Original title: "Meme fever, a new battlefield for VC, opportunity or trap?"

Original author: Ray, ArkStream Capital

TL;DR

1. Meme experienced a slow germination stage from 2013 to 2019, followed by a chaotic period of rapid change from 2020 to 2022, and finally ushered in a period of rapid development from 2023 to 2024, and officially gained wide recognition and audience base as a single track.

2. The average daily turnover rate of Meme is about 11%. In comparison, DeFi is 5%, Layer2 is 7%, and Layer1 is 4%. This ratio not only highlights the high liquidity of Meme, but also shows that users are interested in Meme and have a high frequency of transactions.

3. As of the end of the third quarter of 2024, the market value of Meme in the entire crypto market has increased from 0.87% two years ago to 2.58% today, and there is still a growing trend. If a simple linear regression simulation is done, this proportion will reach 3.54% in 2025 and 7.81% in 2030.

4. Meme is a leveraged Layer1, which means that when the market conditions improve, there will be a 5 to 10 times increase in Layer1.

5. Animal Meme and Cult Culture Meme are suitable for long-term attention. In contrast, other categories of Meme are often related to short-term hot spots, and their attention and popularity may rise rapidly and then fall back.

In 2024, the industry and the market are undergoing a dramatic reshuffle. Against the backdrop of poor performance of many VC-invested and supported projects, Meme has gone against the tide and become a new force that cannot be ignored. The rise of the PvP model, the wealth effect brought by single-coin crits, and Solana, which is extremely friendly to Meme, have all shown their unique brilliance this year. Murad, a representative of the new generation of Meme, has quickly become a popular figure in the Meme world through his speech at Supercycle. However, behind this Meme craze, what changes has Meme undergone? From the perspective of VC, how should we participate in it? These issues are worth our in-depth discussion.

Panorama of Meme Market: Origin, Evolution and Market Data Analysis

Origin and Influence

As a cultural communication phenomenon, the emergence of Meme is closely linked to human history. Originated from the language, beliefs and customs of early society, it spreads among groups through imitation and learning. The emergence of the Internet has greatly accelerated the spread of Meme, which spreads rapidly among users in the form of pictures, videos, texts, emoticons, etc. due to humor, irony or resonance. Meme meets people's needs to express emotions, share opinions and establish resonance in social interactions. It is a cultural phenomenon that reflects social trends, group psychology and cultural changes. Its spread and popularity are affected by many factors such as content attractiveness, communication environment, community acceptance and KOL influence.

In Web2, Meme culture was mainly born and developed on the two platforms of 4chan and Reddit. 4chan is the birthplace of the popular meme Pepe the Frog, where a large number of Pepe memes and their derivative culture are gathered. At the same time, 4chan is also the hotbed of the Boy's Club comics, providing us with an important perspective to deeply understand the meme culture. Reddit gave birth to classic memes such as Dogecoin and Success Kid. Thanks to the active community atmosphere and solid user base of these two platforms, they are still the birthplace of many new memes to this day. In addition to these two platforms, other social media platforms with a large number of users (such as Twitter X and Telegram) have also given birth to some popular memes. For example, dogwifhat, the image of a dog wearing a pink woolen hat, has formed a "hat" totem culture in the community with its unique image since its early days. Many users and celebrities who like it have forwarded related hat dog pictures.

Evolution and Development

Started in Web2 and became crazy about Web3. In this article, we will refer to Meme and its related currencies as "Meme" and no longer make specific distinctions. Looking back on the development of Meme, we noticed that it was not prominent in the early days and did not receive enough attention. Referring to the bull-bear cyclical changes in the industry, we can divide the development line of Meme into these three stages: germination period (2013 to 2019), chaos period (2020 to 2022), high-speed development period (2023 to 2024). By consulting CoinMarketCap's historical snapshot data statistics, Coingecko's single-currency data, search engine historical information and social media content, we can have a more comprehensive understanding of the evolution of Meme.

