden liquidity pool withdrawals, tokens that can only be bought but not sold, token inflation, and ticker confusion due to name mismatches or case differences. These factors have not only undermined user trust but have also posed challenges to the steady growth of the entire meme ecosystem.
This situation persisted until platforms like pump.fun emerged. While primarily focused on low-market-cap memes, pump.fun effectively promoted a standardized meme mechanism. This included the use of bonding curve pricing models, a unified total token supply, platform-backed contract security, and a regulated approach to initial liquidity pool additions and token burns. These standardized practices not only enhanced meme transparency and credibility but also laid a solid foundation for the healthy development of the meme ecosystem.
On the pump.fun platform, it is stipulated that liquidity will not migrate to external DEXs until the bonding curve is 100% complete; transactions can only occur on pump.fun during this phase. As a result, users have come to refer to memes with an incomplete bonding curve as “internal-market memes.” On pump.fun, the total token supply for meme tokens is set at one billion, with approximately 800 million tokens available for sale on the internal market. Once the internal-market sale hits its cap, around 85 SOL are consumed. After a 1.5 SOL fee is charged by pump.fun, 20% of the tokens are minted, paired with 79 SOL, and then launched on Raydium Exchange. At this point, the token’s initial circulating market cap is set to 69K SOL. This process not only ensures liquidity management for meme projects but also provides a clear reference for setting the project’s initial market cap.
For readers interested in a deeper understanding of the pump.fun protocol and numerical simulations, Gryphsis Academy offers a comprehensive article titled “Pump.fun Protocol Insights: From Bonding Curve Calculations to Profitability Strategies.” This article not only explains the workings of the pump.fun protocol in detail but also offers profound insights on how to use the bonding curve for numerical simulations. (Note: the migration fee fluctuates in real-time according to official settings, currently set at 1.5 SOL).
Currently, while pump.fun is focused on low-market-cap meme launches, this does not mean these memes have limited potential. Recently, two memes launched on pump.fun successfully listed on major exchanges (via contracts). This achievement has not only fueled the popularity of meme launches on pump.fun but also brought significant economic benefits to the platform. As a result, Moonshot, a new product on the Solana blockchain, has emerged to challenge pump.fun’s position. Additionally, other public blockchains have launched platforms that mimic pump.fun, such as Tron’s Sunpump, all actively competing for market share in the meme sector.
In terms of launch mechanisms, Moonshot’s main improvement over pump.fun lies in its support for adding initial liquidity pools on different external DEXs, as well as some differences in how the full market cap is reached. Aside from that, the platforms do not differ significantly in other areas. As for Sunpump, its overall mechanism is similar to pump.fun’s. Due to the industry’s common “first is first” principle, it is challenging for new entrants to significantly outperform established platforms, even with user incentives like token airdrops aimed at attracting users for “vampire attacks.” Next, we will delve deeper into the data performance of pump.fun, Moonshot, and Sunpump using Dune Analytics, to assess their market performance and competitiveness.
According to Dune data, pump.fun shows a clear advantage in key metrics such as the number of tokens launched, revenue, and the number of new addresses involved. Specifically, pump.fun launched an astounding 34,027 tokens on October 23 (the time of writing). In terms of revenue, pump.fun also performed impressively, generating over $2.09 million in revenue within 24 hours. Furthermore, the growth in daily active addresses reached 107,355, with 43,760 new wallets, indicating a high level of user engagement on pump.fun. These data points collectively paint a picture of pump.fun’s strong performance and widespread user base in the meme market.
https://dune.com/adam_tehc/memecoin-wars
In contrast, the Ethereum mainnet, as a traditional hub for meme-driven projects, has not seen the emergence of a truly standout meme launch platform. The only notable attempt, Vista’s recently launched Etherfun, has not gained much attention. This could be due to Ethereum’s limited transaction throughput (TPS) and the high gas fees, which make it difficult for low-market-cap memes to be launched quickly and at low cost, both of which are necessary to achieve the volume advantages. Perhaps in the future, we might see some changes and developments in meme platforms on Layer 2 solutions like Base.
Lifecycle and Pricing Logic
The lifecycle of a meme is inherently unpredictable; it can last anywhere from just a few minutes to several years. Memes that manage to withstand the test of time and continue to remain popular typically undergo several distinct stages of development. We can outline the basic evolution of a meme from its early stage on DEXs (Decentralized Exchanges) to its more mature stage on CEXs (Centralized Exchanges). During this process, key metrics such as market capitalization and community size will undergo significant changes.
In terms of market capitalization and user analysis, we use several steadily developing meme projects to form an initial judgment. According to holder analysis from 0xScope, we find that the number of retail holders generally far exceeds that of other types of holders (such as whales and large investors), and the value of tokens they hold typically accounts for about 20% to 25% of the total market capitalization. By analyzing the average purchase amount of meme coins held by retail holders, we can estimate market cap data.
For example, in the case of a meme coin with a market cap of $1 million, the total value held by retail holders would be between $200,000 and $250,000. Assuming there are around 1,000 holders, the average value of meme coins held by each individual would be around $200 to $250. This amount falls within a reasonable range for individual users in the cryptocurrency space in terms of single-asset purchases.
