A recent report highlights the significant risks associated with investing in memecoins, the latest trend in the cryptocurrency sector. According to the Chainplay report titled “State of Memecoin 2024,” memecoins—such as Dogecoin, Pepe, and Shiba Inu—have surged in popularity, with the number of meme-related projects increasing by over 440% in the past two years. This rapid growth has propelled the memecoin sector to become the fourth most valuable in the cryptocurrency industry, surpassing decentralized finance and blockchain services, as reported by BDC Consulting.
However, the Chainplay report provides a cautionary view on the sustainability of these assets. It reveals that the average lifespan of a memecoin is only one year, a third of the typical lifespan of an average cryptocurrency project. The report also indicates that nearly 60% of memecoin investors treat these assets as short-term investments, and a staggering 97% of memecoins have already vanished.
The report notes that over 2,000 memecoins disappear each month, with the “death rate”—measured by metrics such as deleted websites, inactive social media accounts, or market caps below $1,000—differing across blockchains. Base leads with a 67% death rate, followed by Solana at 54%, and Ethereum at 37%. This means that on the Base blockchain, two-thirds of all memecoins created have already become obsolete. Furthermore, the report finds that over half of all memecoins are classified as malicious, with one-third of investors reporting losses due to scam tokens.
Despite these risks, memecoins continue to divide opinion within the cryptocurrency community. Approximately one in six new investors considers memecoins a “must-have” in their portfolio. Proponents argue that memecoins epitomize cryptocurrency’s goal of democratizing finance, as anyone can create a memecoin with little more than an idea. Popular examples include “Smoking Catfish,” “Kamala Horris,” and “I Love Puppies.” Investors are drawn to these assets during viral moments, with celebrities like Caitlyn Jenner, Iggy Azalea, and Andrew Tate also engaging in the memecoin frenzy.
Critics, however, argue that memecoins perpetuate the speculative and volatile nature of cryptocurrency, reinforcing the “pump-and-dump” reputation. Ethereum founder Vitalik Buterin criticized the celebrity-driven memecoin trend in a recent X post, advocating for tokens with lasting public-good goals rather than transient financial schemes.
Omid Malekan, an adjunct professor at Columbia Business School, views memecoins as a manifestation of “economic nihilism.” He suggests that, along with meme stocks and increased gambling activities, memecoins reflect a broader trend where individuals are compelled to undertake risky financial behaviors in hopes of achieving economic advancement.
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