The cryptocurrency market has recently been swept by an extraordinary wave of memecoin activity, marking memecoins as one of the highest-performing sectors since the beginning of the year. This phenomenon has drawn considerable attention from investors and traders alike, significantly impacting onchain activity and network dynamics.
The rise of memecoins has led to a notable increase in onchain activity, resulting in elevated gas prices, intensified network congestion, and increased fee revenue for the L1 protocols. Since the fourth quarter of 2023, the number of active onchain traders has more than doubled. This surge reflects the compelling pull of memecoins in attracting both new and existing participants to engage more actively within cryptocurrency ecosystems.
Fantom, with its currently ongoing memecoin competition and upcoming Sonic chain, is well positioned to not only capitalize on the memecoin craze but also handle the surge in users and transactions. As blockspace across the industry continues to get cheaper, more abundant, and more reliable, new use cases that were previously uneconomical or infeasible become unlocked. It’s this new world of blockchain use cases and usability that Fantom’s transition to the Sonic chain and its improved performance is looking to spearhead.
Memecoins
Memecoins have inarguably carved out a space in the crypto world. Despite criticisms about their lack of utility or intrinsic value, memecoins remain one of crypto’s top use cases, spreading far and wide while accumulating significant value.
At their core, memes are ideas, symbols, or behaviors shared within subcultures. The COVID-19 pandemic period demonstrated the power of memes, specifically the rise of meme stocks like GameStop and AMC. “Meme-investing” suddenly became a new trend in the mainstream. Meanwhile, crypto was yet again ahead of the curve as memecoins had already been conceptualized and popularized many years prior. Dogecoin, one of the first memecoins, arguably started the trend 10+ years ago, and today, the combined market cap of memecoins is over $60 billion. This trend shows the growing financial connection between non-fungible token project holders and a future where communities, cultures, and trends will rely on financial instruments for unity and speculation.
Market Impact and Cultural Relevance
Despite their playful nature, some memecoins have evolved beyond simply silly images. They represent the intersection of blockchain technology, internet culture, and frictionless gambling. memecoins leverage their cultural relevance to challenge traditional notions of value and investment. They embody the spirit of irreverence and absurdity, often thriving on the very characteristics that would be considered liabilities in more conventional financial instruments. This unconventional approach has attracted a dedicated following, particularly among younger, tech-savvy investors who are drawn to the blend of humor and potential financial gain.
Moreover, memecoins reflect a broader trend within the cryptocurrency market — the growing influence of social media and online communities in shaping market dynamics. Platforms like Twitter, Reddit, and TikTok play a crucial role in the promotion and dissemination of memecoins, with often a single tweet or YouTube video sending their value sky high or to zero. This phenomenon underscores the importance of community engagement and the power of collective sentiment in the digital age.
With the progression of blockchain technology, like highly performant base layers and frictionless token deployment projects like Pump.fun, the creation of memecoins has never been more accessible or easier. Memecoin deployers can choose a name, ticker, and image for their new token, and trading starts on a bonding curve with zero financial commitment. To prevent rug pulls, Pump.fun requires each token launched on the platform to follow a fair launch model with no presale and no team allocation. That’s been a big part of the platform’s success, with nearly $6 million in revenue over the past month and daily trading fees of over $400,000. Even blockchain foundations recognize the value of memecoins in their ecosystems, with the Avalanche Foundation announcing a memecoin fund in March and Fantom hosting a memecoin competition through the summer of 2024 (more on this later).
But How Are Memes Investable?
Memecoins are tokenized depictions of internet memes or other humorous events or concepts. They are native to blockchains and transferable, available for use in blockchain-based applications, and tradable on secondary markets like DEXes. Often expressed through their tickers, memecoins also have characters or other visuals associated with them, just like memes as most people know them today.
