# Why people ended up buying memecoins?

Source: https://x.com/Ryanqyz_hodl/status/1821572826253648219
Kiwi News: https://news.kiwistand.com/stories/Why-people-ended-up-buying-memecoins?index=0x66b5a4eef22ee9fea316d3327716ffa6e2e1e0bc032fe139a37690f3946e2154dc79df30
Submitted by qiaoliang.eth on 2024-08-09 UTC, 1 upvote, 2 comments

## Summary

This crypto commentary argues that VC-backed tokens and memecoins have become essentially indistinguishable, because projects prioritize dumping tokens over building real products. It says VCs raised 3-10x bigger funds this cycle, which pushes mediocre projects to raise at inflated valuations. On Solana, it describes whales pumping memecoins to 100-500 million market cap while KOLs with tiered call ranges shill them to retail investors. The author's predictions include a successful memecoin-focused CEX and a return to favoring projects with real revenue and use cases.

## Article

What's Happening in Crypto:

About VCs:
- VCs with a gud deploy timing in the last cycle made moni.
- These VCs have now raised 3-10x bigger funds for this cycle, leading to an oversupply of capital.
- But there aren’t enough quality projects, yet they have to deploy capital, so even mediocre projects get additional funding rounds and inflated valuations, raising insanely more than they actually need.
- Projects that rugged three years ago are now back from the dead to secure new VC funding.
- This jacks up the cost for top-tier projects and inflates retail investor expectations.
- VCs aren’t stupid, neither are project teams; it’s all turning into a game of tricking/dumping on LPs (Limited Partners).
- Other projects that can’t launch tokens after raising funds leave VCs and teams awkwardly staring at each other during e-meetings.
- When a solid project finally TGE, they go all-in on PR. Six or twelve months later, they’re forced to dump tokens as soon as they unlock, or even before that, they’ll find ways to sell or hedge.
- Long story short, VCs aren’t making money, and LPs are getting rekt.

About New Projects:
- Seasoned founders realize that whether it’s a small or large project, the effort is the same, and tokens will be dumped either way, so they’re only going after big plays.
- Big projects = High valuations = Infra.
- Infra projects are crowding the market, but there’s no real DeFi or dApps generating revenue on top, so they’re left subsidizing or faking volumes.
- Where’s the money coming from? VCs, because they treat it like free money.
- They’ve cracked the token launch playbook, so the goal is to launch at a high valuation, dump the least tokens for the most cash, then watch as the market buy pressure dries up, but they’ll still need to dump more tokens—no dumping is not an option.
- After the initial post-launch pump, the price tanks, usually within 1-3 days.
- They’ll create volatility to keep dumping.
- If the market’s bullish, they might even hit the top gainers list, then continue dumping.
- Bottom line: The primary goal for projects is to dump tokens; only a tiny fraction actually create value (or rely on tricks) to generate protocol revenue.
- Some projects artificially pump their metrics, with fake users exploiting the system, and these projects essentially become worthless at launch, with no trading volume. For such projects, market cap is meaningless.

About Old Projects:
- Dead projects with relatively decent Captables from three years ago are securing new funding (actually already disconnected from those funds and orginal team), mostly through KOL rounds, with a few using stupid funds as exit liquidity.
- In order to get listed on Binance, they keep raising funds and faking metrics, but still lack real users or use cases.
- Actually, they can’t go on Binance anyways, so they have two options: bribe other exchanges or using DEX to list their tokens.
- Listing on a DEX = Going to zero; bribing CEXs = Going to zero (they need to dump tokens to cover the bribes).
- In short, these projects are destined to fail because they’re not serious about building anything.

About Leading Exchanges:
- Exchange actually offering projects services similar to on-chain huge liquidity pools.
- Adding liquidity for a token is good for the project, so projects inevitably pay the exchanges—this is just how the game works.
- Exchanges also have whales they need to cater to.
- Projects that benefit whales need to get listed, so all the restaking shit must get listed.
- Projects that benefit the exchange itself need to be listed, so the ones they’ve invested in, those with users, new innovations, or those that can bring volume from other exchanges need to be listed.
- Since (exit) liquidity is king, getting listed on top-tier exchange has become the most crucial aspect of a project.
- Exchanges play a key role in user education and liquidity pools and should get rewarded with significant status and matching profits.
- So taking your moni in silence is not a problem at all :)

In Conclusion:
- Building a project has become about creating something illusory; you don’t need to build anything real as long as you can dump tokens. The essence is to create hype and narratives and then dump.
- Given this, there’s no difference between VC-backed tokens and meme coins.

