An article explaining the economics of Meme coins

Author: ChainUp Investment

introduce

Meme coins have become a unique and increasingly influential category in the cryptocurrency ecosystem. Unlike traditional cryptocurrencies, which are often driven by technological innovation and financial applications, meme coins are primarily valued by online culture, humor, and community participation. Often inspired by viral memes, internet trends, or popular figures, these coins attract crypto enthusiasts and novice users alike, providing them with a convenient and entertaining way into the world of digital assets. This article will explore the rise of meme coins, their impact on the cryptocurrency market, and the factors that contribute to their popularity. From dog-themed coins like $DOGE to politically charged coins like $PNUT, we’ll analyze how meme coins are reshaping how people interact with cryptocurrencies, while also examining speculation in investing in them Challenges and risks posed by sexual assets.

What is memecoin

Memecoins are a unique category of cryptocurrencies that derive their identity from internet memes – humorous or viral images that are often accompanied by witty titles. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which are designed with technical utility and financial goals in mind, the main focus of meme coins is community participation, entertainment, and online culture. Their value is mainly driven by the activity and strength of the community, rather than any underlying technological innovation or financial application.

Meme coins come in a variety of themes, with the most popular including dog- themed coins such as DOGE, WIF, SHIB, and NEIRO. Other common categories include animal-inspired coins (such as cat or penguin themes) and coins based on the “Pepe the Frog” meme. Additionally, there are coins associated with politicians, celebrities, and online subcultures such as WallStreetBets and The Boy's Club. Recently, the rise of AI and short-form video content has further fueled the popularity of meme coins inspired by AI agents and viral video culture.

The defining characteristic of meme coins is their community-driven nature. These coins often leverage humor and viral content to build their brand and identity. The value of these coins tends to rise as the community engages with memes through social media, creative content, and promotions. Due to their low barriers to entry and straightforward concept, memecoins are particularly attractive to cryptocurrency newbies or those looking for fun, speculative speculation.

To increase awareness and attract new investors, meme coins often employ bold marketing strategies, such as placing billboards in prominent locations or organizing high-profile events, such as lighting up famous landmarks. Popular meme coin Dogwifhat, for example, is raising funds for an ambitious campaign to light up the Las Vegas Dome.

Despite their light-hearted nature, meme coins have become an important segment of the cryptocurrency market, with a combined market capitalization of over $121 billion and a market share of 3.62%. In the following sections, we’ll take a look at some of the most iconic meme coins.

Animal memes: $DOGE

In December 2013, software engineers Jackson Palmer and Billy Markus created Dogecoin as a satirical response to the speculative mania surrounding cryptocurrencies at the time. They took inspiration from the popular Doge meme, choosing its image as their logo and naming the cryptocurrency Dogecoin.

Dogecoin’s market cap surged to $8 million just two weeks after its release, briefly positioning it as the seventh-largest cryptocurrency in the world. The token quickly gathered a loyal online community and established a solid fan base. During the cryptocurrency bull market of 2017-2018, Dogecoin exceeded $1 billion in market capitalization for the first time.

Elon Musk has been a central figure in driving the popularity of Dogecoin. Musk first expressed interest in the coin in 2018, and his subsequent tweets and public support significantly boosted its price, giving Dogecoin a strong presence in the cryptocurrency market. In 2021, Musk called himself "Dogefather" and Dogecoin's market value reached nearly US$100 billion. However, in 2023, Musk faced charges related to insider trading in Dogecoin and was accused of causing significant losses to investors.

The abbreviation "DOGE" gained renewed attention in 2024, when President-elect Donald Trump used the term to refer to his planned "Department of Government Efficiency" expected to be led by Musk and Vivek Ramaswamy leads. This brought the word "DOGE" into the public spotlight again, followed by a rebound in Dogecoin's market value, reaching approximately $60 billion.

Animal memes: $PEPE

Pepe the Frog is a well-known Internet meme created in 2005 by American cartoonist Matt Furie. The character first appeared in Furie's comic Boy's Club, which follows a group of friends as they face the challenges of growing up. Pepe is a green, humanoid frog that started out as one of several characters in comics, but quickly developed into a prominent internet icon.