Behind every memecoin is a contract tied to a layer 1 blockchain or layer 2 network that specifies the name of the memecoin, its supply, and other details outlining its digital identity. A memecoin can only be deployed by launching one of these token contracts. In earlier blockchain eras, launching a token was mostly costly and difficult, as it required the technical ability to write or adjust the contract, launch it on a blockchain, and create a liquidity pool on a DEX for people to trade it. However, as explained earlier, much of the difficulty has been abstracted away by services that automatically launch tokens and create liquidity pools after users input the details of their memecoin.
Key Factors Driving memecoin Growth
- Community Engagement: memecoins often leverage strong community engagement to drive interest and investment. The use of humor and familiar cultural references creates a sense of inclusivity and shared purpose among investors, which can significantly impact the success of a memecoin.
- Market Sentiment and Speculation: The memecoin sector thrives on market sentiment. Investors are often attracted to the potential for high returns despite the lack of intrinsic value backing these assets. This speculative nature makes memecoins a highly volatile investment, influenced by trends, social media, and community hype.
- Trading Volume Trends: The shift in trading volumes from older memecoins like DOGE to newer entrants such as BODEN, WIF, BONK, and others reflects changing investor preferences.
Over the course of 2024, memecoins have outperformed other sectors in the crypto asset space, including the most senior “respected’ projects like Bitcoin and Ethereum. From Q4 2023 to Q2 2024, memecoins have averaged 500%+ returns as an index.
Despite their impressive returns, investing in memecoins carries inherent risks. The speculative nature of these assets means they are highly volatile and subject to rapid changes in market sentiment.
Memecoin Risks
The memecoin market is saturated with thousands of new launches every day, making distinguishing among them harder and harder for investors. It also fragments memecoins’ top commodity, attention, creating risks across the sector. Here are a few reasons why:
- Fragmented Liquidity: There are so many memecoins (thousands created every day) that the liquidity is fragmented. It’s hard for any one memecoin to get enough liquidity to support a multi-billion dollar market cap.
- Fragmented Communities: Community support is also fragmented. Many memecoins can’t get past the ~3,000 organic holders and, therefore, rarely last beyond a couple of weeks.
- Shady Developer Practices: Many memecoin developers are drawn in by the idea of getting “rich quick” and oftentimes take shortcuts or make sacrifices to the detriment of the long-term health of the project. Some avoid liquidity pool lockups, as well as distribute their token allocations across multiple wallets to hide ownership. This leads to a gradual dump on retail investors and no trust.
- High Gini Coefficients: Memecoins have gained popularity, but their Gini coefficient skews towards high degrees of centralization. This means that a few “whales” can manipulate the price with large buy or sell orders and create volatility.
Oftentimes, investing in risky memecoins is like playing hot potato. The teams behind these projects have opaque ownership, undisclosed allocations, and shady intentions. Retail investors will end up as exit liquidity and lose while the developers and early investors cash out.
Fantom Meme Season
As of June 2024, Fantom has unveiled Meme Season, a competitive initiative aimed at highlighting the leading memecoins on the Opera network and the upcoming Sonic chain. The competition seeks to attract new users and developers while demonstrating the functionality of Fantom’s new technology. Meme Season promises substantial rewards, with up to 10 million sFTMx in prizes.
What is sFTMx?
sFTMx is a liquid staking token on Fantom produced by Beethoven X. This new liquid token is a derivative of staked FTM. The benefits of liquid staking tokens (LSTs) are that they allow users to stake, thereby helping to secure the network and earn staking rewards while also enabling users to participate in DeFi and other onchain activities with the same capital.
The underlying algorithm for this is Proof of Liquid Staking (PoLS), which is a new version of the traditional PoS. PoLS allows one validator to stake on behalf of multiple delegators, effectively pooling resources to represent many accounts. This makes staking more democratic, so users with smaller balances can stake by delegating to validators from a list. Validators can then delegate their tokens to Staking Service Providers and get a share of the staking rewards. It is analogous to mining pools where miners get paid proportionally to their hash power.
Meme Season Competition Structure and Prizes
Meme Season is set to run over multiple rounds, with the first round from June 1 to June 30 and a prize pool of up to 1 million sFTMx. The structure is designed to reward both memecoin holders and development teams.
