Original author: Evan Luthra
Original title: Building real-world projects using meme-inspired strategies
Original source: Cointelegraph
Compiled by: Koala, Mars Finance
MEME coins can drive viral growth — as they did for the cryptocurrency market in 2024 — but they also often lead to price pumps and dumps.
For much of 2024, liquidity in the cryptocurrency market was maintained primarily through trading memecoins. According to CoinGecko, memecoins were the most popular theme in the second quarter of 2024, accounting for 14.3% of the market share, with very similar figures for the first quarter. These cryptocurrencies rely on fun communities and humorous brands known as "memes" to attract users and traders. Through these memes, people from all walks of life are able to come together for the common goal of humor and jokes, and earn potential financial rewards by trading memecoins.
As of October 8, the market cap of MEME Coin has exceeded $50 billion, which shows that the MEME community is growing very fast. Due to the lack of centralization in the field, these communities have become unique supporters of blockchain technology. These communities have quickly become popular in a few minutes with the help of their representative tokens, and the hype is the fuel that drives their development. Most of the tokens have insider trading, which has led to massive stock price pumping. As the hype decreases, the community begins to calm down.
Over the past few years, the influence of MEME-inspired communities has grown by leaps and bounds. They highlight the obvious power of a vibrant community behind a project. If a crypto project with real-world utility has a strong community like the one in the MEME Coin ecosystem, then the chances of it going viral are relatively high.
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.
Leveraging the MEME hype to boost growth
At the core of meme-driven communities and their rapid expansion is a strong sense of humor, herd mentality, celebrity endorsements, and massive FOMO. Communities such as Dogecoin, Shiba Inu, and more recently PEPE have all experienced massive growth due to these characteristics. After influential figures publicly endorse or highlight a memecoin, the fear of missing out (FOMO) of a quick profit opportunity often creates an effect where investors flock to the coin. These endorsements provide a layer of legitimacy and excitement to these memecoins and their communities, creating and sustaining the hype that the meme evokes.
Crypto market share by CoinGecko category in Q2 2024. Source: CoinGecko
Influencers and celebrities also use their popularity on social media to get their hands on the MEME Coins they want to boost in value. Elon Musk has mentioned Dogecoin on Twitter multiple times, which has led to all-time highs in the price of Dogecoin. In February 2024, Elon tweeted that "Dogecoin is the people's cryptocurrency," and the price increased by 50%. This year, we've seen celebrities like Iggy Azalea, Jason Derulo, and Hulk Hogan openly talk about MOTHER, JASON, and HULK to their fans, respectively. In most cases - like all of these mentions - these MEME coins end up turning into pump and dumps. Take ORC coin, a MEME Coin endorsed by crypto celebrity Davinci Jeremie, who is widely known for endorsing Bitcoin in its early days when the price was less than $1 in 2011. ORC has such a large community, but lacks any substance. There is no utility, no real legend. As a result, the project has been stagnant for some time.
Celebrity endorsements form a strong MEME community, which is beneficial to the project, especially in the short term. As the community grows, so does visibility, and other investors and fans/supporters will join. The larger the community, the higher the number of users who will eventually invest in the project. At its peak in 2021, there were about 3.6 million addresses holding DOGE. Just over a month since its launch, SUNDOG has attracted about 150,000 followers on its social media and a market cap of $339 million. The project has a 99% positive rating on the community trust section of DEXTools, a decentralized research and trading platform. This represents the community's trust in the project. NEIRO is another project with an impressive community. The most important thing is brand loyalty. Even without any real utility, these MEMEs will cause users to associate with MEMEs in a short period of time, and not just for profit. This brand loyalty cannot be bought.
Using Vampire Attacks to Transform the MEME Coin Community into a Strategic Launchpad
I know the obvious question here is: What is a vampire attack?
A vampire attack is a technique used by new crypto projects to steal users and liquidity from projects that dominate their niche. In most cases, the latest project is usually a fork of an existing project, which will attract users by providing a better user experience, improved products/services, higher financial incentives, and better benefits. This attacker project can then develop a growth strategy from a position where it can exploit the competitive advantage.
Some popular protocols have experienced vampire attacks, such as OpenSea, Uniswap, Cream Finance, etc. OpenSea was the industry-leading NFT market when another NFT market, LooksRare, began targeting OpenSea users in 2022. LooksRare airdropped more than 120 million LOOKS tokens to active users, who had to migrate to LooksRare to claim the free tokens.
In September 2020, Sushiswap forked Uniswap's open source code and launched a decentralized exchange (DEX) platform, and Uniswap suffered a vampire attack. In order to improve Uniswap's status quo, Sushiswap launched a revenue sharing feature supported by its native token SUSHI. Before the attack, Uniswap locked more than $1.5 billion in assets, which dropped to around $400 million after the attack, and Sushiswap made a profit of $1.35 billion. This severely damaged Uniswap's position as a leading DEX, so much so that it had to launch its native token UNI to emulate SushiSwap's revenue sharing strategy.
A version of this attack can be adapted to launch new projects based on the momentum of an existing community. A MEME Coin community to be exact. Instead of directly trying to build a crypto community for their project, industry builders can create a MEME Coin and market that MEME. Once the community grows by all the important metrics, they can then perform a vampire attack and launch a solid project based on that MEME.
This way, they can maintain a high market cap while attracting a large community for their new project without having to start from scratch. It also provides a better long-term future for MEME Coin and a way for new projects to build a community faster - almost off-the-shelf, you could say.
Building a sustainable project that is not swayed by hype
Here are some ways you can build a sustainable project that goes beyond the initial hype.
1. You should focus on developing projects with real utility. The project should have a compelling value proposition, including creating a unique user experience, solving a specific problem, or providing innovative features.
2. Token economics should incentivize long-term participation while disincentivizing speculation. Factors such as utility, distribution, and deflation mechanisms should be considered.
3. A transparent governance system should be established to empower community members to participate in project decision-making.
4. A clear roadmap should be developed that outlines the future milestones of the project. This action demonstrates a commitment to the long-term success of the project.
Conclusion
While MEME-inspired strategies may be effective, it is important to consider potential ethical implications such as unfair launches, deceptive/misleading marketing, regulatory compliance, and community well-being. Through MEME-inspired strategies, builders can build communities and launch solid Web3 projects that leverage the power of hype and community.
However, this must be balanced with a sustainable project based on underlying value and utility. This strategy ensures the long-term success of your project by reducing risks such as competition (the MEME Coin space is highly competitive) and over-reliance on hype.