Chart: Evolution and Development of Meme

As of December 31, 2019, in the embryonic stage, Dogecoin was the only meme-type coin in the top 100 cryptocurrency market capitalization list, ranking 34th. Looking back at 2013 to 2019, meme-type coins did not occupy a prominent position in the market. During this period, the industry was in a stage of rapid infrastructure construction, and everyone was exploring various new concepts. The mainstream new coins are usually those payment-type public chains with more efficient transaction processing capabilities and faster confirmation times, or new public chains with powerful smart contract functions. For meme-type coins, the challenge is that they not only require higher costs to establish dependent carriers, but also because the construction of liquidity is more difficult, which leads to small trading volumes and difficulty in obtaining widespread support from centralized exchanges. Therefore, in the embryonic stage of Meme coins, apart from Dogecoin, which features the "Doge" emoji and has a significant dissemination effect, there are not many other Meme coins that can survive in the market.

From the chaotic period starting in 2020, or more precisely, from August 2020, the IDO wave triggered by DeFi Summer, the IDO led by DeFi Summer enabled people to build liquidity on the chain at a low cost, provide transactions, and quickly build trading scenarios. In this way, tokens can be issued at a low cost and circulated directly in the secondary market without being listed on the exchange, giving rise to a lot of on-chain Memes. During this period, the surviving Meme coins include SHIB, FLOKI, and PEOPLE. Despite this, these early Meme coins were not taken seriously by the market, and their popularity was mainly based on the concept of hype. In addition, the popularity of Meme in the chaotic period is often generated against the background of excess liquidity in the industry. They usually appear as the last baton after multiple sectors have risen in turn. It is worth mentioning that Meme has also gained widespread attention during this period due to its association with celebrities, especially Elon Musk's continued voice on Dogecoin in 2021, which not only made the price fluctuation of Dogecoin extremely significant, but also generally pushed Dogecoin to a new level in terms of market value, and the community has also been significantly expanded.

With the arrival of 2023, the craze for Meme coins continues to heat up, and a variety of Meme coins have emerged, such as BONK, PEPE, CHEEMS, Cult culture-related BITCOIN (Harry Potter Obama Sonic 10 Inc) and SPX (SPX6900), WIF and MOG, etc. During this period, the types of Meme coins began to be refined, and other public chains such as Solana also emerged. By 2024, the development of Meme coin has directly entered an accelerated stage, and new coins such as BOME, lowercase NEIRO and GOAT continue to emerge, each with its own characteristics. Meme has officially gained wide recognition and audience base as a single track.

Chart: Some Meme data indicators

After sorting out the market value share and market performance of Meme in the top 600 cryptocurrency markets from 2013 to 2024, we can clearly see the growth of Meme's market value and the expansion of its categories and quantity. During this period, Meme's market value has not only achieved significant growth, but its types and quantities have also increased. As of the end of the third quarter of 2024, Meme's market value share in the entire crypto market has increased from 0.87% two years ago to 2.58% today, and there is still a trend of continuous growth. If a simple linear regression simulation is done, this share will reach 3.54% in 2025 and 7.81% in 2030.

Perhaps, we once doubted whether Meme was just a flash in the pan phenomenon, and it would quickly fall into silence after the craze. However, with the study and understanding of Meme, I believe our views have changed. Meme will not only not disappear, but will continue to innovate, and new leading Memes may appear in every era cycle. However, behind these dazzling leading Memes, there is a cruel reality, which reminds us that we must always keep a calm and clear mind.

Market Data Analysis

By analyzing the development and historical data of Meme, we can roughly understand its development trend. Then, studying the current market pattern can provide us with an intuitive perspective to observe the changes in market hotspots and the flow of funds. Below, we further explore the macro indicators of the Meme sector, including core indicators such as market value, trading activity and average daily trading volume. These analyses not only reveal the latest developments in the Meme sector, but also show its future development trajectory.

Market value and quantity changes:The changes in the market value and circulation quantity of Meme can reflect the market demand and acceptance of it. Although some Meme tokens have a low market value, the number of new Memes shows that the community's interest in the entire sector is growing. Compared with other sectors (Layer1/Layer2/DeFi), Meme is far ahead in terms of total market value and new quantity in the past two years.

Trading Activity:Meme's trading activity and turnover rate are generally higher than other tracks. According to CoinMarketCap data, the overall market value of Meme tokens is about $50 billion, and the daily trading volume is about $5 billion, which is much more active than other tracks. On average, the daily turnover rate of Meme tokens is about 11%. In comparison, the daily turnover rate of DeFi is about 5%, the daily turnover rate of Layer2 is about 7%, and the daily turnover rate of Layer1 is 4%. This ratio not only highlights the high liquidity of Meme, but also indicates that users are interested in Meme and have a high frequency of transactions. For Meme tokens above the sector level, especially those with larger trading volumes, they often become the target of market funds.