Pepe's rise as a meme began in 2008, when it began to gain traction on major online platforms, including Myspace, Gaia Online and 4chan. By 2015, Pepe became one of the most common memes, especially on platforms like 4chan and Tumblr. Over time, various versions of Pepe appeared, including the "Sad Frog" and others. In addition, starting in 2014, the concept of "rare Pepe" emerged, and digitized Pepe images began to be traded as part of an online "meme market," similar to exchanging cards.

Initially, Pepe was a neutral, apolitical character. However, from 2015 to 2016, it was appropriated by certain extremist groups, particularly far-right movements, and associated with controversial political messages. Despite this, Pepe has maintained its diversity and widespread use on social media platforms such as 4chan, Twitch, Reddit, and Discord, and users often customize the character into various emoji and meme formats. This enduring popularity has made Pepe an important and growing symbol in online culture.

$PEPE, launched in mid-April 2023, is a meme coin based on the Ethereum blockchain. The token was created as a tribute to the popular "PEPE the Frog" meme and has no formal team or roadmap, with the creator remaining anonymous. The coin did not follow a typical issuance method such as an ICO or airdrop, instead relying on the popularity of memes to attract investors. $PEPE adopts a deflation mechanism. By burning LP and giving up contract ownership, each transaction is equivalent to destroying a small amount of tokens. This process reduces the total supply over time, thereby promoting scarcity and potentially increasing the value of remaining tokens as supply decreases.

In 2024, the price of $PEPE skyrocketed 20 times, with the current market capitalization being approximately $8.5 billion and ranking 19th in the market.

Political Memes: $PNUT

$PNUT is a meme coin inspired by Peanut, the red internet squirrel. Peanut is an Eastern gray squirrel that was discovered and rescued by Mark Longo in New York City in 2017 after his mother was killed in a car accident. Longo breastfed Peanut for eight months and attempted to release it back into the wild. However, Peanut comes back with half of his tail bitten off, and then goes to live with Longo. Longo created an Instagram account for Peanut, and the account gained a lot of attention, with more than 910,000 followers by November 2024.

Unfortunately, Peanut was impounded by the New York State Department of Environmental Conservation (NYSDEC) on October 30, 2024, after an investigation revealed that it had bitten a staff member. After being tested for rabies, Peanut was euthanized. His death sparked widespread outrage on social media, drew condemnation from lawmakers and prompted the introduction of a bill aimed at preventing similar incidents.

With the intense focus on the 2024 US elections, Peanut has unexpectedly become the focus of political debate. Supporters of figures like Donald Trump and Elon Musk have rallied behind the Justice for Peanut movement and criticized the government's actions as an abuse of power. A petition titled "Justice for Peanut Squirrels and NYSDEC Reform" quickly gained a lot of support and had raised approximately $200,000 by November 13, 2024.

The emotional response to the Peanut story gave rise to a meme coin on the Solana chain, Peanut the Squirrel ($PNUT). After listing on Binance and gaining attention from the likes of Elon Musk, $PNUT quickly surged, reaching a peak market cap of $2.5 billion within just two weeks of listing. Currently, $PNUT has a market capitalization of approximately $1.1 billion.

AI Memes: $GOAT

Truth Terminal is a semi-automated AI robot developed by Andy Ayrey as part of an experimental "Meme Project" project. Originally designed to interact with online culture and generate independent content, the bot is fine-tuned with the OPUS Large Language Model (LLM) and trained on data from platforms such as Reddit and 4chan. The aim is to promote discussion about AI-generated belief systems and incorporate content from online subcultures that are often described as "degenerate" or "delusional".

As Truth Terminal continued to engage with the community, it began to generate what it called the "Gospel of Goatse," a fusion of religious concepts such as Buddhism and Gnosticism in a memetic and irreverent tone. Presented content. These exchanges, which are sometimes erratic and vulgar, have attracted widespread attention in niche online communities, particularly on platforms such as Twitter. After observing Truth Terminal's activity on social media, an anonymous developer launched the $GOAT token on the Pump.fun platform and named it "Goatseus Maximus" in tribute to the legend surrounding the Goatse meme. The Twitter account tagged Truth Terminal prompted the bot to comment on and promote the coin. Although Truth Terminal did not create the token, its endorsement via tweets significantly increased $GOAT’s visibility, sparking more interest and trading activity. The interactions also sparked a rumor claiming $GOAT was automatically created by AI, further fueling market speculation and fueling an investment frenzy.

