For most of 2024, liquidity in the cryptocurrency market was maintained through memecoin trading. According to a CoinGecko report, memecoins were the most popular story in the second quarter of 2024, accounting for 14.3% of the market share. The numbers were very similar in the first quarter. These cryptocurrencies rely on their brand of humor – funny communities and memes – to attract users and traders. These memes allow people from all walks of life to come together for the common goal of jokes and jokes with the promise of financial rewards through trading memecoins.
Memecoin’s market capitalization of over $50 billion as of October 8 shows just how large and quickly meme-inspired communities can grow. The lack of centralization in the niche makes the community a unique proponent of blockchain technology. These communities, powered by representative tokens, go viral in minutes with massive hype as the fuel that drives the community. Most of these tokens are internally traded, which results in massive pump and dumps. And as the hype dies down, the community starts to quiet down.
Over the past few years, the influence of the meme-inspired community has grown by leaps and bounds. And they highlight the clear strength of the vibrant community behind the project. If a cryptocurrency project with real utility has a strong community like the Memecoin ecosystem, the chances of it going viral are relatively high.
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The best cryptocurrency companies and projects should be built on meme-inspired communities and projects. In the following paragraphs, I will explain how this strategy works.
Leverage Meme Hype for Growth
At the heart of meme-driven communities and their rapid expansion is heavy humor, herd mentality, celebrity endorsements, and massive FOMO. Communities such as Dogecoin, Shiba Inu, and recently PEPE have experienced tremendous growth due to these features. Fear of missing out on a chance to make quick profits (FOMO) after an influential figure publicly endorses or highlights a memecoin often creates a blanket effect as investors flock to the project. This support provides a layer of legitimacy and excitement to memecoins and their communities, creating and sustaining meme-inspired hype.
Cryptocurrency market share by CoinGecko category, Q2 2024. Source: CoinGecko
Influencers and celebrities also leverage their popularity through social media to earn memecoins, which they are interested in increasing in value. Elon Musk has repeatedly tweeted about Dogecoin, causing its price to reach all-time highs. In February 2024, Elon tweeted “Dogecoin is the people’s cryptocurrency,” which caused the price to rise by 50%. This year, we’ve seen celebrities like Iggy Azalea, Jason Derulo, and Hulk Hogan openly talk to their followers about MOTHER, JASON, and HULK, respectively. In most cases (like everything else mentioned) these memecoins end up being pump and dumps. Let’s take ORC coin as an example. It is a memecoin approved by cryptocurrency celebrity Davinci Jeremie. He is widely known for his early endorsement of Bitcoin in 2011, when the price was below $1. ORC had such a big community, but there was no substance to it. No usefulness, no real knowledge. As a result, the project was stalled for some time.
Celebrity endorsements lead to a strong meme community that does wonders for a project, especially in the short term. As your community grows, your visibility will increase and other investors and fans/supporters will join you. The larger the community, the more users will eventually invest in the project. At its peak in 2021, approximately 3.6 million addresses held DOGE. In just one month since launching, SUNDOG has amassed nearly 150,000 followers on social media and a market capitalization of $339 million. The project received 99% positive votes in the Community Trust section of decentralized research and trading platform DEXTools. This shows the community’s trust in the project. NEIRO is another project with an impressive community. Above all else, brand loyalty is important. Even if they have no real utility, these memes immediately create a connection between users and the meme that goes beyond simply existing for profit. You can’t buy this kind of brand loyalty.
Using Vampire Attacks to Turn the Memecoin Community into a Strategic Launchpad
The obvious question here is: What is a vampire attack?
Vampire attacks are a technique used by new cryptocurrency projects to steal users and liquidity from projects that dominate a niche market. In most cases, newer projects are usually branches of existing projects and will attract users by offering better user experience, improved products/services, higher financial incentives, and better benefits. These attacker projects can then develop growth strategies where they can leverage their competitive advantage.
Examples of popular protocols facing vampire attacks include OpenSea, Uniswap, and Cream Finance. OpenSea was the leading NFT marketplace in 2022 when LooksRare, another NFT marketplace, began targeting users. LooksRare airdropped over 120 million LOOKS tokens to active users who had to migrate to LooksRare before claiming free tokens.
Uniswap experienced a vampire attack in September 2020, when Sushiswap forked Uniswap’s open source code and launched a decentralized exchange (DEX) platform. To improve Uniswap’s functionality, Sushiswap introduced a revenue sharing feature based on its native token, SUSHI. Before the attack, Uniswap’s locked assets were over $1.5 billion, but after the attack they decreased to about $400 million, with Sushiswap making a profit of $1.35 billion. This damaged Uniswap’s position as a leading DEX so much that it had to follow in SushiSwap’s revenue sharing footsteps and launch its own token, UNI.
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This version of the attack can be adapted to launch new projects based on existing community momentum. To be precise, it is the Memecoin community. Builders in the industry can create memecoins and market those memes instead of trying to build a cryptocurrency community for their projects themselves. Once the community grows by all the important metrics, you can do some vampire attacks and start a solid project based on that meme.
This way, they can maintain a high market capitalization while also attracting a large community for new projects without having to build them from scratch. It also gives MEMCOIN a better long-term future and provides a way for new projects to grow their community faster. You could almost say it’s a ready-made product.
Build sustainable projects beyond the hype
Here’s how you can build a sustainable project that goes beyond the initial hype.
- The focus should be on developing projects that have practical utility. Your project must have a strong value proposition related to creating a unique user experience, solving a specific problem, or providing innovative functionality.
- Token economics should encourage long-term participation while discouraging speculation. Factors such as utility, distribution, and deflation mechanisms must be considered.
- A transparent governance system must be established that empowers community members to participate in project decisions.
- A clear roadmap should be developed that outlines the project’s milestones for the future. This action demonstrates our commitment to the long-term success of the project.
last words
Meme-inspired strategies can be effective, but it is important to consider potential ethical implications such as unfair launch, deceptive/misleading marketing, regulatory compliance, and community well-being. Meme-inspired strategies allow builders to leverage the power of hype and community to build a community and launch a solid Web3 project.
However, this must be balanced with sustainable projects driven by fundamental values and utility. By mitigating risks such as competition (the memecoin space is very competitive) and over-reliance on hype, this strategy can ensure the long-term success of the project.
Evan Luther He is a contributing columnist for Cointelegraph and a cryptocurrency entrepreneur. He sold his first company, StudySocial, at age 17 for $1.7 million and had developed more than 30 mobile apps before he was 18. He got involved in cryptocurrency in 2014 and is currently building CasaNFT. He has also invested in over 400 cryptocurrency projects.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.