This estimation method provides us with an intuitive perspective, helping to assess the correlation between market capitalization and user engagement across different market cap ranges.
https://dune.com/dyorcrypto/memecoins
Certainly, based on the rough pricing approach above, we can attempt to find more precise methods or frameworks to assess the fair value of meme tokens. To do this, we can adopt an approach similar to value investing valuations. This involves studying and learning from existing meme valuations and related data, conducting statistical analysis of valuation changes across different stages of meme development, and tracking the dynamics of on-chain data.
Generally, the initial price of a meme token is typically determined by the AMM model based on market supply and demand dynamics. Once the initial price is set, the market cap of the meme can be calculated by multiplying the price by the circulating supply. It’s important to note that the market cap will fluctuate with changes in market conditions and the dynamics of liquidity pools.
According to the AMM constant product formula, the growth curve of capital inflows, the proportion of tokens in the initial liquidity pool, and the sell-off pressure will all impact the market cap. The simplest rule for the base model is: if the market cap doubles, net capital inflows also double; if the market cap triples, net capital inflows will be three times as large. However, this model doesn’t account for some complex factors, such as:
- The transaction fees paid to liquidity providers (LPs);
- The capital inflows and outflows in liquidity pools (LP pools).
In the dynamic and ever-changing market, pricing models cannot achieve perfect accuracy. Therefore, we need to incorporate other indicators to calculate the fair price of a meme token, such as trading volume, transaction frequency, and the distribution of token holders. This represents a cost-driven approach to market cap. As the costs increase, the market cap of the meme should rise accordingly. When breaking down these costs, one key component is the transaction fees generated by trading volume. These fees are the primary cost of maintaining the market cap. Additionally, there are other hidden costs: the gas fees paid to the blockchain network for each transaction, and the time value of funds for token holders. The cumulative effect of these costs can significantly impact the overall market cap of the meme. We believe this can partially explain the fair value of a meme, though it is not a one-size-fits-all pricing formula.
VC Perspective on Blue-Chip Memes
From a data perspective, memes have evolved beyond just being a niche phenomenon. They now have distinct characteristics, and as VCs, we are also paying attention to this segment. Just like with investing in other projects, VCs want to participate in memes, but first, they need to identify those that can withstand market fluctuations and demonstrate stable performance—these are the blue-chip memes.
To identify high-quality memes, it’s essential to focus on several key characteristics: sustainability, virality, and community engagement. A quality meme should have long-term appeal, be easily shareable, and have a passionate community supporting it. These factors form the foundation for a meme’s success.
For memes driven by communities or led by token market cap management teams, it’s crucial to understand the key participants behind them. This could include whales or other significant stakeholders. Understanding these backers is vital for assessing a meme’s potential and credibility. In the absence of market cap management, the community plays a key role in the meme project. Their enthusiasm and engagement can directly affect the meme’s popularity and market cap. Unconscious collective actions, such as promoting and discussing the meme on social media, can greatly accelerate its spread and acceptance. Thus, the role of the community in meme projects cannot be overstated, as it directly influences the meme’s success.
For this reason, we believe Murad’s concept of PvE Memecoins, as presented in his speech on the Meme Supercycle, provides a vivid and insightful framework. Refer to the following two images for more details.
Conclusion
Meme tokens are becoming the new battleground for VCs, testing their ability to stay in tune with market trends. On-chain Degen user behavior also provides VCs with a valuable window into user demands. However, memes do not directly open their doors to VCs. The so-called “Supercycle” narrative can easily lead VCs into a FOMO trap. The harsh reality is that, as the data shows, successful memes are a rare exception. If VCs want to succeed in the meme space, they must invest significant time and effort into identifying the true blue-chip memes. This is not a battlefield where broad net investments guarantee rich returns.
Reference
dogecoin：https://dogecoin.com/
pump.fun：https://pump.fun/
etherfun for Vista: https://etherfun.app/
0xScope：https://0xscope.com/
CoinMarketCap：https://coinmarketcap.com/
gmgn：https://gmgn.ai/
dogwifcoin：https://dogwifcoin.org/
Murad：https://x.com/MustStopMurad
Dune Memecoin Wars：https://dune.com/adam_tehc/memecoin-wars
Pump.fun protocol insight: from Bonding Curve calculation to profit strategy construction https://www.techflowpost.com/article/detail_18340.html
SHIB’s initial transaction pool: https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
SHIB’s first LP addition transaction: https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
Disclaimer：
- This article is reprinted from [ArkStream Capital], All copyrights belong to the original author [Ray]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
- Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
- Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.
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TL;DR
The Meme Market Landscape: Origins, Evolution, and Market Data Analysis
Exploring and Researching Memes
VC Perspective on Blue-Chip Memes
Conclusion
Reference
TL;DR
- Memes underwent a slow developmental phase from 2013 to 2019, followed by a chaotic period of rapid changes from 2020 to 2022. By 2023-2024, they have entered a period of rapid growth, finally gaining widespread recognition and a solid audience base as a distinct category.