A key moment in the $GOAT story occurred when Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz (a16z), noticed unique activity at Truth Terminal. He saw the potential in the project and offered the AI ​​a $50,000 Bitcoin grant to support its development. This investment has significantly fueled $GOAT’s rapid growth. The market value of $GOAT once reached $1.2 billion, becoming the first AI meme token with a market value exceeding $1 billion.

Truth Terminal’s involvement in the $GOAT story sets a precedent for the role of AI in the future digital assets and speculative financial ecosystem. Currently, $GOAT has a market capitalization of approximately $838 million.

AI Memes: $ACT

Act I: The AI ​​Prophecy Project (ACT), referred to as Act I, is an open source, decentralized platform designed to promote innovative interactions between AI systems and human users. The project aims to create an "ecosystem" where various AI technologies powered by the native token $ACT can collaborate to generate new forms of AI-driven interaction. Act I hopes to push the boundaries of AI in the field of AI, especially in the field of AI chatbots, and promote the development of algorithms by promoting collaboration between different AI modes (such as text and image generation).

Originally co-founded by AmplifiedAmp (Amp), Act I's purpose is to promote a decentralized, community-driven ecosystem. The $ACT token was introduced as a funding mechanism, with 6% of the total supply allocated to Amp. However, as the project grew, Amp began selling $ACT tokens, eventually liquidating the entire allocation. Amp's sudden exit left many community members feeling disillusioned and betrayed.

Nonetheless, Amp’s exit served as a catalyst for the community to take control of the $ACT project. The focus of Act I turned to rebuilding the platform and building it into a truly decentralized AI community. Its mission is to popularize AI knowledge and allow more people to access and understand AI. Through community-driven initiatives, resources, and educational content, $ACT works to lower the barriers to understanding AI, promote ethical discussions about AI, and support research and development in the field.

The $ACT token has experienced significant growth since its listing on Binance on November 11, 2024. After the listing announcement, the market value increased tenfold within an hour, quickly reaching US$300 million, and then peaked at US$950 million. Currently, $ACT has a market capitalization of approximately $490 million.

Art Memes: $BAN

In 2019, Italian artist Maurizio Cattelan's installation art work "Comedian" attracted great attention in the art world. The work, which showed a banana taped to a wall, sparked widespread debate about its artistic merit. Despite the apparent simplicity of the work, it sparked heated discussions among artists, critics and the public, questioning whether it could truly be considered art or simply a humorous visual presentation. The controversy ended with the work being sold at Sotheby's for a whopping $120,000.

In October 2024, "Comedian" made headlines again when Sotheby's announced that the work would be sold at its upcoming landmark auction in New York. The news quickly caught the attention of the art and cryptocurrency communities. Sotheby's Vice President Michael Bouhanna anonymously issued a meme coin named $BAN inspired by the artwork. In just two days, $BAN’s market capitalization surged to $60 million.

As Bouhanna's identity as $BAN's founder became public, rumors of insider trading and market manipulation began to swirl. In response, Bouhanna took to X (formerly Twitter) to deny the accusations and to allay public concerns by burning 3.7% of the total $BAN supply. This action triggered a brief rally, with the price of $BAN rising by more than 80%.

$BAN continues to gain momentum, especially on November 18, 2024, when Binance Futures announced the launch of the $BANUSDT perpetual contract, offering leveraged trading of up to 75x. Speculative attention in the market intensified following the announcement, pushing the $BAN price to an all-time high of $0.5361, with a market capitalization of $536 million.

On November 21, 2024, TRON founder and HTX owner Justin Sun made headlines when he purchased Maurizio Cattelan's controversial work "Comedian" for $6.2 million and ate it. However, the speculative excitement surrounding the $BAN meme coin quickly began to wane. By November 29, 2024, $BAN’s market capitalization had dropped significantly to $134 million, showing a change in investor sentiment and the possible saturation of the narrative surrounding the coin.

