# Making A Case For Memecoins. 

Source: https://ifeoluwani.substack.com/p/making-a-case-for-memecoins

Memecoins are all the rave right now in crypto. In every bull cycle, there is a speculation vehicle usually tied to the dominant narrative. With the 2017 bull run, it was ICOs. With the 20/21 bull run, it was NFTs. Now, we have memecoins. To be clear, memecoins aren’t new but they are what have currently gained ascendancy in the crypto world.

Memecoins (memes) are tokens that aren’t tied to a project focused on utility. You can think of a meme as the articulation of a joke, idea, or concept, so there can pretty much be a meme for anything. The only thing that lends value to a meme is attention.

But human attention is notoriously fickle, and seeing as memes aren’t focused on utility, it means most of them are bound to run to zero once they’re past their attention peak. With previous dominant speculation vehicles like NFTs, there was a utility angle at play. NFTs were about tokenizing art on-chain to make it easy for creators and collectors of art to connect and exchange value without any barriers. That was a narrative with a strong promise of utility.

And this is where we arrive at the catch with memes in their current iteration, the lack of any accompanying focus on utility just makes it pure, unfettered speculation. It’s the casino brought on-chain, and you know what they say about casinos; the house always wins, so the average person is a lot more likely to lose a lot of money apeing into memes than winning big.

However, given the strong financial incentives associated with speculating on memes, they’ve worked great for onboarding everyday people into crypto, more so than espousing cypherpunk ideals seem to have.

The question to then ask is if most memes are likely to go to zero, should we be embracing it as an onboarding vehicle for mass adoption of crypto? And does it meaningfully aid retention of users?

Li Jin of Variant Fund has written extensively about how memecoins, NFTs, and tokens form a new class of assets; attention assets, assets whose economic value are solely tied to their current attention level and potential for increased virality or utility in the future.

This is what makes memes interesting; they are formed around ‘something’ that many people find relatable. There are memecoins dedicated to cute/funny animals like WIF & DOGE, and memecoins around the political meta in the US elections like $BODEN & TRUMP.

Much of crypto isn’t accessible to ‘normies’ without a significant time investment, so having a vehicle for funnelling the general public’s attention to crypto is a good thing. But how do we make the model of memes less zero-sum and broaden the understanding of the ecosystem beyond the casino angle:

Keep Attention Flowing: One of the problems with the speculative nature of memes is that often the devs who launch memes and the initial buyers are just looking to make a quick buck, so following buy-in by a broader user base, they proceed to start dumping their tokens on the market and call it a day with profits taken. Also, there are memes where the early community pretty much just stops doing anything to drive more attention after experiencing an initial growth spurt.

These are non-ideal. A goal for meme communities should be to keep the wave of attention flowing by evolving into cultural tokens or scenecoins where there is a steady inflow of capital because people are buying into the coin for what it culturally represents.

An example is HIGHER, a meme launched on Base. The rallying cry around HIGHER is, well, going HIGHER ↑, living an optimistic lifestyle, and supporting builders, creators, and everyone to go HIGHER in their personal endeavors.

Following initial growth, the meme has stayed relevant through efforts of the community to kickstart or align with projects that fit the HIGHER ethos such that holding the HIGHER token is tending more towards being a statement of your personal beliefs rather than just idle speculation.

Builders Can Leverage Memes: Memes have the potential to help a lot of builders in crypto solve the early stage problem of finding users. Building a product that leverages the community around an already existing meme can be a great acquisition model for new projects.

A great example here is recently launched video-sharing app Drakula, think of it as TikTok on-chain. Upon launch, Drakula integrated DEGEN, a meme on Base as its primary token within the app, and an effect of that was that it benefited from the general attention DEGEN was getting in that moment and contributed to its initial user growth.

In that way, builders can solve for top-of-the-funnel efforts like awareness and acquisition by leveraging the mindshare of memes.

Crypto Needs To Deliver: In marketing, acquisition and retention are viewed as separate stages of the growth funnel with the understanding that it’s not what gets people to try out your product that makes them stay. It’s the product experience you offer that helps you retain users, and the same holds true for crypto.

Memes work great for onboarding regular folks, but to meaningfully retain them, crypto needs to start delivering product experiences that are comparatively better than web-2 experiences. It means building more exciting and relevant consumer apps on top of existing infrastructure to create a richer ecosystem.

Some of the things I’m excited for in this regard are Base’s Onchain Summer; a call for creators and builders around the world to create new experiences built onchain, Farcaster’s innovation with Frames that allows for headless marketplaces, and Coinbase’s smart wallet among many others.

The extreme financial speculative nature of memes will never fully go away because that’s what it means to have a permissionless prediction market for assets, but there’s a gap where we can shoot for more positive-sum outcomes rather than negative:

Meme communities aligning with real-world projects.

More building around memes.

Offering a new range of social and financial experiences that allow us to better retain users discovering crypto through memes.

To paraphrase Vitalik, we need more good memecoins than bad memecoins.