Vanity indicators and the dream of getting rich quickly: How to view the MEME coin craze

There is a false notion that memecoins are helping people out of poverty, and I think that really does a disservice to the space. More importantly, I think that blockchains like Solana and Avalanche are getting more attention because of the memecoin craze, but they are incredibly overhyped. At their core, memecoin counts are vanity metrics, similar to likes and followers on social media platforms, without any real substance.

Anyone who worked on web2 will know that the real KPIs for social media engagement are engagement, user-generated content, link clicks, and sales conversions. The primary purpose of likes and followers is self-serving. In Web3, the on-chain metrics the network should be watching are increasing with the flow of “fake” memecoins, which will decline once the novelty of the shitcoin casinos wears off.

Looking at the OG memecoin network, BNB Chain, which has seen a huge increase in usage in 2021 due to memecoin trading on PancakeSwap. In 2021, it hit about 17 million token transactions per day, but has since settled to about 5 million. Still, 5 million token transfers per day sounds like a healthy metric, right?

However, when we look at the top tokens transferred on-chain, we notice that most are either memecoins or fake scam tokens, according to BSC Scan data.

Most of the tokens without logos in the above picture are scam tokens designed to trick users into trading to steal funds. For example, the USDT token with 1.2 million unique transfers in the past 7 days is not the actual token issued by Tether.

Solana’s pre-sale of memecoins saved its failed phone launch, and Avalanche is fueling its “community token” economy by buying tokens for its treasury arm, and may well end up going the same direction as BNB Chain.

I’m not against the concept of memecoins, but I do believe they should be treated like gambling activities. Furthermore, Solana and Avalanche are now likely to join BNB Chain as gambling networks filled with scam tokens and memes with no material value.

Remember, memecoin trading is essentially Russian roulette, where the goal is not liquidity from whale exits.

I was an early adopter of Dogecoin back in 2014 when I used my video production company’s graphics cards to mine Dogecoin. At the time, the term “memecoin” wasn’t even a thing yet, as Doge was the only thing that existed. I became a big fan of the concept, thinking it was a way to earn “magic internet money” that aligned with the internet culture of the time. Doge memes were all the rage, so Dogecoin was a fun way to learn about cryptocurrency and potentially become part of a digital medium of exchange for a world that was still learning how to “internetize.”

For full transparency, I sold all of my Doge for Bitcoin in late 2015 and currently hold a small amount for nostalgia.

However, the current memecoin market has nothing to do with providing an interesting digital currency that can be used for free online transactions. There is no use for any memecoin other than hoping that the “price will go up.” Recently, Bitcoin content creator Layah Heilpern said,

“Memecoins and shitcoins are truly life-changing. There is no other industry where you can go from broke to a millionaire in a matter of weeks or even days.”

These are dangerous narratives because they make people think they can change their lives with memecoins. The reality is that most people either buy in too late or hold on too long. They may be paper millionaires temporarily, but they rarely realize profits in Bitcoin or fiat. Either their belief in further profits prevents them from selling before the market inevitably crashes, or a lack of liquidity hinders their ability to sell.

Cryptoquant founder Ki Young Ju made a comment here today that seems to share some of my views,

“Memcoins harm the crypto industry.

It’s frustrating to see multi-billion dollar memecoins overshadow the hard-working teams building legitimate products to move this industry forward.

As the 2018 ICO boom demonstrated, easy money does not drive progress across an industry. ”

Book of Meme (BOME) has reportedly reached a market cap of $1 billion, leading to an influx of new traders. However, DEX data shows that liquidity was around $64 million when the milestone was first reached. Since then, CEX listings have helped push trading volumes to over $2 billion in the past 24 hours.

Another Solana pre-sale token, Slerf, said that the founder "accidentally" burned all pre-sale tokens as well as LPs before listing on CEX, and the current trading volume today alone has reached 700 billion US dollars, with a market value of 200 million US dollars.

Dogwifhat (WIF), the most watched meme coin of the past month, clearly states, “WIF is a symbol of progress for the future of trading and a beacon for those who think ahead. It is clear that the future belongs to those who embrace innovations like WIF, push boundaries, and usher in a new era of finance and technology.”

However, don’t be fooled; unlike Dogecoin from a decade ago, these “tokens” of progress are designed for one thing and one thing only, and that is to make someone rich by dumping shitcoin casino lottery tickets on retail investors.

Blockchains that change their focus to promote the community aspect of digital assets to foster innovation and engagement can also say what they mean by “Web3 has become so noisy that the only way we can get attention is to become a casino, but we don’t want to say that, so we’ll pretend this is about ‘community’.”

In the words of many millennial moms, “I’m not mad, I’m just disappointed.” I hold Solana, BNB Chain, and Avalanche in my portfolio; this is not a short report. I’m just trying to raise awareness of memecoins and call the “community” bullshit out of the water. The only meme community in my opinion is Dogecoin, but even the original developers gave up on that.

So let’s be honest and admit that memecoins are gambling . Then, add appropriate caveats instead of pretending that they represent innovation.