About ETH:
- Whales have shifted their approach, embracing PoS (Proof of Stake), moving away from PoW (Proof of Work), and not focusing on trading, let alone apeing new capital inflows. Instead, they’re freeloading, and milking retails.
- Whales aren’t participating in real development that directly impacts ETH’s price, including but not limited to creating memecoins, pumping quality memecoins, or fostering unique ETH cult-like culture let alone making gud projects.
- In short, they’re not building.
- The only reasons to ape ETH this cycle are restaking and ETFs, but these don’t really matter to retail investors, so ETH lacks a strong, straightforward reason to buy.
- ETH still has the most devs, the most nodes, and the most ecosystem projects, making it the most robust blockchain.
- However, the projects on ETH have ulterior motives, aiming to dump their bullshit fantasy coins on retail investors, only profiting for themselves.
- In short, it’s hard for retail investors to make money on ETH.

About SOL:
- Whales are banding together; they have a grand vision and understand what retails want.
- Whales have 400k to 2 million SOL. Spending 10k SOL to spin up a so-called cult memecoin or getting a buddy to create a memecoin is a easy peasy.
- They pump memecoins, create a bunch of small liquidity pools for these memecoins, and pump them to 100-500 million in market cap.
- Retail investors see the memecoin explosion and get FOMO hard.
- KOLs profit by farming attention through calls, executing wealth transfers (from retails), and mean while, these tokens actually pump!
- KOLs form a hierarchy with different call ranges: top-tier influencers like @HsakaTrades  and @blknoiz06 , mid-tier with 100k followers, and others (mainly KOCs), each shilling tokens within different market cap ranges, roughly 500 million+, 100-500 million, 10-100 million, and below 10 million for degen plays.
- This pumps the SOL ecosystem’s activity, making retail investors carry the bags, even marry the bags.
- Since most retail investors are bagholding SOL, a SOL maxi army naturally forms, and the sentiment of SOL flipping ETH is spreading like wildfire among retails. These investors are so hyped by memecoins they forget the risks of SOL rollbacks and that the memecoins they hold are basically AIR.
- SOL has entered a positive feedback loop, with main characters shilling, retail investors continuing to FOMO, and the cycle repeats.
- When will it end? Who knows. Maybe when everyone gets tired of memecoins.
- In short, SOL has become the best casino of this cycle, the best casino chips, and everyone needs SOL.

Predictions:
- The memecoin supercycle is ture, with 20 memecoins breaking into the top 100 by market cap, and many memecoins ranging between 100-300 million, mainly on SOL.
- A successful memecoin-focused CEX will emerge.
- Projects will continue to launch with high valuations, but TGE valuations will be significantly lower. PR statements will often mention that the project valuation has been rationalized (some project teams are already doing this, showing they care about reputation and want to build for long term).
- VCs in the next round will have to seek funding from Web2; they envy the industry, but reporting to LPs will be painful.
- High-quality projects that don’t over-finance (or don’t seek VC funding at all) will emerge, using other, more transparent methods for value transfering to value adding guys.
- Companies that truly create value, such as auditing and security firms, will slowly gain recognition, and quality auditing and blocking will become an important part of the industry: BlockSec, Hexagate, Hypernative.
- For non-meme projects, the market will return to favoring those with real revenue, real monopolistic power, and real use cases (hopefully, they’ll find innovative ways to tie tokens to their business).
- The next cycle will be a cycle of REAL applications.

To My Readers:
- Just hodl BTC, put it in cold wallet, sell some when normies start FOMOing, and buy more when your parents call you an idiot. HODL the rest, and don’t tell anyone.
- Find ways to make money from VCs/project teams: start projects or provide services to them.
- Find ways to make money from other retail investors: provide services / goods to retail investors.
- Don’t buy VC-backed fantasy tokens, especially high market cap ones (destined to underperform BTC). ( if things changes u will know it automatically) 
- Consider degen plays on SOL memecoins with market caps between 10-100 million, and exit when they hit 100-500 million (w <10% of your bag).
- Avoid old projects; if they didn’t TGE last cycle, there’s a reason.
- Verify all information you come across; if you can’t verify it, assume it’s FAKE.
- Engage with valuable content creators and give them interaction (<1% of accounts are still doing this).

## Comments

**tim**: lol, this is just an SOL advertisement in disguise

**qiaoliang.eth**: SOL just happen to be the best memecoin casino chain