- The daily turnover rate for memes is approximately 11%, compared to 5% for DeFi, 7% for Layer 2, and 4% for Layer 1. This high turnover rate highlights the liquidity of memes and demonstrates the strong interest and high trading frequency among users.
- By the end of Q3 2024, meme market capitalization has increased from 0.87% of the overall crypto market two years ago to 2.58%, with continued growth expected. A simple linear regression suggests this market share could reach 3.54% by 2025 and 7.81% by 2030.
- Memes function as leveraged Layer 1 assets, meaning that when market conditions improve, meme assets can experience 5 to 10 times the price appreciation of traditional Layer 1 assets.
- Animal-based memes and Cult culture memes are more suited for long-term observation. In contrast, other meme categories often tie into short-term trends, with popularity spiking quickly before fading.
In 2024, amidst a market reshuffle where many VC-backed projects have faltered, memes have defied expectations, emerging as a new force in the market. The rise of PvP models, wealth effects from single-coin “moonshots,” and the meme-friendly environment fostered by Solana have all contributed to the phenomenon. The new generation of meme leaders, such as Murad, has rapidly gained attention, with his Supercycle talk propelling him to meme fame. However, what changes have meme assets undergone? From the perspective of venture capital, how should investors engage in this space? These are questions worth exploring.
The Meme Market Landscape: Origins, Evolution, and Market Data Analysis
Origins and Influence
Meme culture, as a form of cultural transmission, has deep roots in human history. Emerging from early social phenomena such as language, beliefs, and customs, memes spread within groups through imitation and learning. The internet accelerated the propagation of memes, which, in the form of images, videos, text, and emojis, spread rapidly among users due to their humor, satire, or resonance. Memes fulfill the human need for emotional expression, sharing of perspectives, and building communal bonds. They reflect societal trends, group psychology, and cultural changes, and their spread and popularity are influenced by factors such as content appeal, dissemination environment, community acceptance, and influencer impact.
In Web2, meme culture primarily developed on two platforms—4chan and Reddit. 4chan is the birthplace of Pepe the Frog, one of the most iconic memes. It has become a hub for Pepe memes and their derivative culture. Additionally, 4chan served as the incubator for Boy’s Club comics, providing an essential perspective on meme culture. On the other hand, Reddit is known for fostering iconic memes such as Dogecoin and Success Kid. Thanks to the active community atmosphere and solid user bases on these platforms, they remain the birthplace of many new memes. Apart from these, other major social media platforms, such as Twitter (X) and Telegram, have also been fertile grounds for popular meme creation. One such meme, Dogwifhat, features a dog wearing a pink knitted hat. This meme, with its distinctive imagery, quickly became a “totem” of the “hat culture” within the community, with numerous users and influencers sharing related images of the hat-wearing dog.
Evolution and Development
From Web2 to Web3, the Meme craze has taken on a life of its own. In this article, we refer to both memes and their associated tokens collectively as “Memes,” without distinguishing between them. Looking back at the evolution of memes, it is evident that they were once inconspicuous and not given much attention. Considering the cyclical nature of market booms and busts, we can divide the development of memes into three distinct phases: the Emergence Phase (2013 to 2019), the Chaos Phase (2020 to 2022), and the Rapid Growth Phase (2023 to 2024). By consulting historical snapshots from platforms like CoinMarketCap, individual token data from CoinGecko, as well as historical content from search engines and social media, we can gain a more comprehensive understanding of how memes have evolved.
Charts: The Evolution and Development of Memes
By December 31, 2019, during the Emergence Phase, Dogecoin was the only meme-based cryptocurrency in the top 100 market cap rankings, holding the 34th position. Looking back from 2013 to 2019, meme-based cryptocurrencies did not hold a significant position in the market. During this period, the industry was focused on rapid infrastructure development, with everyone exploring various new concepts. The mainstream new coins were typically those associated with more efficient transaction processing and faster confirmation times for payment-focused blockchains, or new blockchains with strong smart contract capabilities. For meme-based cryptocurrencies, the challenge was twofold: not only did they require higher costs to build supporting ecosystems, but their liquidity was also difficult to establish, resulting in low trading volumes. This limited their ability to gain widespread support from centralized exchanges. As a result, during the Emergence Phase, apart from Dogecoin, which was characterized by the “Doge” meme and its significant viral impact, there were few other meme tokens that survived in the market.
Starting in 2020, more specifically from August 2020, the Chaos Phase was catalyzed by the DeFi Summer and the subsequent IDO (Initial DEX Offering) wave. The IDOs led by DeFi Summer allowed people to easily create liquidity on-chain at low costs, offering the ability to provide trading services and rapidly establish trading scenarios. This low-cost token issuance model, allowing direct circulation in the secondary market without the need for exchange listings, has given rise to many on-chain memes. During this period, surviving meme tokens like SHIB, FLOKI, and PEOPLE emerged. However, these early meme tokens did not gain serious market recognition and were largely driven by speculative hype.
Additionally, the popularity of memes during this chaotic phase often emerged in the context of market liquidity excess. They typically appeared as the final leg of a relay race, following a series of rallies across various sectors. It’s also worth noting that memes during this time gained widespread attention due to their association with celebrities. In particular, Elon Musk’s continued support of Dogecoin in 2021 led to significant price volatility and propelled Dogecoin to new market cap heights. The community also expanded considerably.