Growth and low success rate of new meme coins:New coins are constantly emerging in the meme market, and their growth sometimes even exceeds that of mainstream cryptocurrencies such as BTC. This shows that the meme token field has high volatility and speculative opportunities. However, among the many new memes, taking Pump fun data as an example, only less than 2% of memes have been successfully launched, and only 0.23% of the current market value remains above 1M, which means that the probability of being able to withstand the test of time and survive is extremely small.

Large trading volume and new users:Meme can bring huge trading volume and has a relatively loyal user base. Therefore, for CEX, listing meme coins can become an important strategy to attract traffic and users. Taking the Binance spot market as an example, 20% of the top 30 trading pairs in terms of trading volume are Memes.

Chart: CMC's Binance spot trading data

Blue-chip Memes Scarcity:Blue-chip Memes are relatively scarce. Faced with a huge number of hundreds of Meme tokens, less than 1% can truly be called blue chips. Taking the Memes recorded on the Coinmarketcap website as an example, although new Memes emerge in the market in an endless stream, only a few can withstand the baptism of time and eventually emerge. In addition, the market value distribution of the Meme sector also shows a significant 80/20 rule: the market value of the entire sector is mainly driven by less than 10% of the top Memes. This highly concentrated market value distribution undoubtedly increases the difficulty of finding real value investments in the Meme field. If you participate in Meme investment from the perspective of VC, this is consistent with the rule of thumb in venture capital, the "2-8 rule": about 10% of successful Meme investments can make up for the losses of other Meme investments.

Summary

Combined with Murad’s recent speech, which is highly respected in the Meme community, he predicts that the market value of Meme will reach $1T in the future, which means there is a 25-fold increase. It is expected that more than 25 Memes will enter the industry’s Top 100, and VCs will buy blue-chip Memes, etc. Referring to our statistics, this prediction is too optimistic. The current Meme, whether in terms of quantity or market value, already occupies a large proportion of the industry. Future development is more about breaking through Layer1. However, Layer1 itself is also an important soil for the growth of Memes. The development of Memes will inevitably push Layer1 forward in reverse. Therefore, we tend to conservatively believe that Memes is a leveraged Layer1, that is, when the market conditions improve, there will be a 5 to 10-fold increase in Layer1. But in any case, we have to admit that Meme is a field worthy of long-term observation and research. To this end, establishing a systematic trading framework can help us better understand and participate in this market full of potential and challenges.

Exploring and Researching Meme

As the wave of Meme sweeps the market, combined with our aforementioned panoramic research on the Meme market and future trend forecasts, we believe that in-depth exploration and research of Meme is a very necessary research work. Through this, we found that the value of Meme does not come from technology or practical applications, but from the enthusiasm of the community and the recognition of Meme culture. This dynamic makes the performance of Meme in the market full of uncertainty and volatility, but also brings unprecedented vitality. By summarizing these characteristics, we have constructed a clear analytical framework to understand and grasp the potential value and risks of Meme.

Basic Characteristics of the Sector

Although the analysis of a single Meme can provide in-depth insights, a broader perspective is needed to fully grasp the development trend of the entire Meme sector. Therefore, we first conducted a comprehensive study and analysis of the basic characteristics of the Meme sector. In the current market environment, the Meme sector has shown the following significant characteristics:

Low threshold to enter the market:The threshold for issuing Meme is extremely low. As long as there is a social media account, a Telegram group, and some creative pictures, you can easily launch a new Meme. There is no need to make products and develop applications like traditional currency projects. The token is the product. The threshold for issuing Meme is significantly lower than that of traditional projects. As long as there is a social media account, a Telegram group, and some creative pictures, you can easily launch a new Meme. This process does not involve complex product development or application construction, making the token itself a core and directly market-oriented "product."

Surge in number:Due to the extremely low threshold for creating a meme, a large number of new memes emerge every day. These new memes quickly expand the token pool of the market, resulting in a sharp increase in supply. With the continuous addition of new memes, everyone will face more choices, but also bring higher screening difficulties.