Pop Culture Meme: $CHILLGUY

"Chill Guy", also known as "My New Character", is a digital artwork and internet meme created by artist Phillip Banks. The image shows an anthropomorphic dog wearing a gray sweater, blue jeans and red sneakers with a relaxed expression on his face and his hands in his pockets. The piece initially attracted some attention when it was posted on Twitter on October 4, 2023, but went viral in August 2024 when a TikTok user edited it with other popular memes . Its wide popularity stems from its close-to-people "relaxation" attitude, which promotes a stress-free and casual lifestyle.

The meme quickly gained traction on social media and attracted the attention of major brands, including AMC Theaters and the Atlanta Hawks, who included it in promotional campaigns. The character, often paired with "Unchill Gal," inspired a fan-driven movement and spawned widespread cosplay, fan art and memes on platforms like TikTok.

In November 2024, with the creation of $CHILLGUY, a meme coin based on the Solana blockchain, this meme once again ushered in a wave of climax. By November 29, 2024, $CHILLGUY had a market capitalization of approximately $700 million, driven in part by viral tweets from high-profile figures like Salvadoran President Nayib Bukele. Despite the commercial success of the meme, Banks did not endorse the coin or its commercial uses and initiated legal action against the unauthorized merchandise and tokens, demanding their removal from the market in order to protect his intellectual property. However, $CHILLGUY remains one of the most popular and well-known memes in the digital sphere right now.

The rise of the meme super cycle

According to Artemis' index benchmark, the meme space has grown by 273.8% since the start of 2024, making it one of the fastest-growing asset classes in this market cycle. The meme trend has also attracted a large number of new entrants to the cryptocurrency market. According to Google Trends, meme- related searches surged nearly a hundredfold in 2024. In addition, Solana wallet Phantom ranks 48th in the Apple App Store, surpassing Coinbase, which ranks 55th. The popularity of memes is unquestionable.

The popularity of memes can be best explained by cryptocurrency analyst Murad Mahmudov’s “meme supercycle” theory. He believes that the meme coin market is in its early stages and has the potential to exceed the $1 trillion market capitalization. The so-called “meme supercycle” is a significant and ongoing trend in the cryptocurrency market, driven by a combination of internal and external factors that underscores the unique appeal and growing dominance of meme coins. status.

In terms of internal factors, one of the main driving forces is lack of innovation and overproduction of tokens. Unlike previous cycles, this rally was not triggered by explicit innovation, but rather by Bitcoin ETFs and institutional adoption. There is no single disruptive development, just optimism and signs of a maturing infrastructure.

At the same time, the number of assets in the cryptocurrency space continues to grow, making it more difficult to grow the overall industry. In 2024 alone, more than 600,000 new tokens will be listed before April, with more than 5,000 new tokens entering the market every day. Centralized exchanges often list these altcoins at inflated valuations, causing retail investors to act as exit liquidity for participants in already profitable private placement rounds. Exacerbating this problem is the lack of real value behind most altcoins, with 99% of tokens relying more on speculation than actual revenue generation. Binance’s research shows that $155 billion in tokens will be unlocked over the next five years, posing a significant challenge to these tokens. Memecoins are different, however, as they are typically fully tradable and do not face the burden of future unlocks. Their potential is proving to be another internal factor driving the supercycle.

In terms of external factors, global challenges such as inflation, rising costs, threats to AI-driven jobs, and wealth inequality make alternative investments like meme coins even more attractive. Social factors such as loneliness, mental health issues and declining trust in traditional institutions have further fueled interest in memes. Success stories of large gains have also inspired strong market momentum, attracting investors' continued attention to meme coins.

Additionally, meme infrastructure like Pump.fun and Telegram trading bots lower the barrier to entry for memes. Pump.fun is a Solana-based marketplace that allows users to easily create and trade meme coins. It uses the bonding curve pricing model to ensure a level trading environment. The platform has gained widespread traction, with over 3.85 million meme coins created and deployed as of November 2024 (approximately 70% of daily token issuance on Solana), and over $227 million generated income. The platform features simple memecoin creation (low fees of around 0.02 SOL), low fees, and includes safeguards against market manipulation. Many famous meme coins, such as $ACT, $PNUT, and $MOODENG, were created by Pump.fun.