With the arrival of 2023, the meme coin craze continued to heat up, and a diverse array of meme tokens emerged, including BONK, PEPE, CHEEMS, and those related to Cult culture, such as BITCOIN (HarryPotterObamaSonic10Inc) and SPX (SPX6900), along with WIF and MOG. During this period, meme coins began to diversify and become more specialized, with newer blockchain platforms like Solana rising to prominence.
By 2024, the development of meme coins accelerated, with new tokens such as BOME, lowercase NEIRO, and GOAT continuously emerging, each with unique features. Meme coins have officially gained widespread recognition as a distinct category, developing a solid audience base and a clear path as an established asset class within the cryptocurrency market.
Charts: Key Data Indicators for Meme Tokens
By analyzing the market cap share and performance data of meme tokens in the top 600 cryptocurrencies from 2013 to 2024, we can observe the growth of meme market capitalization, as well as the expansion of categories and numbers. Over this period, meme tokens have not only experienced significant growth in market value but have also seen an increase in both variety and quantity.
As of the end of Q3 2024, the market share of memes in the overall cryptocurrency market has grown from 0.87% two years ago to 2.58%, with a continued upward trend. A simple linear regression model suggests that this market share could reach 3.54% by 2025 and 7.81% by 2030.
Perhaps we once doubted whether Memes were merely a passing trend, destined to fade away after the hype subsided. However, as we have deepened our research and understanding of Memes, it has become clear that our perspective has shifted. Memes will not disappear; on the contrary, they will continue to evolve and innovate. Each new era may bring about a new leading Meme. However, behind these prominent Memes lies a harsh reality, which reminds us that we must always stay calm and maintain a clear head.
Market Data Analysis
By analyzing the development and historical data of memes, we can gain a general sense of their growth trends. Studying the current market landscape, however, provides us with a more direct perspective on how market trends and capital flows are changing. Below, we delve deeper into macro-level indicators of the meme sector, including market capitalization, trading activity, and average daily trading volume. These analyses not only reveal the latest dynamics in the meme sector but also provide insights into its potential future trajectory.
Changes in market capitalization and circulating supply: The changes in market capitalization and circulating supply of meme tokens offer insight into the market’s demand and acceptance. Even though some meme tokens may have relatively low market caps, the growing number of new meme tokens indicates that the community’s interest in the entire sector is on the rise. Compared to other sectors (such as Layer1, Layer2, and DeFi), memes have outpaced them in terms of total market capitalization and the number of new tokens added over the past two years.
Trading activity: Meme tokens typically exhibit higher trading activity and turnover rates than other sectors within the cryptocurrency market. According to data from CoinMarketCap, the total market capitalization of meme tokens is approximately $50 billion, with a daily trading volume of around $5 billion. This level of trading activity is significantly higher compared to other sectors. On average, meme tokens have a daily turnover rate of about 11%. In comparison, DeFi tokens have a daily turnover rate of approximately 5%, Layer2 tokens around 7%, and Layer1 tokens about 4%. This higher turnover rate not only highlights the high liquidity of meme tokens but also indicates a strong level of user interest and frequent trading activity within the meme sector. For meme tokens that sit at the sector level or have higher trading volumes, they often become the target of market capital flows and investor interest.
New meme kokens with high volatility and low success rate: The meme market continues to see a constant influx of new tokens, with some experiencing price surges that even exceed those of mainstream cryptocurrencies like Bitcoin. This indicates that the meme token sector offers significant volatility and speculative opportunities. However, among the many new meme tokens, using data from Pump Fun, we find that less than 2% of newly launched meme tokens successfully gain traction in the market. Furthermore, only 0.23% of meme tokens maintain a market cap above $1 million. This means that the probability of a meme token withstanding the test of time and surviving in the market is very small.
Massive trading volume and new users: Meme tokens not only drive substantial trading volume but also attract a relatively loyal user base. As a result, centralized exchanges (CEXs) have increasingly turned to meme tokens as a strategic move to attract traffic and new users. For instance, in Binance’s spot market, 20% of the top 30 trading pairs by trading volume are meme tokens.
Chart: Binance Spot Trading Data from CoinMarketCap
Blue-chip memes and their rarity: Blue-chip-level memes are notably scarce within the meme token market. Amidst the hundreds, if not thousands, of meme tokens available, fewer than 1% can truly be considered blue-chip. Taking the data from CoinMarketCap as an example, although new meme tokens emerge constantly, very few manage to withstand the test of time and rise to prominence. Additionally, the market capitalization distribution within the meme sector follows a clear 80/20 rule, or the Pareto Principle. The majority of the sector’s market cap is driven by fewer than 10% of the top-performing meme tokens. This concentrated distribution of market value makes it increasingly difficult to identify true value investments within the meme space. From the perspective of venture capital (VC) investments in memes, this aligns with the classic VC rule of thumb, known as the “2-8 rule.” In this case, approximately 10% of successful meme investments can offset the losses from the remaining meme tokens that do not perform well.