Significant wealth effect:Although the risks of the meme market cannot be underestimated, it also provides huge potential returns for those who enter the market early. The wealth effect of single-coin crit and small-scale betting on big gains, like a magnet, not only attracts the attention of many users, but also inspires their high attention and active participation in the meme market.

Market resilience:Meme has shown good resilience in the face of market fluctuations, and can quickly recover and rebound from shocks. This rapid recovery is mainly due to the driving value of community sentiment and the enthusiastic pursuit of meme by funds.

Celebrity Effect:The participation of celebrities has significantly increased the hype and market attention of Meme, which in turn has exacerbated price fluctuations. This celebrity effect not only attracts more attention, but may also lead to a series of information arbitrage behaviors, in which some of the top players in the information chain may use their influence and information advantages to obtain improper benefits.

Low liquidity and limited capital capacity:In the early and middle stages of Meme, that is, the on-chain market period, Meme's liquidity was not high, which means that there is a considerable amount of water in its huge market value and trading volume. Due to insufficient liquidity, large funds will encounter higher slippage when buying or selling, which leads to increased transaction wear and tear costs. Therefore, the on-chain capital capacity of the Meme market is relatively limited, and it is difficult for institutions to enter and exit on a large scale without significantly affecting prices. This limitation not only increases the difficulty of trading, but also limits the depth and breadth of the market, making the Meme market more vulnerable to large-scale capital flows.

Extremely high trading risk: Due to the lack of practical application support and intrinsic value, the prices of many memes often rise rapidly and then fall sharply like a roller coaster. What is more worrying is that many memes eventually go to zero, that is, their market value and trading volume fall to almost zero. This high-risk trading environment requires us to be extremely cautious when getting involved in memes and fully aware of the possible risk of financial loss.

Active Trading and Susceptibility to Manipulation: Meme's frequent trading and huge trading volume also indicate the market's great interest in it. But lurking behind the trading volume may be unknown manipulating funds. For this reason, unlike VC projects, the Meme market is more like an open gambling speculative market where "willing to gamble and accept defeat".

After an in-depth analysis of the basic characteristics of the Meme sector, we can conclude that the Meme sector does have some distinctive characteristics that make it unique in the crypto market. Meme's low entry threshold, surge in numbers, low liquidity and limited capital capacity, extremely high trading risks, significant wealth effects, active trading and susceptibility to manipulation, market resilience, and celebrity effects together constitute the unique ecology of this sector. For this reason, the Meme sector is often regarded as an arena full of PvP, which is not without reason. In this highly competitive field, everyone needs to be like a gold digger, identifying the real blue-chip memes and hidden gems from the vast amount of meme coins.

Characteristics and Categories

As the meme sector matures, we should no longer be bound by outdated ideas. Standing on the periphery and ignoring it, it is impossible to gain insight into the deep laws of memes. Today's meme culture has long surpassed the simple meme pictures at the beginning. It has become an important carrier for diversified expression of market sentiment and dissemination to people outside the circle. To this end, it is necessary for us to have a basic understanding of its key characteristics and classification.

Memes have many characteristics, some of which can be quantified by data indicators, while some are relatively difficult to quantify and are more qualitative characteristics. Then, the key characteristics here are roughly as follows:

1. Cultural uniqueness:It is the core of meme. It usually originates from a specific cultural phenomenon or social trend, and uses it to establish its unique identity and appeal. Just like the light-hearted and humorous Dogecoin and the self-deprecating Pepe, before entering Web3, they have attracted many fans with this cultural feature, either using emoticons or re-creating related emoticons.

2. Sustainability: is the key to measuring whether it can exist in the market for a long time. A successful Meme can often transcend short-term popularity and form a long-term cultural influence, similar to the concept of "diamonds are forever". Dogecoin, which has been around for more than ten years, has accompanied the growth of the cryptocurrency industry like a leader, and is already the origin of the entire Meme. For new Memes, we cannot demand that they can immediately go through the test of many years like Dogecoin, nor can we imagine that each one will be completed in three days. BOME on Binance, for this reason, we believe that Meme should be able to last for half a year to a year in terms of sustainability, which is also in line with the time period for centralized exchanges to investigate project launches.

3. Spreadability: is an important factor in whether a Meme can spread quickly and be widely accepted. A Meme that is easy to spread and has a good conversion effect can attract a lot of attention in a short period of time. Generally, it is observed by observing the discussion of related Memes on social media and the growth rate of the community size. For example, the number of followers on Meme Twitter is tens of thousands, which is the most basic requirement, and the better standard is hundreds of thousands or even millions.

