To Gain Users is to Gain the World: Even Binance, as Strong as It Is, Cannot Ignore the Rise of Meme Coins. How Did This Super Cycle of Meme Coins Form? This article is derived from a research report by Binance and interpreted and compiled by Deep Tide.
(Prequel: Vatican “Mascot Luce” Sparks Religious Meme Coin Craze, with Meme Market Cap Surpassing $60 Million)
(Background Supplement: NFT Collector Pranksy Lashes Out: Waking Up to Meme Coins is Annoying! Memes are All Crap)
Table of Contents:
– Key Points
– Macro Data on Memes
– Global Economic Background of Memes: Massive Liquidity and Financial Nihilism Among Young People
– Value Proposition of Meme Coins: Lacking Utility but Having Appeal
– Risk Considerations
– Outlook: Tokenized Software Business VS Tokenized Ideas
To gain users is to gain the world. Even Binance, as strong as it is, cannot ignore the rise of meme coins. How did this super cycle of meme coins form? Recently, Binance Research released a report titled “Understanding the Rise of Meme Coins,” which comprehensively analyzes the phenomenon of meme coins’ emergence, the macroeconomic factors behind it, their value proposition, and potential impacts on the cryptocurrency industry. Deep Tide TechFlow has edited and interpreted this report to help everyone quickly grasp its key points.
Macro Background: Global Monetary Supply Expansion and Investment Behavior
Against the background of rapid global monetary supply expansion, high-risk investments have become more attractive. This phenomenon can be divided into the following levels:
– Most funds flow into traditional assets like the S&P 500 Index and real estate. Some funds flow into major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
– At the far end of the risk spectrum, meme coins emerge as high-risk, high-reward investment tools, attracting some of the excess capital.
Micro Environment: Retail Investors Seeking New Paths for Wealth Growth
Many retail investors are exploring new channels for wealth creation, reflecting a change in their views on traditional finance. Meme coins attempt to embody these principles by reducing internal advantages and increasing the equal availability for global investors.
Trend: Financialization of Internet Culture
Since the early days of the internet, memes have shown viral spread and community-driven appeal. This phenomenon is now extended into the financial realm through crypto technology, achieving the financialization of memes.
Implications: Extracting the Essence
Key features such as fair issuance and low circulation have been successfully demonstrated by well-known meme coins; these features are worth considering for any project planning future token issuance. Meme represents another side of the industry that has always existed: focusing more on financial profit rather than technological advancement.
Since 2022, the total market cap share of meme coins (excluding BTC, ETH, and stablecoins) has increased from 4% to 11% in 2024. This proportion is still below the peak in 2021 when $DOGE and $SHIB market caps reached $80 billion and $39 billion, respectively. From 2022 to 2024, the market cap share of meme coins almost tripled.
Fiat Printing and Global Monetary Supply Increase
During the 2020 COVID crisis, global central banks increased the supply of fiat currency at an unprecedented pace. Figure 2 shows that from 2020 to 2022, the total global monetary supply increased from $81 trillion to $102 trillion, an increase of over 25%.
Inflation and Rising Commodity Prices
The U.S. inflation rate reached 7% in 2021 and 6.5% in 2022.
Faced with currency devaluation, rational actors invest funds in assets considered to have long-term value. Wage growth cannot keep up with the pace of rising house prices. Figure 4 shows that the average number of years needed to purchase a house at average prices increased from 4.4 years in 1963 to 8.1 years in 2021, almost doubling.
Attitudes of the Younger Generation: Financial Nihilism
The macroeconomic situation pressures the younger generation. Young people are losing confidence in the traditional financial system, particularly evident in the cryptocurrency market. 94% of cryptocurrency buyers are Millennials and Gen Z, aged between 18-40. A key event: the 2021 GameStop short squeeze reflects young investors’ questioning of the traditional financial structure.
Definition of Meme Coin Nihilism: Based on internet culture, memes, or popular trends; usually lacking clear utility or intrinsic value. Since 2020, the number of meme coins has surged. 75% of meme coins were established within the past year.
Alternative Appeal: Represents a newer, fairer, and more accessible opportunity for wealth creation. No pre-mining, team allocation, or venture capital allocation. All tokens are equally available to all participants at issuance. Often has simple, easy-to-understand narratives, making it easier for ordinary investors to comprehend and participate. Largely driven by investor sentiment and group psychology.
High Failure Rate, Manipulation Persists
97% of meme coins have already failed. Only a few meme coin projects can survive long-term and maintain relevance. Conspiracy groups and rug pulls are ubiquitous, and you might become “exit liquidity.” Low liquidity can lead to severe price volatility and difficulty exiting investments.
Market Saturation, Innovation Stagnation
New projects may struggle to gain attention and investment, or attention may be limited in duration. The meme coin market may have become saturated. Its prevalence may distract from genuine innovative projects, affecting the long-term development and innovation of the entire cryptocurrency industry.
Altcoins VS Memes
We can describe technology-driven altcoins as tokenized on-chain software businesses, while meme coins are tokenized ideas and narratives. In the long run, the most successful altcoins need to create and maintain useful, sufficiently differentiated software products with real market fit. The most successful meme coins may need to create and maintain differentiated, unique narratives and ideas.
To Gain Users is to Gain the World
Meme coins demonstrate a significant retail demand for tokens that are fairly issued and open to all blockchain participants from the start. The brand and network resources provided by mature venture capital institutions (obtained through private token sales) may be attractive to new projects, but what ultimately constitutes the user base of any product will be retail participants. Giving retail participants the opportunity to invest from the early stages of a project and grow with the team is crucial for cultivating a strong, loyal community around any crypto asset.
Globalization of Price Discovery Mechanism
The rise of meme coins suggests that tokens issued in this manner can achieve millions or even billions in market value through organic price discovery mechanisms driven by the borderless and permissionless nature of decentralized markets. The rise of meme coins is an exciting new trend, at least powerfully demonstrating blockchain technology’s ability to unite individuals globally and foster organic communities around tokenized assets, a capability seemingly stronger than ever before.
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