Summary
In light of the recent highly regarded Murad’s speech within the meme space, he predicts that the meme market cap could reach $1 trillion in the future, implying a 25x growth potential. He anticipates that more than 25 meme tokens will enter the Top 100 by market cap and that venture capital will increasingly focus on purchasing blue-chip memes. However, based on our data, we believe this prediction is overly optimistic. Currently, the meme sector is already a significant player in the industry, both in terms of token quantity and market capitalization. Future growth is more likely to break out on Layer1 blockchains, which will continue to serve as the crucial foundation for meme development. The growth of memes will, in turn, drive the development of Layer1, creating a symbiotic relationship between the two sectors. Given this, we lean toward a more conservative view: memes function as a leveraged Layer1 asset. In favorable market conditions, meme tokens could see a 5 to 10 times increase in value, mirroring the potential gains in Layer1 tokens. Nevertheless, it is undeniable that memes represent a sector worth observing and researching in the long term. Establishing a systematic trading framework will be essential for understanding and participating in this dynamic, high-risk, yet high-potential market.
Exploring and Researching Memes
As the wave of memes sweeps across the market, and combining our previous panoramic research on the meme market and future trend predictions, we believe that it is crucial to delve into and study memes in depth. Through this, we have found that the value of memes does not stem from technology or practical applications, but rather from the enthusiasm of the community and their identification with meme culture. This driving force creates uncertainty and volatility in the market performance of memes, while also bringing unprecedented vitality. By analyzing these characteristics, we have developed a clear framework to help understand and assess the potential value and risks inherent in the meme market.
Fundamental Characteristics of the Meme Sector
Analyzing a single meme can provide deep insights, but to fully grasp the development trends of the entire meme sector, a broader perspective is needed. Therefore, we first conducted a comprehensive study and analysis of the basic characteristics of the meme sector. In the current market environment, the meme sector has exhibited several distinct features:
Low Entry Barriers: The threshold for meme creation is extremely low. With just a social media account, a Telegram group, and a few creative images, a new meme can easily be launched. Unlike traditional crypto projects that require product development and application creation, memes themselves are the product. The entry barrier for memes is significantly lower than that of traditional projects, as it does not involve complex product development or app construction, making the token itself the core “product” directly facing the market.
Exponential Growth: Due to the low barrier to entry, a large number of new memes emerge daily, rapidly expanding the token pool and leading to a sharp increase in supply. With the continuous influx of new memes, users are faced with more options, which also makes the process of selection more challenging.
Significant Wealth Effect: Despite the risks associated with the meme market, it offers enormous potential returns for early participants. The wealth effect of single-token moonshots and high-risk, high-reward investments acts like a magnet, not only attracting numerous users but also spurring heightened attention and active participation in the meme market.
Market Resilience: Memes have shown impressive resilience in the face of market fluctuations, quickly recovering and rebounding after downturns. This rapid recovery is primarily driven by community sentiment and the intense enthusiasm of investors.
Celebrity Effect: The involvement of celebrities has significantly boosted meme hype and market attention, further intensifying price volatility. This celebrity effect not only draws more attention but can also lead to information arbitrage, with top players potentially using their influence and informational advantages to gain improper benefits.
Low Liquidity and Limited Capital Capacity: During the early to mid-stage of memes—specifically the on-chain market phase—the liquidity of memes is relatively low. This means that a substantial portion of their market cap and trading volume is somewhat inflated. Due to insufficient liquidity, large funds face high slippage when buying or selling, resulting in increased transaction costs. Consequently, the capital capacity of the meme market is limited, making it difficult for institutions to enter or exit on a large scale without significantly affecting prices. This limitation increases the difficulty of trading and restricts the market’s depth and breadth, making the meme market more vulnerable to large-scale capital flows.
High Transaction Risk: Due to the lack of underlying applications and intrinsic value, the prices of many memes often behave like roller coasters—rapidly soaring and then crashing down. More concerning is the fact that many memes ultimately face the fate of zero, with their market value and trading volume dwindling to almost nothing. This high-risk trading environment requires careful caution when venturing into memes, as investors must fully understand the potential for financial loss.
Active Trading and Susceptibility to Manipulation: Meme trading is highly active, with substantial trading volume, indicating massive market interest. However, behind this trading volume, there may be hidden manipulation by certain large players. Unlike VC-backed projects, the meme market is more like an open, speculative gambling arena, where investors may be exposed to more volatility and manipulation risks.
After conducting an in-depth analysis of the basic characteristics of the meme sector, we can conclude that the meme sector indeed has some unique traits that distinguish it from other segments of the crypto market. The low entry barriers, exponential growth, low liquidity and limited capital capacity, high transaction risks, significant wealth effects, trading activity and susceptibility to manipulation, market resilience, and celebrity effect collectively form a distinct ecosystem for memes. Because of these characteristics, the meme sector is often seen as a PvP (Player vs. Player) battleground, which is not without reason. In this fiercely competitive field, participants need to act like gold miners, identifying true blue-chip memes and hidden gems among the vast array of meme tokens.