4. Stickiness or loyalty: refers to the loyalty and participation of Meme community members. A Meme community with high stickiness can maintain the long-term participation of members, and even when the market fluctuates, members will not easily withdraw. This loyalty is crucial to the long-term success of Meme.

The original Dogecoin brought everyone Memes with cute cats, dogs and other animal images, but today, some new categories of Memes have emerged and merged into the past animal Memes, greatly including and expanding the categories of Memes. Below, we have simplified the classification of Meme, and different categories can be combined to a certain extent:

1. Animal Meme:Based on animal images, it expresses emotions or opinions through humorous texts and is widely loved for its cuteness and affinity. The most well-known ones are undoubtedly Dogecoin for dogs and Pepe for frogs.

2. Celebrity Hype Meme:By leveraging the influence of celebrities or public figures, paying attention to and capturing their words and behaviors, and using imitation or jokes to creatively recreate. Typical examples include a series of Memes derived from elements such as Elon Musk's tweets, personal profiles and avatars, such as "Troll".

3. Politicians and Events Meme:Use humor or satire to allude to politicians or events. Representative memes include slogans around Trump's campaign and memes generated by emergencies, such as MAGA and FIGHT. In addition, there are memes related to the misspelling of Trump and Biden's names.

4. Cult culture memes: Originated from the popular culture of a specific group, containing specific symbols or memes, which can only be understood by people who understand the background, and are loved by specific groups because of their uniqueness and exclusivity. This type of meme is somewhat similar to the concept of DAO in the past. The representative example is PEOPLE, which started with raising funds to bid for the purchase of the US Constitution and later became the code name of the people.

5. IP-derived Meme:Token creation based on traditional anime IP or well-known NFTs, using their existing popularity to attract the corresponding target fan groups. For example, the associated Meme launched by mfer, an NFT project that once featured mourning culture.

6. Meme of Meme: Early mechanisms had special settings, such as fair distribution, destruction, and buyback of trading taxes. Currently, more Memes are issued through associations using emerging AI technologies. The most popular one is the first Meme Goat GOAT created recently by terminal of truths.

Dogecoin/Troll/Maga/People/mfer/GOAT

Memes show unique cultural characteristics and audience bases in different categories, which affects their sustainability, spreadability, and stickiness to the community. Among these categories, animal memes and cult culture memes are considered suitable for long-term attention due to their deep cultural roots and loyal fan base. In contrast, other categories of memes are often associated with short-term hot spots, and their attention and popularity may rise rapidly and then fall back. In order to quickly identify and understand the core characteristics of various memes, we provide the following evaluation framework.

Primary Market and Launch Platform

In-depth observation of the birth process of the primary market of memes is helpful for understanding memes, especially those based on public chains, even after several years, the initial liquidity establishment can still be seen. Taking SHIB as an example, we can see the amazing growth of its market value by looking at the initial transaction of SHIB adding liquidity pool. Initially, the market value of SHIB was only equivalent to 20 ETH, which was worth about 10K USD at the time. Converted to the current ETH market price, the initial market value of SHIB was only 50K USD. For Meme, whose market value has grown to billions within a year, its wealth growth effect is undoubtedly very attractive and has great publicity value.

https://dexscreener.com/ethereum/0x811beed0119b4afce20d2583eb608c6f7af1954f

https://etherscan.io/tx/0x7f1be2ac40313400c83f23fbe3926bf6bf1d6b2b363264b3016444ea28fe21c7

SHIB, as a leader in Meme culture, has inspired the birth of a large number of Memes with its brilliant achievements. However, in this wave, not all Memes can continue to develop. Users have encountered many challenges in participating in these Memes, such as the strange circulation and initial market value, as well as a series of security issues, such as the sudden withdrawal of liquidity pools, Pixiu disks that can only be bought but not sold, additional token issuance, and Ticker confusion caused by the same name or inconsistent capitalization, etc.. These factors not only weaken the trust of users, but also bring challenges to the steady growth of the entire Meme.

