Meme Coins: A Comprehensive Analysis

Internet memes have been at the forefront of possibly every ‘viral’ social media trend. These memes, which (in case you’re like 60+ years old) is a term for any piece of text, picture, video, GIF, or any other form of viral media, have also found their niche in the world of crypto and blockchain. Meme coins, born from the convergence of internet culture and blockchain technology, have generated great value and wealth, along with a few concerns along the way.
This blog traces the origins of memecoins, the risks associated with them, and a few aspects of the top meme coins and their trends that are extremely popular today!

What are meme coins?

What are meme coins? is probably the question in the mind of every crypto enthusiast who comes across it for the first time. Memes are generally associated with viral topics on social media, but how did they come about in the crypto landscape?

Meme coins are technically crypto coins or tokens that are based on actual memes. Unlike others like BTC or ETH which could have a specific utility, meme coins could be created for no particular reason.

Let's take the example of Dogecoin (DOGE), the first meme coin. 

DOGE was created in 2013 as literally a joke by its founders. Over the years, DOGE gained tremendous popularity, with the likes of Elon Musk endorsing it. driving up its prices to a multi-billion market cap. As a result, meme coins, even with no use case, can generate price appreciation with sheer hype around them.

Thus, community engagement, hype on social media, lack of intrinsic value, and speculative nature are some primary characteristics of meme coins. They are predominantly positioned on popular memes, with themes of humour.

Organic and inorganic meme coins

Meme coins can also be broadly categorised into organic and inorganic meme coins. The former is built by a community, which forms the backbone for the coin’s growth. In the case of DOGE, its survival for over ten years with organic growth through its community’s initiatives distinguishes it as an organic memecoin. Organic meme coins like MAGA, POPCAT and TREMP are also trending at present.

However, inorganic or corporate meme coins are backed by entities that are entirely driven by profits. In this case, new meme coins may create big marketing stunts for promotion, but in reality, it could just be a way to produce quick gains at the cost of retail investors. For example, in recent days, a meme coin named RTR, linked to former US President Donald Trump, surged initially before suffering from a huge crash.

Thus, from the point of view of investors, major indicators like the initial liquidity of meme coins at the time of launch are very important in differentiating between organic and inorganic meme coins.

How do meme coins work?

Conceptually, meme coins are created using the theories of tokenomics and are driven by blockchain technology as in other crypto projects. A community around a meme coin plays a key role in determining its viability and potential value, while factors like social media and ongoing trends also contribute to the success or failure of new meme coins.

Sentiments in the crypto market can play a vital role in influencing price fluctuations in meme coins. 2021 saw the first major rally in meme coins, largely driven by catalysts sparked by external players. 

For example, the famed GameStop stock rally in 2021 resulted in a price jump in an unrelated meme coin, GME, which spilt over to a boost in other meme coins. While earlier meme coin rallies were also driven by the bullish narrative around layer 2 blockchains, this year’s meme coin rally is mainly assisted by the upswing in Bitcoin and other major meme coins.

In addition, blockchain protocols like Avalanche (AVAX) have launched liquidity mining incentive programs like Memecoin Rush to elevate liquidity across the blockchain’s community tokens. Decentralised exchanges like Trader Joe have also floated a Memecoin rush on AVAX.

Top meme coins

Here are some of the top meme coins, listed in order of their market capitalisation,  that have become household names in the industry:

• Dogecoin: As we mentioned, DOGE was the first meme coin that was started over a decade back as a parody of the meme representing a Shiba Inu dog. DOGE currently trades at a market capitalisation of over $14 billion, the biggest among meme coins, while over 145 billion DOGE tokens are in circulation.
• Shiba Inu: An anonymous entity, ‘Ryoshi’ launched an Ethereum-based meme coin, SHIB, in 2020. Also representative of the Shiba Inu breed, this meme coin quickly gained prominence in the crypto ecosystem. The SHIB ecosystem has also launched a layer2 blockchain called Shibarium, along with a decentralised exchange known as Shibaswap. In 2021, the founder of Ethereum, Vitalik Buterin, donated $1.5 billion for Covid relief in India, out of which $1 billion was in the form of SHIB and the rest in ether. As soon as his donation went public, the price of SHIB crashed, anticipating a huge liquidation event. Hence, the event highlighted both the volatile nature of meme coins and the uncertain domain of donations in crypto.
• Pepe: As one of the new meme coins launched just over a year ago, PEPE’s huge price surge in such a short period was nothing short of a spectacle in the crypto market. Based on the comic character Pepe The Frog, the PEPE meme coin jumped by over 7000% within just a few days of its launch.
• Dogwifhat: Launched on the Solana network, dogwifhat (WIF) is another meme coin that gained fame through community-driven initiatives and social media. It also depicts a Shiba Inu dog wearing a pink hat. The parodic nature of so many meme coins is evident from how a single meme of a Shiba Inu dog has inspired so many similar projects.
• Bonk: Another Solana-based meme coin, BONK, was launched in 2022. The tokenomics of BONK is managed by the Bonk DAO. As of August 2024, the market capitalisation of BONK amounts to over a billion USD.

The Future of meme coins

A few associated risks of meme coins are worth noting for crypto investors or traders. Meme coins in crypto can also be seen taking away market share from the gambling industry. These risks mainly revolve around three core aspects: regulations, volatility, and safety.

Regulations of meme coins could be subsumed by a region’s specific crypto regulations. 

But the latter itself holds a shade of uncertainty, with even developed countries like the US still deliberating on it. Meanwhile, the volatile nature of meme coins always poses a risk for investors. Finally, the rise of scams amidst meme coins, especially through pump-and-dump schemes, highlights a major risk.

Even so, the entertaining and community-steered features of meme coins make them an attractive bet for many! Due to their correlation with the latest trends on the internet, meme coins are bound to stay and thrive in the future.

Check out India Crypto Research  to learn more about key concepts in crypto and blockchain!