A memecoin’s position on the leaderboard is calculated using the following formula: market cap * 0.5 + gas usage * 0.35 + DEX volume * 0.15 on Opera. For example, a memecoin with a $1 million market cap, 10,000 FTM of gas usage, and 100,000 FTM of DEX volume would score 518,500. Centralized exchange volume or volume on other networks outside of Opera is not included.
Points count towards the memecoin’s position. The top three memecoins at the end of each round win. In each round, 80% of the prize pool goes to the holders of the top three memecoins and 20% to the teams behind the projects. Here’s the prize distribution for Round 1:
- 1st Place: 600,000 sFTMx (480,000 to holders, 120,000 to team)
- 2nd Place: 300,000 sFTMx (240,000 to holders, 60,000 to team)
- 3rd Place: 100,000 sFTMx (80,000 to holders, 20,000 to team)
Eligibility Criteria and Distribution Process
To receive rewards, memecoin holders must have at least $25 worth of the token, calculated based on a 3-day average after the round ends. Exclusions apply to tokens held in liquidity pools (LPs), auto-compounders, vesting contracts, or known marketing, sniper, burn, or deployer wallets.
For participants with over $10,000 in sFTMx winnings (determined by a 3-day Time-Weighted Average Price, or TWAP), confirmation of ownership of the deployer wallet through an on-chain signature and KYC is required. They must email bd@fantom.foundation to complete the process. Those with under $10,000 in sFTMx winnings will receive their rewards via airdrop within 14 days of the round ending. Terms apply.
Example Projects
Degen Express offers a fair launch platform for creators to introduce memecoins to the market, similar to Pump.fun. The platform allows users to purchase these memecoins on a bonding curve until the token's market cap reaches $75,000. Upon reaching this threshold, $12,000 of initial liquidity is seeded on the Degen Express Automated Market Maker (AMM), ensuring a fair and equitable distribution of the tokens.
SuperPumpFun: Permissionless and Secure Coin Launches
SuperPumpFun provides a permissionless launchpad designed for rapid, secure, and unruggable coin launches. On this platform, creators can launch their memecoins, which become subject to liquidity allocation upon achieving a market cap of 50,000 FTM. Specifically, 40% of the liquidity is allocated to a designated decentralized exchange (DEX), promoting market stability and enhancing the coin’s accessibility.
TailsFTM: A Hub for Token Tooling and Blockchain Gaming
TailsFTM serves as a comprehensive hub for memecoin tooling and blockchain gaming on the Fantom network. Its primary offering is a token tool that enables anyone to launch memecoins within seconds through an intuitive web interface. This user-friendly approach lowers the barrier to entry for token creation, fostering innovation and participation in the memecoin space.
Bedrock Finance: Simplifying Memecoin Launches
Bedrock Finance offers a streamlined solution for launching memecoins via a straightforward web interface. The platform utilizes advanced algorithms to ensure that tokens are safe, gas-efficient, and functionally equivalent to manually coded contracts. This automation reduces complexity and enhances security, making it easier for creators to enter the memecoin market with confidence.
Meme Season Round 1 Result
The inaugural round of Meme Season concluded at the end of the month, marking a significant milestone as the platform prepares for the debut of the Sonic chain. The rewards were allocated based on market capitalization, gas usage, decentralized exchange (DEX) volume, and the number of qualifying wallets for each memecoin. The prize distribution saw 80% awarded to memecoin holders, proportionate to their holdings, and the remaining 20% allocated to the memecoin development teams.