This situation continued until the emergence of Meme launch platforms such as pump.fun. Although it specifically targets low-market-cap Memes, pump.fun has actually successfully promoted a set of standardized Meme mechanisms, including the use of bonding curve pricing models, a unified total amount of tokens, platform-backed contract security, and standardized initial circulation pool additions and destruction. These standardized practices not only improve the transparency and credibility of Meme, but also provide a solid foundation for the healthy development of the Meme ecosystem.

Because the pump.fun platform has made regulations for Meme: before the bonding curve is not completed 100%, the corresponding liquidity will not be migrated to the external DEX, and can only be bought and sold on pump.fun. Therefore, players habitually refer to Meme that has not completed the bonding curve as "internal disk". On the pump.fun platform, the total issuance of Meme tokens is set at 1 billion, of which about 800 million are sold on the internal disk. When the internal sales reaches the upper limit, approximately 85 SOL will be consumed. After pump.fun collects 1.5 SOL as a handling fee, 20% of the tokens will be minted, paired with 79 SOL, and then launched to the Raydium exchange. At this point, the initial circulating market value of the token is set at 69K SOL. This process not only ensures the liquidity management of the Meme project, but also provides a clear reference for the initial market value setting of the project.

For readers who want to learn more about the numerical simulation of the pump.fun protocol, Gryphsis Academy provides a detailed article called "Pump.fun Protocol Insights: From Bonding Curve Calculation to Profitable Strategy Construction". This article not only explains in detail how the pump.fun protocol works, but also provides deep insights on how to use the bonding curve for numerical simulation. (The migration fee changes in real time according to the official settings, currently 1.5Sol)

Although the current pump.fun focuses on the launch of low-market-cap Memes, this does not mean that the ceiling of these Memes is limited. Recently, two Memes launched through pump.fun have been successfully launched on first-tier exchanges (in the form of contracts).This achievement not only promoted pump.fun's Meme launch activities to become more popular, but also brought significant economic benefits to pump.fun. To this end, a new product Moonshot has emerged on the Solana chain to challenge the status of pump.fun. At the same time, there are also meme launch platforms imitating pump.fun on other public chains, such as Tron's Sunpump, which are actively competing for the share of the meme market.

In terms of launch mechanism, the main improvement of Moonshot compared to pump.fun is that it supports the initial pool addition of different external DEXs and there are differences in the initial full market value. Apart from this, the difference between the two in other aspects is not significant. As for Sunpump, its overall mechanism is similar to pump.fun. Since the industry generally follows the "first is first" principle, even if incentives such as token airdrops are used to attract users to conduct vampire attacks, it is difficult for new entrants to achieve a significant surpassing. Next, we combine dune's data to gain a deeper understanding of the data performance of pump.fun, Moonshot, and Sunpump to evaluate their performance and competitiveness in the market.

According to Dune data, the pump.fun platform shows a clear lead in key metrics such as the number of tokens launched, revenue, and new addresses participating. Specifically, pump.fun launched a staggering 34,027 tokens on October 23 (at the time of writing). In terms of revenue, pump.fun's performance was equally impressive, generating more than $2.09 million in revenue in 24 hours. In addition, the growth in daily active addresses reached 107,355, of which 43,760 were new wallets, which reflects the extremely high user engagement in pump.fun. Together, these data points also depict pump.fun's strong performance in the Meme market and a broad user base.

https://dune.com/adam_tehc/memecoin-wars

In contrast, the Ethereum mainnet, as the birthplace of the old Meme, has no real Meme launch platform, and the only Etherfun platform recently launched by Vista has not received much attention. Of course, this may be related to the TPS of the Ethereum mainnet and the high gas fee, because the launch of low-market-cap Memes requires fast and low-cost transactions to achieve the advantage of quantity. Perhaps in the future, we may see some changes and developments in the Layer2 such as the Base where Meme is divided into good ones.

Life cycle and pricing logic

The life cycle of Meme is unpredictable, and its survival time may be as short as a few minutes or as long as several years. For memes that can stand the test of time and continue to be popular, they usually go through several different stages of development. We use DEX and CEX as the boundary to outline the basic evolution of memes from the early stages of DEX to the mature stage of CEX. In this process, key indicators such as the market value and community size of memes will show significant changes.

In terms of market value and user number analysis, we use some stable Meme projects to form a preliminary judgment. According to 0xScope's holder analysis, it is found that the number of Retail Holders is generally much larger than other types of holders (such as whales and large users), and the market value of the tokens they hold accounts for about 20% to 25% of the total market value. By analyzing the average purchase amount of Retail Holders of Meme coins, we can estimate the market value data.

