Opinion: What makes a Memecoin successful?

Jun 19, 2024

Author: defioasis

Note: This article is a reflection on the Meme craze and should not be taken as investment advice or as an endorsement for any project.

VCs and retail investors are not passing the buck to each other, and the tension between project teams and community members over airdrops and anti-sybil measures is escalating. Combined with suboptimal liquidity in the industry, Memes have become a solution. Recently, as Bitcoin rebounded to over $66,000, the tokens with the highest trading volumes on Binance were still MEMECOINS, with the top ten by volume being BTC, ETH, PEPE, SOL, FLOKI, WIF, DOGE, BNB, BOME, and SHIB, six of which are MEMECOINS.

In the past few days, I have been contemplating those high market cap Memes, such as the original DOGE and the current PEPE, whose popularity stems from but is not limited to these five elements: cultural foundation, simplicity and distinctiveness, entertainment and humor, low barrier to second creation, and the push by super influencers and pivotal figures.

(Note: It is necessary to clarify that this may not apply to the 0–1 stage of MEME but is more relevant to the 10–100 stage of MEME)

- Cultural Foundation: The images of Pepe and Doge have long been popular in internet culture, amassing a large fan base on various social platforms. The crypto community is often composed of young and active internet users who grew up with the development of the internet. They are familiar with these memes and enjoy integrating them into new trends.

For example, Doge’s popularity on the internet can be traced back to a photo of the Shiba Inu Kabosu in February 2010; in December 2010, the Doge Meme became popular on Reddit and was associated with broken English phrases; by 2013, various Doge memes were frequent, by which time the Doge Meme’s influence was significant. In December 2013, Dogecoin (DOGE) was born from a joke idea.

Pepe is even earlier and more complex. It can be traced back to 2005 in Matt Furie’s comic “Boys Club,” with the most classic line being “feels good man”; later, this line was given more meanings, like the sad frog “feels bad man.” In 2008, Pepe became popular on the 4chan forum and was turned into various memes. Around 2014, Pepe had basically covered all mainstream social media. However, later Pepe was given some political connotations and faced much controversy, which made Pepe’s image quite complex; from 2017 to 2019, Matt Furie and the Pepe community worked to set the record straight, trying to bring Pepe back to its origins and initial intentions.

In April 2023, the Memecoin PEPE was launched, initially driven by forces from the NFT community like Milady NFT holders and the Chinese community in Dubai. Later, there were also some accusations from Pauly, co-founder of Not Larva Labs, against the PEPE team, as well as internal strife within the PEPE team and misuse of the treasury for selling coins. Although in the history of tokens, PEPE came much later than DOGE and had some controversies, it ultimately became the third-largest Memecoin after DOGE and SHIB.

- Simplicity and Distinctiveness: This hardly needs elaboration. When one mentions Doge and Pepe, those memes immediately come to mind, instantly understood. These memes themselves possess high recognizability and memorable qualities, making them easy to spread and visually distinguishable from others.

- Entertainment and Humor: Memes should inherently be humorous and entertaining, and Memecoins should carry this trait forward. They are meant not just for investment gains but also for the enjoyment they bring. This relaxed atmosphere is more likely to attract outsiders, beginners, and young investors. Hence, in the last two bull markets, what likely drew a massive influx of users into the circle were not value coins or applications, but Memecoins like DOGE and SHIB.

Assuming the absence of Ponzi schemes in the market, choosing a Meme should be based on first impressions — the most immediate visual appeal. One should be able to engage with it without much thought, instantly drawn by the fun and community spirit, and feel a sense of happiness.

- Low Barrier to Second Creation: A distinct characteristic of memes is the low threshold for creating spin-offs or derivative works, enabling users to rapidly spread them and attract a large number of participants to join in the creation, which then continues to radiate and propagate. Most memes have a fixed image or template, allowing users to simply alter part of the content; there are many free online tools and apps specifically for creating and sharing memes, which simplify the process of meme creation. Creating derivative memes is not only a form of entertainment but also a way to convey personal views and emotions, as well as reflect the lifestyles of people in different eras.

Every act of recreation adds a new core to the meme, and the fact that a meme becomes a Memecoin also demonstrates the meme’s capacity to continuously absorb new cultures during its development — incorporating elements of Crypto and blockchain, thus turning culture into a cultural asset that conveys value on a financial level.

However, due to the ease of spreading memes, some people with ulterior motives might also brand derivative memes with political or extremist labels, thereby posing certain social risks. Addressing these issues requires the concerted effort of super influencers, pivotal figures, and the community.

- Driven by Super Influencers and Pivotal Figures: Social influencers play a crucial role in promoting and disseminating memes, and any related Memecoins are driven by their involvement, especially when celebrities and public figures from the internet and various traditional industries mention or promote these memes on social media, rapidly triggering market attention and speculation. For instance, Elon Musk has mentioned Dogecoin multiple times on Twitter, directly affecting its market price and popularity, and at times, he has even been accused of manipulating the market; a picture of a dog wearing a hat posted by Musk on Twitter caused WIF to surge.

Moreover, the spread and success of a meme can sometimes be driven by individual key figures or so-called pivotal figures, akin to the role of a cult leader. For example, the pivotal figure of “Retail vs. Wall Street,” Roaring Kitty, became suddenly active on social media nearly three years later, leading to a massive surge in GameStop’s stock, which triggered six trading halts during the session; Pepe’s creator, Matt Furie, may not have intentionally pushed Pepe to become a main meme, but during the 2017–2019 “Save Pepe” campaign, Furie played an indelible role in maintaining and reshaping Pepe’s image; Ansem has been continuously marketing and promoting WIF.

The fusion of internet pop culture with Crypto has allowed memes to make a significant impact on the financial level, bringing an element of entertainment into investment activities and enabling more users, who resonate with meme culture, to enter Crypto at a lower cost. However, it is important to remind that Memecoins are highly risky and subject to substantial volatility. While a sense of identification may be a prerequisite for investment, it is not a guarantee of investment security. Investors are advised to approach Memecoin investments with rationality.

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