Characteristics and Categories of Memes
As the meme sector matures, we should no longer be confined by outdated views. Standing on the periphery and ignoring the deeper dynamics of memes only limits our understanding. Meme culture has now evolved far beyond simple image macros; it has become a multifaceted expression of market sentiment and an important tool for spreading awareness to those outside the community. Therefore, it is essential to have a basic understanding of the key characteristics and classifications of memes.
Memes possess a variety of characteristics, some of which can be quantified with data metrics, while others are more challenging to measure and are primarily qualitative. The following are the key characteristics:
Cultural Uniqueness: Cultural uniqueness is at the heart of memes. They often stem from specific cultural phenomena or social trends, establishing a unique identity and appeal. For instance, memes like the playful Dogecoin and the self-deprecating Pepe have attracted large communities even before entering the Web3 space, thanks to their cultural characteristics. Whether through emoticons or creative reinterpretations, these memes have built a strong following based on their cultural identity.
Continuity: Continuity is a key measure of whether a meme can sustain its presence in the market over time. A successful meme often transcends short-term trends and establishes long-term cultural significance. The idea is similar to the phrase “diamonds are forever.” Dogecoin, for example, has lasted for over a decade, growing alongside the cryptocurrency industry and becoming the origin of meme culture itself. For newer memes, we cannot expect them to undergo the same long-term tests as Dogecoin, nor can we expect every meme to be listed on Binance in just a few days, as happened with BOME. Therefore, we believe that a meme should demonstrate sustainability for at least six months to a year to be considered viable, which also aligns with the typical due diligence period for centralized exchanges when assessing new projects.
Spreadability: Spreadability refers to a meme’s ability to rapidly gain traction and be widely accepted. A meme that is easy to share and has high conversion potential can attract considerable attention in a short amount of time. Indicators of spreadability include the level of discussion on social media and the rapid growth of the meme’s community. For example, a meme’s Twitter account should ideally have tens of thousands of followers, with a more impressive benchmark being several hundred thousand or even millions.
Stickiness or Loyalty: Stickiness, or loyalty, refers to the level of commitment and engagement from the meme’s community. A meme with high community loyalty can maintain long-term participation, even during market fluctuations. This loyalty is essential for the meme’s sustained success.
Dogecoin, initially popular for its cute animal imagery, has maintained a committed following, and this loyalty is central to its ongoing relevance. As meme culture continues to evolve, new subcategories have emerged, blending traditional meme types and greatly expanding the diversity of the meme space. Below is a simplified classification of different meme types, with some categories potentially overlapping or combining:
Animal Memes: Animal-based memes use adorable or humorous animal imagery to express emotions or ideas. These memes are widely beloved for their cuteness and approachability. The most famous examples are Dogecoin (dog) and Pepe the Frog (frog), both of which became iconic for their charming animal representations.
Celebrity-Driven Memes: Celebrity-driven memes leverage the influence of public figures, capturing their words and actions and creatively reinterpreting them through parody, imitation, or satire. A well-known example is the meme culture surrounding Elon Musk, where his tweets, profile pictures, and other public elements have inspired a variety of memes, such as the Troll meme, which humorously critiques or mimics Musk’s online presence.
Political Memes: Political memes humorously or satirically reference political figures or events, often serving as social commentary or expressing political opinions. These memes thrive on the controversies and absurdities surrounding political figures or events. Examples include memes based on Donald Trump’s campaign slogans like MAGA or FIGHT, as well as memes poking fun at the names of Trump and Biden.
Cult Culture Memes: Cult culture memes emerge from specific subcultures or niche communities, often incorporating symbols or references that only insiders understand. These memes appeal to a sense of exclusivity and insider knowledge. A notable example is PEOPLE, a meme related to a group’s effort to purchase the U.S. Constitution, which later evolved into a decentralized identity meme for the masses.
IP-Driven Memes: IP-driven memes are based on established intellectual properties, such as traditional anime characters or popular NFTs. By leveraging the existing fame of these IPs, memes attract the fanbases of those franchises. A prominent example is the mfer meme, which originated from an NFT project with a “doom culture” aesthetic.
Mechanism-Based Memes: Mechanism-based memes are defined by unique operational features, such as fair distribution, token burning, or buyback taxes. Recently, these memes have incorporated emerging technologies like AI. One of the hottest examples is the GOAT meme, created by Terminal of Truths.
Dogecoin/Troll/Maga/People/mfer/GOAT
Memes exhibit unique cultural characteristics and audience bases in different categories, which affects their persistence, spread, and stickiness to the community. Among these categories, animal Meme and Cult culture Meme are the types that we believe are suitable for long-term attention due to their deep cultural roots and loyal fan base. In contrast, other categories of memes tend to be associated with short-term hot spots, and their attention and popularity may rise quickly and then fall back. In order to quickly identify and understand the core characteristics of various Memes, we provide the following evaluation framework.