Telegram trading bots also facilitate the trading of memes. These bots significantly increase transaction speeds, allowing users to perform swaps faster than manual DEX connections, which is especially important in the highly volatile meme coin market, where acting quickly can lead to significant gains. Telegram’s popularity and community-driven environment supports these bots, making them easy to use and widely adopted. In addition, various features, such as BONKbot’s “buy and burn” mechanism, Trojan’s copy trading, Shuriken’s multi-chain support and Sonic Sniper BOT’s real-time token data, meet various trading needs and enhance their appeal to a wide range of users. group attraction.

Meme coins are about more than just market performance. They are seen as a counterattack against overvalued crypto-tech tokens and embody the spirit of 2017’s ICO wave. Retail investors are particularly attracted to meme coins because of their ability to combine financial opportunities with elements of entertainment, identity and community. Meme coins are more than just tokens, they represent tokenized communities symbolized by memes, emphasizing people and culture rather than technology.

Choose your meme coin

The effect of currency listing on centralized exchanges

On September 16, Binance officially announced that it “will list First Neiro on Ethereum ($NEIRO), Turbo ($TURBO) and Baby Doge Coin ($1MBABYDOGE) and add seed tags to them.” The market capitalization of $NEIRO rose rapidly, from $20 million to over $120 million in just a few hours. After Binance announced the listing, the market value of $NEIRO reached $1.25 billion, an increase of approximately 80 times.

Coincidentally, on November 11, Binance announced the launch of spot trading for $ACT and $PNUT. Subsequently, $PNUT rose by 250% in one day and $ACT rose by 2000% in a few hours, with the market capitalization soaring from $20 million to $300 million.

In fact, Binance’s trading volume accounts for approximately 50% of CEX’s trading volume. When a Meme coin is listed on Binance, it means there will be huge liquidity in the secondary market. From a statistical perspective, the market capitalization of Meme coins listed on Binance usually exceeds $500 million. Those meme coins that have announced that they will be listed on Binance and have a market capitalization of less than $500 million are worthy of attention. Binance meme listing time and market capitalization growth in 2024:

In fact, the currency listing effect also exists on CEXs such as Upbit and Bybit. Meme coins with good token distribution, reasonable market capitalization, strong community consensus and unique narratives are more likely to be listed.

integer psychological disorder effect

The integer psychological barrier effect exists for most meme coins due to their lack of real underlying value. For example, Pump.fun's token issuance is 1 billion, so a market value of $1 billion is the upper limit for most Meme coins. Doge reached a price of $0.74 in 2021, with a market cap of $98.47 billion at the time, but was capped by a $100 billion market cap. Investors can refer to this effect to judge the rising potential of Meme coins.

Public chain capital multiplier effect

Choose a public chain with high TVL (total locked value) and high popularity. An increase in the token price of a public chain will attract funds into the chain. Meme coins with higher market capitalization can only be created when TVL grows. The token price growth and ecological activity of public chains such as Solana, Base, and Sui have prompted the creation of many meme tokens, and their values ​​have increased hundreds of times. Since August 2024, Sui’s token price has tripled and TVL has also grown more than three times. Various water-related meme coins continue to emerge, among which $SUDENG has a market capitalization of over $200 million.

Take the meme market value/public chain TVL as a reference. The ratios of Solana, Sui and Base are 181.4%, 25.5% and 93.2% respectively. The higher the ratio, the higher the popularity of memes on the corresponding blockchain, and the greater the probability that meme coins with high market capitalization will appear.

Based on this theory, Messari proposed a high-return meme investment method: when the tokens of the public chain rise, purchase the corresponding memes; when the memes fall, convert them into cash. This investment strategy started in January 2021 and achieved a return of 13,000% in three years.

Analyze the origin and purpose of the project

It is crucial to understand the basic purpose of launching a meme coin. Some projects are created for satirical purposes or as reflections on contemporary social or political phenomena, aiming to build a community of positive interactions. Projects that have a clear and easily understood purpose tend to have a more promising foundation because their appeal often resonates with audiences on a deeper level.

