- Summary:
- Some memecoins have evolved from useless tokens to become DeFi communities, and we can expect to see more innovation and more utility arise.
Table of Contents
The astonishing rise in popularity of memecoins within the cryptosphere has been accompanied by an equally generous dose of notoriety.
While many advocates tout the fun, entertaining aspects of memecoins and their potential for large gains, the reality is that most memecoins have very little value, and for every one that rockets to the moon, there are dozens that end up on the scrapheap.
But even though memecoins are risky, over the last year they have arguably outperformed many of the best utility tokens, growing enormous communities and building strong social bonds within them, taking on a life of their own that has led to utility organically springing up in their wake.
Charitable donations
The story of memecoin utility begins with the original meme token, Dogecoin, which was created back in 2013 as a joke based on the once-popular “Doge” Internet meme that featured a cute Shiba Inu dog.
Dogecoin became wildly successful, attracting an enthusiastic fanbase that saw it as a kind of celebration of the internet and crypto culture, and it quickly became a viable cryptocurrency in its own right. As it became more popular, utility emerged as the community began using it to send donations to charities, tip content creators and similar use cases.
The Ethereum co-founder Vitalik Buterin has since become well known for his memecoin donations to charity, and he later wrote that this can be one of the most promising applications for what were once considered to be useless tokens. “Among the more interesting of the coins that I’ve seen are coins where a large portion of the token supply is dedicated to some kind of charity,” Buterin wrote in a blog post.
Indeed, the rise of memecoin donations gave birth to memecoins that are dedicated to good causes. One of the best known is the Neiro Foundation, which is a crypto community collective that provides money to fund Shiba Inu dog rescues and research into their health, as the breed is prone to issues such as hip dysplasia, cataracts, glaucoma and progressive retinal atrophy.
Political Fundraising
Technology has become a valuable tool for politicians looking to reach out to the masses, with social media expertise widely seen as critical to election-winning campaigns. And in more recent years, memecoins have sprung up both in support of, and in opposition to political candidates.
One of the best examples of this is the Argentinian President Javier Milei, whose supporters created a memecoin that’s dedicated to his reform efforts. It emerged as a vehicle for Argentinian citizens, many of whom are pro-crypto, to communicate their political beliefs through monetary donations, similar to the “text-to-donate” initiatives of yesteryear.
Incoming U.S. President Donald Trump’s most famous supporter, Elon Musk, is another prime example, making Dogecoin his gold standard. Meanwhile, Trump supporters raised funds from the sale of memecoins like MAGA, before donating them to his campaign. That came after Trump himself raised funds, not from memecoins, but from the sale of an exclusive NFT collection, netting almost $4.5 million in the process.
There was also a notable surge in the price of Kamala Harris memecoins, which shot up in value shortly after the then-Democratic Presidential candidate Joe Biden tripped on a staircase, shortly before he stood down as its nominee.
Fostering Friendly Rivalries
Some memecoins have emerged with a mission to do nothing more than promote memecoin culture itself.
Take LADYS, which is a memecoin that was created to celebrate the popular Miladys NFT collection, although there is no official link between the two projects. LADYS was just one of hundreds of obscure tokens that suddenly got catapulted into the spotlight following a tweet by Elon Musk, resulting in its value soaring by more than 7,000% in a single day.
Unlike many Musk-pumped memecoins that immediately crashed back down to Earth, LADYS has been able to retain a significant following, and its community has since gotten more organized, promoting itself as a “tokenized, fully memetically optimized white pill” that aims to foster friendly rivalries between its community and those of other memecoins.
Its mission has been aided by a significant investment from DWF Labs, and it’s now focused on establishing partnerships with other memecoins while trying to “facilitate the accumulation of meme capital in the era of unstoppable meme coins.”
Dodging Securities Laws
By being useless, it seems that memecoins are anything but. Because they don’t have any utility, memecoins are unique in that they don’t find themselves subject to the scrutiny of U.S. regulators who are worried they might contravene its tough securities laws.
This was noted by a16z’s crypto managing partner Chris Dixon, who pointed out that it’s “actually safer to release a memecoin today with no use case, than it is to launch a token that’s useful.”
U.S. Securities laws use the Howey Test to try and determine if a token constitutes an investment contract, and memecoins, which don’t represent any tangible asset, product or service at all, and do not promise any returns to investors, pass with flying colors. As a result, memecoins have surged while many other tokens with genuine utility have struggled.
DeFi Hubs
Some memecoins have evolved from useless tokens to become DeFi communities. After enjoying spectacular growth and building up a loyal community of followers, the creators of FLOKI wanted to give something back to those who had supported it.
As a result, FLOKI, which was also inspired by a Shiba Inu dog, evolved into a comprehensive crypto project that’s now pioneering a number of initiatives, including a suite of DeFi projects called FlokiFI, a gaming metaverse called Valhalla, an NFT marketplace called FlokiPlaces and a crypto educational platform called Floki University.
A similar example is Pepe Unchained, which is an Ethereum Layer-2 blockchain built by the creators of PEPE that aims to bring DeFi capabilities to the popular memecoin. It’s currently focused on building staking applications for PEPE token holders, giving them a way to earn yield by holding onto the tokens over the long term.
Memecoin utility is an opportunity
The growth of memecoin utility has led to the rise of a new opportunity in the crypto industry. When such projects are developed in a responsible and transparent manner, they can help to bridge the gap between the average internet user and the intimidating world of blockchain.
Their strength lies in the way they are able to leverage popular concepts, such as internet memes, while simultaneously providing users with a taste of what Web3 is really all about.
As memecoins continue to evolve and redefine themselves, we can expect to see more innovation and more utility arise. Eventually, memecoins may emerge to tackle some of the most pressing real-world problems with face today, integrate with traditional finance, and perhaps one day even surpass the popularity of more traditional tokens like Bitcoin and Ethereum.
As this space continues to redefine itself, we can expect to see further innovation. Perhaps we’ll witness memecoins tackle real-world problems, integrate with traditional finance or even push the boundaries of blockchain technology in ways we haven’t yet imagined.