Primary Market and Launch Platforms
A deeper observation of the primary market and the launch process of memes can provide valuable insights into understanding their dynamics, especially for those memes based on public blockchains. Even after several years, it is still possible to examine the initial liquidity build-up. Taking SHIB as an example, by reviewing the initial trades where liquidity was added to the SHIB pool, we can observe the astonishing growth of its market capitalization. Initially, SHIB’s market cap was only equivalent to 20 ETH, which at the time was valued at around $10,000. When converted to the current price of ETH, the initial market cap of SHIB was merely $50,000. For a meme that grew to a market cap of over a billion dollars within just one year, the wealth accumulation effect is undeniably attractive and holds significant promotional value.
https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
As a leader in meme culture, SHIB’s remarkable success has inspired the creation of many other memes. However, not all memes have been able to sustain their development in this wave. Users have faced numerous challenges when engaging with these memes, such as bizarre circulating volumes, odd initial market caps, and a range of security issues like sudden liquidity pool withdrawals, tokens that can only be bought but not sold, token inflation, and ticker confusion due to name mismatches or case differences. These factors have not only undermined user trust but have also posed challenges to the steady growth of the entire meme ecosystem.
This situation persisted until platforms like pump.fun emerged. While primarily focused on low-market-cap memes, pump.fun effectively promoted a standardized meme mechanism. This included the use of bonding curve pricing models, a unified total token supply, platform-backed contract security, and a regulated approach to initial liquidity pool additions and token burns. These standardized practices not only enhanced meme transparency and credibility but also laid a solid foundation for the healthy development of the meme ecosystem.
On the pump.fun platform, it is stipulated that liquidity will not migrate to external DEXs until the bonding curve is 100% complete; transactions can only occur on pump.fun during this phase. As a result, users have come to refer to memes with an incomplete bonding curve as “internal-market memes.” On pump.fun, the total token supply for meme tokens is set at one billion, with approximately 800 million tokens available for sale on the internal market. Once the internal-market sale hits its cap, around 85 SOL are consumed. After a 1.5 SOL fee is charged by pump.fun, 20% of the tokens are minted, paired with 79 SOL, and then launched on Raydium Exchange. At this point, the token’s initial circulating market cap is set to 69K SOL. This process not only ensures liquidity management for meme projects but also provides a clear reference for setting the project’s initial market cap.
For readers interested in a deeper understanding of the pump.fun protocol and numerical simulations, Gryphsis Academy offers a comprehensive article titled “Pump.fun Protocol Insights: From Bonding Curve Calculations to Profitability Strategies.” This article not only explains the workings of the pump.fun protocol in detail but also offers profound insights on how to use the bonding curve for numerical simulations. (Note: the migration fee fluctuates in real-time according to official settings, currently set at 1.5 SOL).
Currently, while pump.fun is focused on low-market-cap meme launches, this does not mean these memes have limited potential. Recently, two memes launched on pump.fun successfully listed on major exchanges (via contracts). This achievement has not only fueled the popularity of meme launches on pump.fun but also brought significant economic benefits to the platform. As a result, Moonshot, a new product on the Solana blockchain, has emerged to challenge pump.fun’s position. Additionally, other public blockchains have launched platforms that mimic pump.fun, such as Tron’s Sunpump, all actively competing for market share in the meme sector.
In terms of launch mechanisms, Moonshot’s main improvement over pump.fun lies in its support for adding initial liquidity pools on different external DEXs, as well as some differences in how the full market cap is reached. Aside from that, the platforms do not differ significantly in other areas. As for Sunpump, its overall mechanism is similar to pump.fun’s. Due to the industry’s common “first is first” principle, it is challenging for new entrants to significantly outperform established platforms, even with user incentives like token airdrops aimed at attracting users for “vampire attacks.” Next, we will delve deeper into the data performance of pump.fun, Moonshot, and Sunpump using Dune Analytics, to assess their market performance and competitiveness.
According to Dune data, pump.fun shows a clear advantage in key metrics such as the number of tokens launched, revenue, and the number of new addresses involved. Specifically, pump.fun launched an astounding 34,027 tokens on October 23 (the time of writing). In terms of revenue, pump.fun also performed impressively, generating over $2.09 million in revenue within 24 hours. Furthermore, the growth in daily active addresses reached 107,355, with 43,760 new wallets, indicating a high level of user engagement on pump.fun. These data points collectively paint a picture of pump.fun’s strong performance and widespread user base in the meme market.
https://dune.com/adam_tehc/memecoin-wars
In contrast, the Ethereum mainnet, as a traditional hub for meme-driven projects, has not seen the emergence of a truly standout meme launch platform. The only notable attempt, Vista’s recently launched Etherfun, has not gained much attention. This could be due to Ethereum’s limited transaction throughput (TPS) and the high gas fees, which make it difficult for low-market-cap memes to be launched quickly and at low cost, both of which are necessary to achieve the volume advantages. Perhaps in the future, we might see some changes and developments in meme platforms on Layer 2 solutions like Base.
Lifecycle and Pricing Logic
The lifecycle of a meme is inherently unpredictable; it can last anywhere from just a few minutes to several years. Memes that manage to withstand the test of time and continue to remain popular typically undergo several distinct stages of development. We can outline the basic evolution of a meme from its early stage on DEXs (Decentralized Exchanges) to its more mature stage on CEXs (Centralized Exchanges). During this process, key metrics such as market capitalization and community size will undergo significant changes.
