For all the goofiness, memecoin fever has been embraced by some corners of the crypto industry. Looking to give back, a small number of hedge funds have invested in memecoins this year. Some investment companies, such as Pantera Capital, consider memecoins as a “Trojan horse” that may introduce new people to crypto.
The idea, said Robert Le, a crypto analyst at the market data company PitchBook, is that memecoin’s activity in a certain crypto network will translate to an audience that is ready for future projects with an active service built on the same basic infrastructure. “It brings some kind of significant value to other real projects,” Le said.
But some say the memecoin phenomenon could potentially hurt crypto by perpetuating the perception that the industry is nothing but a paradise for gamblers and grifters. “At best, it looks like a dangerous casino. Or a series of false promises hiding casinos,” wrote Eddy Lazarin, CTO of the crypto division of venture capital firm a16z, in April. “This greatly affects acquisitions, regulations/regulations, and the behavior of builders. I see the damage every day. You should too.”
Ironically, memecoins have largely escaped U.S. financial regulators under the Biden administration, and entrepreneurs who try to establish crypto use cases are targeted for investigation, said Chris Dixon, head of a16z crypto, in an interview with WIRED last year. . “Stupid crypto things, like Dogecoin, which are completely absurd and stupid—that’s perfectly legal,” Dixon said.
There is a possible future where entrepreneurs can use memecoins as a vehicle to raise money for legitimate crypto projects without offering equity, Khan said. But for now, they represent financial speculation in its raw form. “We have always been in this place where as an industry we are considered the version of Macau or Vegas. This is useless in this way,” he said.
Whether or not memecoins harm the prospects or reputation of the crypto industry, a collapse of some kind is possible, industry observers say, such is the amount of money flying and the level of risk for traders.
“Memecoins is a completely PvP game. In order for someone to win, someone has to lose. The most people who can’t afford to lose money are the ones who lose the most,” Khan said. “There has to be a breakout at some point.”
Because memecoins cannot be easily compared to traditional investment assets, Le said, they are perhaps better regulated by gambling authorities. “Basically it’s uncontrolled gambling. It will probably come down to the goal of whoever controls the gambling in each country,” he said. “On the grapevine, I’m already hearing state regulators in the US talking about making some kind of laws.” Pump.Fun declined to comment.
Until then, however, memecoins will continue to do their thing. On December 5, Hailey Welch of “Hawk Tuah” fame launched the coin, which lost 95 percent of its value in the first hours of trading, leading to an outcry. On the same day, traders were throwing money at PNUT, a coin created after the celebrity squirrel was approved late last year by the New York State Department of Conservation, currently worth more than $1 billion.
Since launching MOM, Azalea has promoted the coin relentlessly to its 7.7 million followers on X, through a series of provocative photos and meme posts. Part of his plan to ensure his coin’s longevity—a rarity for memeocins—is to invent some form of use for it. The coin is now being accepted as payment by a telecom startup in which Azalea has a stake. “I plan to be here for a long time. And I will be,” he said.
Ultimately, Azalea hopes to integrate memecoin into other business opportunities—including establishing its own trading fund—by proving to potential partners and investors that it can identify and ride the zeitgeist.
“I’ve always been a big shitposter,” he says. “I like to tease, to back off, to say provocative things. I like to say things and move in ways that I know will be memorable … It’s about the virus, ultimately.”