Original title: A Brief History of Memecoins: Their Past and Future

Original author: freezer, 1kx

In this article, we will cover:

· The origin of Meme coins: Proof-of-Work Meme blockchain

· How Meme coins evolve in cycles: ICO, tokens, DeFi summer, Solana

· How NFT affects the Meme coin landscape

· Latest developments and new trends

· Potential risks and opportunities

What is a Meme?

A Meme is a unit that carries cultural ideas and symbols and continues to spread in people's consciousness. Like genes, the ability of Memes to spread varies. Those that resonate will last forever, while those with less influence will soon be forgotten.

The Internet brought with it the concept of “Internet Memes,” which allow memes and cultural ideas to spread at a much faster pace, often in the form of images, videos, GIFs, and jokes. One study likened the spread of Internet Memes to a disease: “Memes spread in a viral pattern, infecting “individuals” in a manner reminiscent of the SIR model of disease spread.”

Internet Memes spread in a similar way to infectious diseases.

“Meme Coins” are cryptocurrencies whose value derives solely from the Memes associated with them, essentially bringing financial value to the concept of Memes.

With the advent of Meme Coins, cultural ideas and symbols and their spread can be traded and speculated on. Their value is based on the relevance of Memes and their ability to capture mindshare, creating a new type of market where cultural resonance is quantifiable and has financial value.

A Brief History of Meme Coins

The following table and illustrations are a brief introduction to the Crypto cycles and the Meme coins that emerged in these cycles:

POW Meme Coins

Proof-of-work meme coins are primarily designed for miners to allocate their resources to new coins for mining and selling. Many of these meme coins made their debut in the “alternative cryptocurrency” subsection of the Bitcointalk cryptocurrency forum. While a significant number of meme coins failed to make it onto exchanges, those that did made it onto platforms like Cryptsy and BTC-E for traders to trade, these centralized services have now shut down. Each meme coin is typically distinguished by factors such as name and brand, hashing algorithm, block time, and supply, all of which contribute to their overall narrative (or “meme”).

The first wave of tokens after Bitcoin were “meme coins”. In a sense, they were almost nothing but a new idea. No value provided. The image below shows some such examples:

In addition to Litecoin, All of these coins are dead (for reasons including low trading volume and market capitalization, no exchange support, vulnerability to 51% attacks, etc.). This could be due to several reasons: Memes are not very sticky (lack of cultural longevity), and cost of participation issues (each Meme coin is an entire blockchain).

Litecoin’s longevity may be due to Bitcoin’s memetic value (“digital gold”), which has been around longer than other meme coins. Much earlier, and also has continued support from a large number of exchanges.

Dogecoin: The First Meme Coin

In the summer of 2013, the original Doge The meme ("There should be applause here") began to spread on 4chan and Reddit. On December 8, 2013, Jackson Palmer and Billy Markus capitalized on this cultural trend by launching Dogecoin on Bitcointalk. It was the first cryptocurrency based on an internet meme.

The success of Dogecoin has brought about a new "category" of cryptocurrencies that are funny, humorous, satirical, and use celebrities (such as Kanye West , Max Keiser), animals (e.g. PandaCoin) or trying to capture a specific community. These are all proof-of-work tokens launched on Bitcointalk’s “Alternative Cryptocurrency” subsection. "Technical details" become less important, and everything is centered on "Meme". The image below shows some examples:

ICO boom and the rise of Ethereum

The rise of Ethereum has triggered a wave of innovation, bringing new use cases, better user experiences, and new users.

Some specific improvements include:

· Easier launch of tokens (ERC20 standard)

· Brings a new user base (non-miners)

· Token creators can make more money (unlike zero pre-mined PoW tokens, ERC20 is Directly sold through ICO)

· Introducing interoperability/unified ecosystem/unified wallet (through ERC20)

The ICO era has given birth to a wave of more "serious" projects, such as: theDAO, Filecoin, Tezos, EOS, Cardano, Tron and Bancor, which try to have some kind of utility or purpose beyond Meme value. During this period, there were a handful of meme coins that, while not particularly eye-catching, still attracted some attention.