In terms of market capitalization and user analysis, we use several steadily developing meme projects to form an initial judgment. According to holder analysis from 0xScope, we find that the number of retail holders generally far exceeds that of other types of holders (such as whales and large investors), and the value of tokens they hold typically accounts for about 20% to 25% of the total market capitalization. By analyzing the average purchase amount of meme coins held by retail holders, we can estimate market cap data.
For example, in the case of a meme coin with a market cap of $1 million, the total value held by retail holders would be between $200,000 and $250,000. Assuming there are around 1,000 holders, the average value of meme coins held by each individual would be around $200 to $250. This amount falls within a reasonable range for individual users in the cryptocurrency space in terms of single-asset purchases.
This estimation method provides us with an intuitive perspective, helping to assess the correlation between market capitalization and user engagement across different market cap ranges.
https://dune.com/dyorcrypto/memecoins
Certainly, based on the rough pricing approach above, we can attempt to find more precise methods or frameworks to assess the fair value of meme tokens. To do this, we can adopt an approach similar to value investing valuations. This involves studying and learning from existing meme valuations and related data, conducting statistical analysis of valuation changes across different stages of meme development, and tracking the dynamics of on-chain data.
Generally, the initial price of a meme token is typically determined by the AMM model based on market supply and demand dynamics. Once the initial price is set, the market cap of the meme can be calculated by multiplying the price by the circulating supply. It’s important to note that the market cap will fluctuate with changes in market conditions and the dynamics of liquidity pools.
According to the AMM constant product formula, the growth curve of capital inflows, the proportion of tokens in the initial liquidity pool, and the sell-off pressure will all impact the market cap. The simplest rule for the base model is: if the market cap doubles, net capital inflows also double; if the market cap triples, net capital inflows will be three times as large. However, this model doesn’t account for some complex factors, such as:
- The transaction fees paid to liquidity providers (LPs);
- The capital inflows and outflows in liquidity pools (LP pools).
In the dynamic and ever-changing market, pricing models cannot achieve perfect accuracy. Therefore, we need to incorporate other indicators to calculate the fair price of a meme token, such as trading volume, transaction frequency, and the distribution of token holders. This represents a cost-driven approach to market cap. As the costs increase, the market cap of the meme should rise accordingly. When breaking down these costs, one key component is the transaction fees generated by trading volume. These fees are the primary cost of maintaining the market cap. Additionally, there are other hidden costs: the gas fees paid to the blockchain network for each transaction, and the time value of funds for token holders. The cumulative effect of these costs can significantly impact the overall market cap of the meme. We believe this can partially explain the fair value of a meme, though it is not a one-size-fits-all pricing formula.
VC Perspective on Blue-Chip Memes
From a data perspective, memes have evolved beyond just being a niche phenomenon. They now have distinct characteristics, and as VCs, we are also paying attention to this segment. Just like with investing in other projects, VCs want to participate in memes, but first, they need to identify those that can withstand market fluctuations and demonstrate stable performance—these are the blue-chip memes.
To identify high-quality memes, it’s essential to focus on several key characteristics: sustainability, virality, and community engagement. A quality meme should have long-term appeal, be easily shareable, and have a passionate community supporting it. These factors form the foundation for a meme’s success.
For memes driven by communities or led by token market cap management teams, it’s crucial to understand the key participants behind them. This could include whales or other significant stakeholders. Understanding these backers is vital for assessing a meme’s potential and credibility. In the absence of market cap management, the community plays a key role in the meme project. Their enthusiasm and engagement can directly affect the meme’s popularity and market cap. Unconscious collective actions, such as promoting and discussing the meme on social media, can greatly accelerate its spread and acceptance. Thus, the role of the community in meme projects cannot be overstated, as it directly influences the meme’s success.
For this reason, we believe Murad’s concept of PvE Memecoins, as presented in his speech on the Meme Supercycle, provides a vivid and insightful framework. Refer to the following two images for more details.
Conclusion
Meme tokens are becoming the new battleground for VCs, testing their ability to stay in tune with market trends. On-chain Degen user behavior also provides VCs with a valuable window into user demands. However, memes do not directly open their doors to VCs. The so-called “Supercycle” narrative can easily lead VCs into a FOMO trap. The harsh reality is that, as the data shows, successful memes are a rare exception. If VCs want to succeed in the meme space, they must invest significant time and effort into identifying the true blue-chip memes. This is not a battlefield where broad net investments guarantee rich returns.
Reference
dogecoin：https://dogecoin.com/
pump.fun：https://pump.fun/
etherfun for Vista: https://etherfun.app/
0xScope：https://0xscope.com/
CoinMarketCap：https://coinmarketcap.com/
gmgn：https://gmgn.ai/
dogwifcoin：https://dogwifcoin.org/
Murad：https://x.com/MustStopMurad
Dune Memecoin Wars：https://dune.com/adam_tehc/memecoin-wars
Pump.fun protocol insight: from Bonding Curve calculation to profit strategy construction https://www.techflowpost.com/article/detail_18340.html
SHIB’s initial transaction pool: https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f
SHIB’s first LP addition transaction: https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7
Disclaimer：
- This article is reprinted from [ArkStream Capital], All copyrights belong to the original author [Ray]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
- Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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