The Memecoin Mania Is Back: How the DeFI space never learned its lessons?
If you were dwelling in the crypto space between 2020 and 2021, you might come across tokens with the name Dogecoin and Shiba Inu. Both of them were gaining the hype in those times even as far as being adopted by some institutions due to the momentum it was on but most of them have mainly disappeared from existence. This is what is referred to as Memecoin and now in 2023, there is a new breed of these memecoins gaining momentum and hype from its users. So is the Memecoin Mania back? Have the DeFI Space not learned from its past mistakes?
Memecoin: A Rollercoaster Ride You Wouldn’t Want To Be On!
The DeFI Space has quite gone through a rollercoaster ride from 2021 to 2023, from rising to its peak and taking over headlines in the financial space to being deemed a volatile and unsafe place that everybody should stay away from. From being predicted as the next big thing with NFTs and Metaverse at an all-time high to facing three major collapses in a single year in 2022, it has surely been a wild journey to watch during the pandemic era.
One of the key factors behind all this is the raising of capital that flows to the DeFI Space during this journey with the interest of catching the next Bitcoin all-time high. Of Course with every great project like Bitcoin or Ethereum, you find the not-so-great ones that gain momentum for a little while before disappearing from existence as the Hype dies down. These sometimes baseless projects are what most people refer to as Memecoin as their existence is just like a Meme you find on the internet.
You might come across some of these Memecoin or even be tempted to buy the token as the price was flying off the charts in 2021 but you are not the only one. These Memecoins come in multiple forms, from being Dog based such as Dogecoin and Shiba Inu to Film based such as Avengerscoin and Squid Game Token, there are so many of them to name. Although their origins are not yet known, these coins were growing in popularity mainly in 2021.
The similarities between all these coins are that all of them have extreme growth for a short period but then follow by a major decline as their popularity fades away. While some of them have managed to stay for quite some time such as Dogecoin and Shiba Inu but most have been wiped out of existence as the Crypto Winter comes along. Some of them even saw massive increases such as the 28,000% increase shown by Squid Game Token but unfortunately are a scam as users cannot withdraw their funds.
Of course, this is a common occurrence with all of these Memecoins as their origins or fundamentals are not known. Some do not even have a whitepaper or their developer is unknown while one that does have a developer can’t help to admit that these tokens are created out of fun. From there on we know that these projects were not created with any intention to succeed like Bitcoin and Ethereum but instead as tools for traders or speculators to grab as much profit as they still can before the Rug Pull begins.
These Rug Pull Actions where the developer disappears with the user’s investments and renders the coin/token useless are what is seen very frequently throughout 2021. This then shapes the whole perception of the users and regulators looking at the DeFI Space and digital assets as a form of trading tool where they can flip to earn quick profits. It also diminishes the trust people have in projects that are providing real value in the DeFI Space.
It creates a problem as people don’t differentiate between Ethereum or Binance which are really building the ecosystem for the DeFI Space to progress with tokens such as Shiba Inu or Nomeme that use their platform to create useless tokens. Unfortunately, as it is easy to create those tokens and the regulations are not quite in place yet to prevent these memecoin developers from scamming its users and running away with users’ investments, it continues to be a problem.
There are currently 24,071 crypto projects registered in CoinMarketCap with almost 90% of those projects either have lost their value or are ineffective. Just when you thought the 2022 and 2023 recession has wiped the slate clean, the memecoin mania is back with a new form of meme project raising its value astronomically. Pepecoin with its ticker literally spelled “MEME” seems to be at the forefront of this, rising by more than 347% in a single day and becoming the quickest coin/token to reach a $1 Billion Market Cap within 14 days of its inception.
This was expectedly followed by a steep decline with its value down 50% from its peak more than 7 days ago. This raise bred a new form of Memecoin such as Wojak (WOJAK) or Milady Meme Coin (LADYS) which saw a similar pattern to what is achieved by Pepecoin. Does this mean the Memecoin mania is back? Well, there is reason to believe that it is, as the surge of growth shown by Pepecoin will be used by other developers to create more of these tokens and garner profits.
More of these tokens will be bad for the DeFI Space as a whole if it wants to be taken seriously by regulators and present its true potential in the financial space. This needs to be prevented with better regulation and education from the stakeholder within the DeFI Space so users don’t have to lose their investments in these tokens. Meanwhile, it is hoped that this new breed of Memecoin will provide a lesson for the future on how to choose the right DeFI project.
Have The Mistakes Been Learned?
Clearly, the mistake of the past has not been learned as there are still huge Rug Pulls and Scams occurring in the DeFI Space. What is odd about all this is that these things have become a norm for most users of seeing a Memecoin raise in value and a week later losing all of it. A simple proof of this is you can look at the top gainers from the past week and you will see 50% of them are filled with these so-called Memecoins which essentially means the reception is high for all these coins/tokens.
Has there any improvement been made? Obviously yes as the receptions are not as high as in 2021 when most people were jumping into the bandwagon to make quick bucks. With the failure of each Memecoins, there are always some people who are at a loss and those then become prevention for them to carefully select the projects next time. Of course, there are still speculators who love these memecoins but people are more educated and more aware than the 2021 fiasco.
Now the question is how do we differentiate the Memecoins from the not? Well, one of the first clear signs is to look at the fundamentals and legality of the developers behind the coins/token. If you find the company plans, vision, or website questionable, that can be a red flag for you to not engage with the coin/token. With the era of decentralization upon us and information widely available, a small bit of research can get you a long way to protect yourself from these Memecoins.
All in All, this Memecoin mania is not going to end anytime soon and we should be well-informed enough to learn from the past. Creating these tokens might be easy and viewed as fun by its users but it doesn’t benefit anyone from its existence. We need to be careful enough to see through the scraps and find the gem in the DeFI Space. If we believe that DeFI is the future of finance and will revolutionize the finance space, we need to put our attention on a project that has a clear vision and values to prosper in the years to come. Those are not Memecoins that are easily created and destroyed because of hype but instead, gems that were created by proper fundamentals and backed by sustainable plans for it to grow. The question is in which project will you find this Gem?
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