One example is the Useless Ethereum Token released in June 2017, which mocked the concept of ICO and in 310 ETH were raised in the ICO.

Dentacoin is considered a meme coin, although it originally aimed to be the "cryptocurrency for dentists", which it achieved in January 2018 Peak market capitalization of $2 billion.

HAYCOIN was the first ERC20 token to be listed on Uniswap and one of the meme coins created in this era (2018). Hayden Adams, the founder of Uniswap, created the token for testing of the Uniswap protocol. It didn’t gain much attention at first and the trading volume was very small, but it was resurrected in 2023 due to its historical significance.

Collectible Meme and early NFT

Outside of cryptocurrencies, a subset of Pepe the Frog memes are known as "Rare Pepes". These memes are not publicly released and, if released, are marked with "RARE PEPE" DO NOT SAVE" watermark.

Between 2016 and 2018, a group of Counterparty (a smart contract protocol built on Bitcoin) developers and Pepe-meme enthusiasts created the Rare Pepe wallet Pepe Cash and curated the "Rare Pepe meme" to be traded on the Counterparty protocol.

Rare Pepe is often considered the second NFT series ever created and continues to hold its value, with some selling for more than $500,000.

NFTs began to enter the mainstream of the Ethereum era with the release of CryptoPunks, MoonCats, and CryptoKitties, a non-fungible token that can point to pictures and other media. EtherRocks was launched as a joke on Reddit in 2017, and it is a collection of 100 multi-colored clipart rocks. The series received little response at the time (only 30 were minted), but was later revived and sparked a buying frenzy, reaching a floor price of 305 ETH in August 2021 (valued at $1 million at the time).

Another example of a collectible meme coin is Unisocks (SOCKS), launched by Hayden Adams on May 9, 2019. He listed 500 physical socks, redeemable for SOCK (ERC20). At the time of writing, the price of each sock has reached $53,000, making them possibly the most expensive socks in the world.

Summer of DeFi

In June 2020, Compound Finance pioneered a new method of token distribution: “liquidity mining” or “yield farming”. Users lock up their assets to provide liquidity and are rewarded with tokens for doing so.

This new primitive kicked off the “Summer of DeFi” and culminated in “food coin” yield farms that offered 10,000% APY (in Meme coins) in exchange for locking your tokens in a Yam or Pickle contract.

Meme Stocks and Dogs

Stimulus measures, rate cuts, cheap money, and COVID lockdowns led to a risky environment around the world throughout 2021.

In early 2021, retail traders gathered on Reddit and began spreading the "Gamestock" Meme. They posted pictures/videos and drove the rapid rise in stock prices. Thanks to Robinhood’s user-friendly experience (such as having a mobile app and no trading fees), a large number of regular users are participating.

The "GME" mania has led many people to start speculating on other assets, especially those that can be traded on Robinhood. DOGE was listed on Robinhood in 2018 and was priced at 0.008 cents in late January, which was a very attractive “price” for retail users. In early February 2021, Elon Musk began tweeting heavily spreading the Doge Meme. DOGE peaked in May 2021 with a market capitalization of $90 billion.

The popularity of DOGE has spawned more canine meme coins, including Shiba Inu, Floki, and Safemoon, all reached valuation peaks in just a few months.

NFT craze: “Meme coins with pictures”

With the introduction of the ERC721 standard and the emergence of general markets such as OpenSea, NFT has created a new crypto asset "class" that is unique, " A unique visual expression of "culture" or "Meme".

Some of the most well-known NFTs include: CryptoPunks, Bored Apes, Squiggles, and Pudgy Penguins. NFTs can be used in profile pictures on platforms like Twitter and Discord to spread them virally by using them as markers of one’s identity. These PFPs represent a kind of prestige and "membership in a cultural club." Many collectibles make their holders wealthy, but holders cannot sell their NFTs or "leave the community." In order to reward loyal holders, some NFT projects issue a "Meme Coin" (ERC20) to their communities, thus providing NFT with a form of value with liquidity, "utility" and cultural "currency".

