This is a super useful model, thanks for sharing!!
I knew this mental model from Cobie's essay but I like how you dissected it into more elements. This was btw my meta-game thesis on investing in FC-related memecoins: Farcaster was growing, I knew there are people with money there and it had a native attention machine (via Warpcast). So I invested in some of the most legit FC-related memecoins, which paid off. One big mistake I made was that I didn't plan the exit accordingly. I think the better move would be to carefully observe the sentiments towards FC, and when people started criticizing it more openly, sell my holdings. Thanks to your model, next time I won't make this mistake :)
IMO, the FC memecoin thing is self-defeating for reasons I've pointed out on Twitter already: - Grifters are siphoning off all the value from investors by running tipping bot networks. - The actual content that is being produced by tipping is shit. There seems to be no solution that can fundamentally address this. All of this makes investment into DEGEN self-defeating because more money is extracted than is being put to good use. source: https://x.com/timdaub/status/1787102886284976170 - The "DEGEN has the most holders on base" narrative is logically flawed as it is promoted by OG DEGEN whales with huge balances. I have $40 in DEGEN that used to be $400, and so the fact that I have this balance is NOT useful to me; it's just dust. This is self-defeating, too, and actually not a defensible benefit. Other coins can easily airdrop to all of the DEGEN holders too, but it is the store of value functionality of money that would make these holders' balances valuable to the network eventually. Source: https://warpcast.com/timdaub.eth/0xc4657fa8 Finally, the last argument for why memecoins are self-defeating is that they're in-defensible in terms of technology and brand. - When DEGEN came out, it was literally the only coin that would enable tipping on Farcaster, and this is what made it valuable. - Now, there are a bazillion clones, and this technology is completely commodified. - What really sets DEGEN apart from other memecoins? And what will it set apart from others even if it innovates? The playbook for the grifters is clear that they'll just copy anything that works. That's why its self-defeating, because defeat (that there'll be tons of competition) is basically built in at this stage.
Agree, and since it's self-defeating you need to plan your exit accordingly as it's a short-term trade. That's why I wrote: "One big mistake I made was that I didn't plan the exit accordingly. I think the better move would be to carefully observe the sentiments towards FC, and when people started criticizing it more openly, sell my holdings. Thanks to your model, next time I won't make this mistake" The only option for memecoins to survive for a long time is to have more events that will point attention to it. A classic example is Elon shilling $DOGE on Twitter.