Everything is meme

Everything is Memecoin

In recent times, Memecoins have emerged prominently in the cryptocurrency market, attracting significant attention from investors and the media. Looking back at the history of cryptocurrencies, various concepts have continuously emerged, captivating investors' interest. However, most of these concepts have gradually faded away, while Memecoins have remained enduringly popular. Their popularity has even intensified amid growing discontent with venture capital governance tokens.

Governance tokens are Memecoins with additional steps

All governance tokens are essentially Memecoins, with their value depending on the meme origin of the protocol. In other words, governance tokens are Memecoins dressed in suits. Why is this said?

• Value Driven by Perception and Hype: Both governance tokens and Memecoins rely on community perception and hype to drive their market value. The community's activity level, the narrative behind the project, and media attention all significantly impact the prices of these tokens.

• Critical Community Influence: The success and market acceptance of both governance tokens and Memecoins heavily rely on the strength of their communities. Communities can increase token value through promotion, proposals, and participatory decision-making, crucial for their sustained growth.

• Speculative Nature and Market Trends: Both governance tokens and Memecoins exhibit strong speculative tendencies in the cryptocurrency market. Investors often buy these tokens with the expectation of market appreciation, influenced by trends, sentiments, and investor behavior.

• Utilization of Marketing and Memetics: Governance tokens and Memecoins often use similar strategies for promotion, such as leveraging entertaining memes, social media campaigns, and influential supporters to increase their exposure and appeal.

• Symbolic Significance: Governance tokens symbolize ownership in a protocol or project's future development, akin to Memecoins representing cultural or social memes. This symbolic value significantly enhances their market attractiveness and investor engagement.

Therefore, governance tokens are essentially formalized Memecoins with additional features and a more serious branding approach. However, their core dynamics and reliance on community-driven value remain unchanged. Moreover, governance tokens are facing significant challenges and a gap between perception and reality:

• Revenue Distribution Restrictions: Due to securities law limitations, many governance tokens cannot distribute income to holders through dividends or similar methods. This restriction weakens the economic incentive for holding governance tokens, making them more reliant on memes to maintain their value and engagement.

• Community-Oriented Decision-Making Framework Issues: The design of governance tokens aims to drive protocol development and decisions through community participation. However, in reality, many governance tokens face issues such as concentration of holdings, low participation rates, opaque governance processes, and ineffective implementation of governance decisions. These challenges often prevent governance tokens from effectively fulfilling their intended community-driven functions.

• Memecoin-like Characteristics: Many governance tokens behave similarly to Memecoins, reflecting more speculation and community culture than actual protocol governance needs. These tokens may lack long-term practical utility or substantial impact on protocol governance.

This is not to say that governance tokens are useless. Ultimately, their existence serves as a constant reminder of the need for regulatory updates. However, governance tokens can often cause as much harm as memecoins in many cases:

• For Builders: Many well-known venture capital-backed governance tokens have started issuing tokens long before product launches, leading to severe disillusionment. This directly undermines the credibility of founders who have worked for years to gain adoption. For instance, Zeus Network even launched with a $1 billion fully diluted valuation (FDV) before product release, a goal that many founders struggle to achieve even after achieving significant milestones.

• For Community: Most governance tokens are venture capital-backed, launching at high valuations and gradually transitioning to retail investors. The so-called decentralized process often turns out to be a process of selling off their company, leading to numerous projects failing catastrophically. Even ICOs from 2017 are viewed more favorably compared to current low-circulation tokens backed by venture capital, as they mostly unlocked a large portion of their supply upon release.

• Low FDV Launch: Allowing retail investors to profit from repricing and helping to form a strong community and sense of identity. Refer to the Celestia case study.

Memecoin is a product of the financial system's collapse

Bitcoin can be considered the largest and oldest Memecoin, born after the 2008 financial crisis. Negative or zero real interest rates have compelled every depositor to speculate in new, shiny asset categories, such as Memecoins. The market environment created by zero interest rates is filled with desperados sustained by cheap capital. Even top indices like the S&P 500 have around 5% zombie companies, which will fare worse as rates rise, making them not much different from Memecoins. What's worse, these companies are promoted by fund managers, with retail investors buying into them every month.

Based on this, the term "financial nihilism" has recently garnered a lot of attention. It encapsulates the viewpoint that the cost of living is strangling most Americans, with fewer opportunities for upward mobility. The American Dream has essentially become a thing of the past, as the median ratio of housing prices to income has reached unsustainable levels. The fundamental driving force behind financial nihilism is similar to populism, which is a political approach that appeals to ordinary people disillusioned with established elite groups—"this system isn't working for me, so I want to try something very different" (for example, opting to invest in TRUMP instead of voting for Biden).

As a fundraising mechanism, Memecoin

Memecoin can serve as an excellent fundraising mechanism and listing strategy. Traditionally, projects raise substantial funds by allocating 15-20% to venture capitalists, developing products, and subsequently building community through marketing efforts while issuing tokens. However, this often results in the community feeling ultimately abandoned by venture capitalists.

In the Meme era, people can raise funds by launching their Memecoin (without a roadmap, just for fun) and early forming tribal-like communities. Then, they can continue to build applications/infrastructure, steadily increasing the utility of the Memecoin without making false promises or providing roadmaps. This approach leverages tribalism within the Memecoin community (e.g., holder bias), ensuring high engagement from community members who become your BD/marketing personnel. It also ensures fairer token distribution, countering the low circulation high FDV pumping and dumping strategies employed by venture capitalists. This trend will eventually lead to a fusion of Memecoin and governance tokens. It's important to note that not all Memecoins are fair, scams are common, but they are easier to expose than the scams carried out quietly by venture capitalists.

In summary

• Everything is a meme.

• Researching Memecoins as a fundraising and community-building mechanism.

• Projects should lean towards fairer launches.

It's time to make early-stage financing more open.