Take Meme coin with a market value of $1 million as an example, the value of the coins held by Retail Holders is approximately between $200,000 and $250,000. Assuming there are about 1,000 coin holders, the average value of Meme coins held by each person is about $200 to $250. This figure is within a reasonable range of the single coin purchase amount of cryptocurrency users.

This estimation method provides us with an intuitive perspective to help us evaluate the correlation between Meme's different market value ranges and user engagement.

https://dune.com/dyorcrypto/memecoins

Of course, based on the rough pricing above, we can try to find a more precise method or framework to evaluate the fair value of Meme. To do this, we can take a similar approach to value investment valuation. Study and learn existing Meme valuations and related data, and statistically analyze the valuation changes of different types of Meme at various stages of development, as well as the dynamics of on-chain data.

In general, the initial price of Meme is usually determined by the AMM model based on market supply and demand dynamics. Once the initial unit price is determined, the Meme market value can be calculated by multiplying the unit price by the circulation volume. It should be noted that this market value will fluctuate with changes in market conditions and dynamic adjustments to the liquidity pool.

According to the constant product formula of AMM, the growth curve of capital inflow, the proportion of tokens in the initial liquidity pool, and the selling pressure will all affect the market value. The simplest formula of the basic model is: When the market value doubles, the net inflow is doubled, and when the market value doubles, the net inflow is tripled. However, this does not yet include some complex factors, such as:

1. Transaction fees paid to liquidity providers (LP);

2. Inflows and outflows of funds in the liquidity pool (LP pool).

In the actual dynamically changing market, the pricing model cannot be so ideal. For this reason, the fair price of Meme should be calculated in combination with other indicators, such as trading volume, number of transactions, and distribution of the number of users holding coins. Of course, this is a cost-driven market value idea. As costs continue to increase, the market value of Meme should also increase accordingly. When breaking down these costs, the first thing to notice is the transaction fees brought by the transaction volume. These fees constitute the main cost of maintaining the market value. In addition, there are other hidden costs: the gas fee paid to the blockchain network for each transaction and the financial time cost of the coin holders. The cumulative effect of these costs may have a significant impact on the overall market value of Meme. We believe that this can explain the fair value of Meme to a certain extent, but it is not a universal pricing formula.

Blue-chip Memes from the Perspective of VCs

From the data, Memes are no longer just a small circle, they now have their own characteristics, and as VCs, everyone is paying attention to this sector. So, just like investing in other projects, if VCs want to participate in Memes, they must first find blue-chip Memes that can withstand market ups and downs and perform stably.

To identify high-quality Memes, we usually focus on several key characteristics: sustainability, spreadability, and community activity. A high-quality Meme should have long-term appeal, be easily spread, and have a passionate community support. These factors form the foundation of Meme success.

For Memes that are driven by the community or led by the capital market value management team, it is necessary to understand the main players behind them. This may include whales or other key stakeholders. Understanding these driving forces is crucial to assessing the potential and credibility of Memes. In the absence of market value management, the community plays an important role in the Meme project. Their enthusiasm and participation can affect the popularity and market value of Meme. Unconscious collective actions, such as promotion and discussion on social media, can greatly promote the spread and acceptance of Meme. Therefore, the role of the community in the Meme project cannot be ignored, and it directly affects the success of Meme.

For this reason, we think that the PvE Memecoins proposed by Murad in the Meme Supercycle speech are very vivid, please refer to the following two pictures.

Conclusion

Meme is becoming a new battlefield for VC, which tests whether VC can keep up with the market pulse, and the Degen user movements on the chain also provide VC with a window to understand user needs. However, Meme does not open its door directly to VC. The so-called Supercycle theory makes it easier for VCs to fall into FOMO. The cruel data shows that we should not be blinded by survivor bias. Only a few memes are successful. Therefore, if you want to succeed in the meme field, VCs must invest a lot of time and energy to dig out those real blue chip memes. This battlefield is not a place where you can get rich returns by casting a wide net and investing.

Reference

dogecoin: https://dogecoin.com/

pump.fun: https://pump.fun/

Vista’s etherfun: https://etherfun.app/

0xScope: https://0xscope.com/