Some examples of NFT projects (and their possible meme coins) from this era include:

Recently (2023+)

As cryptocurrencies emerge from the bear market Recovery, new Meme, culture, ideas and ecology are constantly emerging. Meme coins are one of the few asset classes that continues to receive traction (whether in terms of trading volume, market capitalization growth, or social interest), and interest in it has recently surged.

Some recent Meme narratives include:

Some common models

Every cycle has some form of Meme coin:Meme coin Presented in different ways depending on the underlying technology, such as PoW coins, ERC20 and NFT, they are one of the earliest "applications" of new technologies or form factors.

Although Meme coins have different types of media, the way they accumulate value is the same: They all rely on Attention, narrative and hype are what survive and spread. While new media always generate initial excitement, long-term value is maintained only through sustained attention. Just making it an NFT is not enough, just making it an Ordinal is not enough. Attention is highly cyclical. After the first wave of hype cycle of the initial media, it requires lower-level attention drivers.

Meme first, coin second: For the most successful meme coins, such as doge, pepe and dogwifhat, internet memes are the First of all, Meme coins just use the existing popularity of Meme to spread and promote.

Memes originating from Crypto are just getting started: Crypto natives have already begun to create memes that can successfully spread beyond the web3 circle. A prime example of this trend is the rise of crypto-native intellectual property, particularly NFT projects like Pudgy Penguins.

Low Price is Meme: Since the earliest altcoins, users have liked to speculate on low “prices” (due to supply large) tokens. There's a psychological allure in this, that if a seemingly insignificant token reaches $1, it could turn the holder into a millionaire overnight. Therefore, the price itself is a Meme.

Strong community + marketing:Meme coin needs a strong community, founder or "spokesperson" to create content, promote the brand, and spread the word Meme".

Barbaric growth and evolution to professional operations:The first wave of Meme coins was relatively primitive, usually fair sales, and had no internal Personnel or team assignments. This method of publishing has many benefits, but it also comes with some risks, such as rug-pulling, fund theft, and more. An emerging solution is for dedicated teams to promote ecological development around Meme coins, such as the PFP project.

Use strong imagery, image derivatives, and slogans to spread Meme: Image (Imagery) is the main reason why Meme spreads on social networks Way. Usually, it starts with a tone symbol and manifests itself in many different ways.

Opportunities

With a total market capitalization of more than $60 billion and a daily trading volume of more than $13 billion, Meme coins command tremendous financial value.

Since the only function of a meme is to spread into other people's minds, catching the next "meme" early on can be a lucrative opportunity. Creators and investors “work for the meme” by amplifying its reach and are rewarded for becoming early believers in the process.

Whether it is a lottery ticket to get rich, a choice to follow a specific KOL, or speculation on social trends and ideas, since the beginning of cryptocurrency, Meme coins are exploding all the time.

Criticisms and Risks

While there are plenty of opportunities, Meme coins are not without risks. Many meme coins tend to appeal to users who are trying to gain instant wealth with little effort, viewing it as a form of lottery or gambling.

Another common trend is "pulling the carpet" and "pulling the plate to cut the leeks", which happen almost every day in the Meme currency market. Carpet pulling accounted for 99% of all Crypto scams in 2023, with total losses of $2.1 billion, according to a recent report by blockchain analytics firm CipherTrace. It is therefore particularly important to check some key characteristics of meme coins, such as the status of LP tokens (are they burned or centrally held?), team allocation, transfer taxes, and whether contract rights have been waived.

At the same time, Meme coins also lack regulatory clarity. The most high-profile meme coin regulatory incident was the Thai Securities and Exchange Commission’s ban in June 2021 on tokens that “had no clear purpose or substance” and whose prices were influenced by social media trends and KOLs.

Another major problem is that, regardless of any malicious behavior, Memes may not "survive" due to a lack of interest, attention, and resonance. And these investment losses can create a hostile or indifferent community of holders.

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