Assess community engagement and ecosystems

Assessing the activity and engagement of the project community on major social media platforms such as Twitter, Reddit and Telegram is a must. This includes looking at metrics like the number of active members, frequency of discussions, and overall engagement. A strong and active community not only drives a project's exposure, but also its growth and sustainability. Additionally, track whether the community is partnering with reputable projects, brands, or influencers, as such collaborations can enhance a project’s credibility and market positioning.

Monitor price performance and technical analysis

Analyzing the historical price trends of meme coins can provide insights into their market acceptance and investor sentiment. A coin that shows stable volatility and is resistant to sharp drops may indicate growing market recognition and stability. Conversely, tokens with wild price fluctuations may indicate speculation. Additionally, tracking the coin’s popularity, through search volume trends and market rankings, helps gauge broader market interest and a project’s long-term potential.

Use smart monitoring and trading robots

There are many bots available to help investors invest in Meme coins. For example, GMGN.ai is a platform designed for traders to analyze and track Meme tokens with greater speed and efficiency. It provides real-time trading signals by observing fund flows and token activity from smart wallet addresses, covering multiple blockchain networks like Ethereum, Solana, and Blast. It also provides on-chain sniping tools, cross-chain exchanges, smart fund tracking, and technical analysis integration capabilities.

indirect investment

In addition, investing in decentralized exchanges (DEX) with active meme trading, such as Solana’s Raydium and Base’s Aerodrome, is also a good choice.

The Risks of Investing in Memes

Despite their significant appeal, meme coins also come with considerable risks:

• High Volatility and Low Liquidity: Prices can surge or plummet rapidly, resulting in significant losses. Most meme coins have low trading volumes and poor liquidity.

• Pump-and-dump risk: Developer withdrawal of liquidity remains an issue, underscoring the need for adequate research on projects.

• Money laundering trading risk: Money laundering trading refers to investors (usually the same person or group) buying and selling the same assets at the same time to create the illusion of active trading. Here are the key points for identifying the signs of a money laundering transaction:

• Meme coins have experienced a sudden and significant increase in trading volume, without any major news, technical updates, or community events, and without reasonable continuity thereafter.

• Prices fluctuate rapidly and irregularly over a short period of time (such as within minutes or hours) and are not based on the normal supply and demand relationships in the market.

• If buy and sell orders are similar in size and frequency and appear in alternating order, as if they were programmed, this may be a sign of money laundering transactions.

• If there is a high correlation between multiple wallet addresses, such as frequent transfers of funds in a short period of time, or their transaction behaviors are highly similar (such as buying and selling the same number of Meme coins at the same time), money laundering transactions may occur.

• Content and Platform Abuse: Pump.fun’s live streaming feature was used to post objectionable content, leading to its deactivation and raising ethical concerns about NSFW (not suitable for a work environment) and exploitation issues.

• Regulatory challenges: Lack of age verification and speculation may violate regulatory norms and promote unhealthy gambling behaviors.

The survival rate of memes is extremely low. According to data from Pump.fun, the probability of a meme coin reaching a market value of US$10 million is only one in 100,000, and only 3% of users have made profits of more than US$1,000. Always do your own research (DYOR) before investing in meme coins.

in conclusion

Meme coins have proven that they are more than just a passing fad in the cryptocurrency market. They represent a unique intersection of internet culture, financial speculation and community-driven engagement, providing entertainment and investment opportunities. As the meme space continues to grow, driven by factors such as the popularity of AI, social media virality and bold marketing strategies, meme coins have attracted the attention of retail investors, media and even large financial institutions. However, their success is not without risks, including high volatility, speculative behavior and regulatory uncertainty. Investors must carefully consider market sentiment, project background, and community participation before investing in meme coins. As the meme supercycle continues, it will be worth watching in the future whether meme coins can maintain their momentum or if the market will shift to projects with more fundamental support. Whatever their future holds, memecoins have undeniably carved out a niche in the cryptocurrency space and are reshaping how people perceive and trade digital assets.