Meme Coins Going Legit Is the Worst Thing for Meme Coins

When
Elon
Musk
semi-ironically
endorsed
dogecoin
during
the
last
bull
run,
most
people
saw
it
as
a
joke:
a
high-profile
business
guy
playing
with
the
funny
money.
Nobody
is
laughing
anymore.
These
days,
there
are
real
institutions
—
from
the

Avalanche
Foundation
to

Franklin
Templeton
—
willing
to
say
that
meme
coins
are
a
legitimate
use
of
blockchain
tech.

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On
Solana,
there’s
dogwifhat
{{WIF}},
sillycat
(SILLYCAT)
and
popcat
(POPCAT).
On
Ethereum,

(DOGE)
remains
top
dog.
Then
there’s
the
emerging
field
of
“PoliFi,”
short
for
political
finance,
with
its
roster
of
coins
like
MAGA
(TRUMP),
jeo
boden
(BODEN)
and
elizabath
whoren
(WHOREN).

These
would-be
jokes
have
gained
virality
in
the
past
year
“due
to
their
unique
nature,”
the
Franklin
Templeton
Digital
Assets
team
wrote
in

a
recent
report.
A
rally
that
kicked
off
in
late
2023
has
only
picked
up
steam
since
the
release
of
U.S.
spot
bitcoin
exchange-traded
funds
(ETFs),
the
financial
giant
noted.

In
some
sense,
meme
coins
are
reaching
escape
velocity.
The
Avalanche
Foundation
launched
a
“Culture
Catalyst”
program
that
has
started
buying
up
meme
coins
in
a
bid
to
support
what
it
believes
to
be
“culturally
important”
Web3
projects.
While
Franklin
Templeton
(which
for
a
while

sported
bitcoiner’s
laser
eyes
on
Twitter)
attributes
growing
use
of
Ethereum
and
Solana
in
part
to
these
token’s
“opportunities
to
make
quick
profits.”

See
also:



The
Memecoin
Grift
and
How
It
Threatens
Ethereum
Culture


|
Opinion

And
yet,
meme
coin
projects
are
also
seemingly
doing
everything
in
their
power
to
self-destruct.
While
the
conventional
wisdom
about
meme
coins
is
that
they
have
“no
underlying
value,”
more
and
more
meme
coin
creators
are
investing
time
and
money
into
making
their
projects
stand
out.
It’s
a
risky
trade.

For
instance,
shiba
inu

(SHIB),
the
Ethereum-based
competitor
to
the
first
and
likely
most
well-known
meme
coin
dogecoin,
is

building
out
an
entire
tech
ecosystem
including
its
own
scaling
layer
called
Shibarium,
decentralized
exchange
ShibaSwap,
Shiboshis
NFTs
and
even
a
a
digital
identity
initiative
and
project
incubator.

Dogwifhat
(WIF),
a
spin
on
the

“dog
token”
trend
by
adding
on
a
pink
beanie
to
the
canine
mascot
that
has
rallied
over
600%
in
the
past
month,

raised
over
$600,000
in

(USDC)
to
advertise
on
the
side
of
Los
Vegas’
Sphere
megaproject.

Whether
these
projects
are
aware
of
it
or
not,
by
looking
to
develop
or
market
their
tokens,
they
could
be
raising
the
ire
of
the
U.S.
Securities
and
Exchange
Commission
(SEC).
It’s
not
really
a
laughing
matter,
considering
the
SEC
has
been
more
than
willing
to
make
an
example
of

under-the-radar
projects
to
make
a
point.

“Advertising
would
theoretically
make
it
more
likely
for
a
court
to
find
that
an
investment
is
a
security,
because
‘marketing’
is
a
factor
in
the
application
of
the
Howey
test,”
U.S.
law
professor

Brian
L.
Frye
told
CoinDesk
in
a
direct
message,
referring
to
the
test
the
SEC
deploys
to
determine
whether
an
asset
is
a
security.

Neeraj
Agrawal,
director
of
communications
at
Coin
Center,
a
lobby
group,
echoed
that
point
and
cast
doubt
on
an
argument
many
meme
coin
projects
like
to
project,
that
these
are
“community
led”
initiatives.

“Remember
a
lot
of
these
meme
coins
are
not
decentralized
in
any
real
way.
They
may
ride
on
a
decentralized
network,
but
it
wouldn’t
surprise
me
to
learn
the
contract
itself
is
controlled
by
a
couple
of
people,”
Agrawal
said.
The
basic
definition
of
a
security
is
whether
there
is
“a
team
in
control
of
this
thing
that
is
promising
to
do
things
that
will
increase
the
value
of
the
thing,”
he
added.

Projects
can
certainly
decentralize
over
time
and

gain
stakeholders.
Messari
researcher

Ally
Zach
wrote
a
guide
(“Navigating
the
Memecoin
Mania”)
that
tracks
three
critical
metrics:
“the
rate
of
change
in
the
number
of
holders,
the
ratio
of
new
to
returning
daily
buyers
and
the
types
of
buyers.”

In
particular,
there
is
a
“critical
threshold”
of
3,000
holders
that
tends
to
indicate
a
project
is
gaining
traction.
The
next
phase,
characterized
by
the
number
of
new
buyers
exceeding
existing
traders,
typically
sees
holder
counts
jump
to
10,000
and
the
involvement
of
whales
without
extreme
market
swings.

Dogecoin,
launched
in
2013
(and
since
renounced
by
its
creator),
is
fairly
well
distributed,
and
its
development
activities
are

essential
for
keeping
the
network
safe
to
use.
While
the
biggest
DOGE
holder
owns
over
22%
of
the
token’s
circulating
supply,
there
are

also
nearly
7
million
dogecoin
holding
addresses
(compared
to
9
million
wallets
that
hold
solana

(SOL)).

See
also:



The
One
Word
That
Defines
Ethereum’s
Goals


|
Opinion

While
there
is
a
not-for-profit
Dogecoin
Foundation
that
coordinates
development,
the
project
benefited
from
launching
during
the
proof-of-work
era,
which
enabled
a
number
of
people
to
earn
tokens
by
mining
at
home.
Today’s
breed
of
meme
coins
are
dominated
by
a
few
large
bagholders
who
got
in
early.

Likewise,
the
argument
that
these
are
nihilist
jokes
or
acts
of
performance
art,
or
that
there’s
no
real
expectation
of
profit,
isn’t
much
of
a
legal
cover.

“The
likelihood
of
profit
may
be
low
or
nonexistent,
but
people
are
still
buying
them
at
least
in
part
because
of
the
possibility
they’ll
become
popular
&
increase
in
value,”
Frye
said.

That
said,
Columbia
Business
School
professor
Austin
Campbell
argues
that
projects
can’t
just
call
themselves
“Dog
Co.
and
have
a
memey
logo”
and
do
legitimate
business
practices
without
running
afoul
of
securities
regulators.
Yet
there
is
room
for
nuance.

“The
SEC
theory
of
why
these
things
are
securities
is
pretty
clearly
on
the
rocks
(e.g.
just
buying
products
is
not
enough),”
he
said.
Just
because
a
token
resembles
a
security,
or
was
even
issued
under
an
“investment
contract,”
doesn’t
necessarily
mean
the
underlying
token
is
a
security.
It’s
an
open
legal
question.