Aside from the long-standing need for people to gamble, what has the blockchain industry proven to itself, outsiders, and regulators?

By Donovan Choy

Compiled by: BitpushNews Mary Liu

Memecoin is entering what’s known as a “supercycle phase” — an apt phrase for when you need to loudly announce to unsuspecting investors that “something big is happening.”

That was the theme of a talk by Murad Mahmudov at Token2049 titled “The Memecoin Super Cycle,” to which a growing number of crypto Twitter users appear to be subscribing.

Murad Mahmudov believes that embrace memecoin because memecoin can give you hope, fun, identity, belonging, emotional connection, a way to alleviate loneliness, a way to participate in collective artistic expression and imagine reality.

Let’s look at the data first.

According to CoinGecko, the entire memecoin market is worth $53 billion, or about 2.3% of the entire $2.3 trillion cryptocurrency market cap. pump.fun was launched in January 2024, and about 2.3 million memecoins have been created since then.

How many of these memecoins are “successful” for investors?

The answer is, not much.

According to data from Adam_Tehc in August, 64.7% of pump.fun traders on Solana lost money or at best broke even. Only 3% of wallets made more than a thousand dollars in profit, while a tiny minority of wallets, 0.0028%, made a million dollars on memecoin.

Source: @crypto__kermit on Twitter

Part of the “why memecoins” argument is that venture-backed altcoin alternatives are terrible.

Admittedly, there is some truth to this. Most venture-backed tokens have fallen after listing on CEXs, their projects are riddled with questionable insider investor token economics, and many products have failed to take off. (According to Lattice Fund, about 18% of cryptocurrency companies that raised funds in 2022 have already closed down).

But I think the solution to the problem is to do these things well, rather than boycotting meme coins with all your strength and then throwing away the good and the bad together.

Recall that the history of the internet is littered with failed companies that raised billions of dollars. Recalling the dot-com bubble, journalist Maggie Mahar estimated that by February 2002 (two years after the bubble’s peak), about 100 million investors had lost about $5 trillion in the stock market.

The Internet is indispensable today, and it’s safe to say we didn’t get here by doubling down on speculative use cases.

Memecoins did not pretend to try to create a socially innovative product, but instead portrayed it as an investment advantage through marketing. But failed crypto projects at least brought important lessons and knowledge to society, which are being absorbed and applied by the industry.

We know that algorithmic stablecoins are probably not a good idea given the complete debacle of Terra.

While decentralized storage solutions like Filecoin offer some improvements in cost, these improvements are not significant compared to traditional centralized storage solutions like AWS. Therefore, data is unlikely to be a breakthrough use case for Decentralized Protocol Infrastructure Networks (DePIN).

Source: MV Global

We know from the failure of Axie Infinity that the next wave of blockchain-based games are unlikely to be based on play-to-earn mechanics.

The point is, we don’t know what will work and what won’t until entrepreneurs (and, unfortunately, many scammers along the way) try it. That’s the whole point of permissionless markets, after all: to allow an archipelago of experiments to flourish simultaneously.

If a memecoin “supercycle” does occur, then that begs the big question: So what? What has the blockchain industry proven to itself, outsiders, and regulators, aside from the long-term demand for people to gamble?

Cryptocurrency was not designed to make money. If you get rich in the process, congratulations! But cryptocurrency was designed to set people free.