Winners of the First Round
1. HOOPS
- Memecoin: HOOPS
- Prize: 600,000 sFTMx (480,000 sFTMx to holders; 120,000 sFTMx to the team)
2. THC
- Memecoin: THC
- Prize: 300,000 sFTMx (240,000 sFTMx to holders; 60,000 sFTMx to the team)
3. sGOAT
- Memecoin: sGOAT
- Prize: 100,000 sFTMx (80,000 sFTMx to holders; 20,000 sFTMx to the team)
Conclusion
The rise of memecoins represents a unique convergence of internet culture, blockchain technology, and financial speculation, challenging traditional investment paradigms. This sector has not only captured the imagination of a tech-savvy generation but also demonstrated significant market impact, as evidenced by the substantial onchain activity and network engagement. Fantom’s strategic initiatives, such as the ongoing Meme Season and the forthcoming Sonic chain, position it to leverage this trend effectively, driving user engagement paired with previously unmatched technological advancements.
As the blockchain ecosystem evolves, the continued proliferation of memecoins will likely spur further innovation, community engagement, and new use cases, thereby solidifying their place within the broader cryptocurrency landscape. The ongoing success and adaptation of memecoin competitions like Fantom's Meme Season will play a critical role in shaping the future of this dynamic and culturally significant sector.
Disclaimer: This report was commissioned by the Fantom Foundation. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
The cryptocurrency market has recently been swept by an extraordinary wave of memecoin activity, marking memecoins as one of the highest-performing sectors since the beginning of the year. This phenomenon has drawn considerable attention from investors and traders alike, significantly impacting onchain activity and network dynamics.
The rise of memecoins has led to a notable increase in onchain activity, resulting in elevated gas prices, intensified network congestion, and increased fee revenue for the L1 protocols. Since the fourth quarter of 2023, the number of active onchain traders has more than doubled. This surge reflects the compelling pull of memecoins in attracting both new and existing participants to engage more actively within cryptocurrency ecosystems.
Fantom, with its currently ongoing memecoin competition and upcoming Sonic chain, is well positioned to not only capitalize on the memecoin craze but also handle the surge in users and transactions. As blockspace across the industry continues to get cheaper, more abundant, and more reliable, new use cases that were previously uneconomical or infeasible become unlocked. It’s this new world of blockchain use cases and usability that Fantom’s transition to the Sonic chain and its improved performance is looking to spearhead.
Memecoins
Memecoins have inarguably carved out a space in the crypto world. Despite criticisms about their lack of utility or intrinsic value, memecoins remain one of crypto’s top use cases, spreading far and wide while accumulating significant value.
At their core, memes are ideas, symbols, or behaviors shared within subcultures. The COVID-19 pandemic period demonstrated the power of memes, specifically the rise of meme stocks like GameStop and AMC. “Meme-investing” suddenly became a new trend in the mainstream. Meanwhile, crypto was yet again ahead of the curve as memecoins had already been conceptualized and popularized many years prior. Dogecoin, one of the first memecoins, arguably started the trend 10+ years ago, and today, the combined market cap of memecoins is over $60 billion. This trend shows the growing financial connection between non-fungible token project holders and a future where communities, cultures, and trends will rely on financial instruments for unity and speculation.
Market Impact and Cultural Relevance
Despite their playful nature, some memecoins have evolved beyond simply silly images. They represent the intersection of blockchain technology, internet culture, and frictionless gambling. memecoins leverage their cultural relevance to challenge traditional notions of value and investment. They embody the spirit of irreverence and absurdity, often thriving on the very characteristics that would be considered liabilities in more conventional financial instruments. This unconventional approach has attracted a dedicated following, particularly among younger, tech-savvy investors who are drawn to the blend of humor and potential financial gain.
Moreover, memecoins reflect a broader trend within the cryptocurrency market — the growing influence of social media and online communities in shaping market dynamics. Platforms like Twitter, Reddit, and TikTok play a crucial role in the promotion and dissemination of memecoins, with often a single tweet or YouTube video sending their value sky high or to zero. This phenomenon underscores the importance of community engagement and the power of collective sentiment in the digital age.
With the progression of blockchain technology, like highly performant base layers and frictionless token deployment projects like Pump.fun, the creation of memecoins has never been more accessible or easier. Memecoin deployers can choose a name, ticker, and image for their new token, and trading starts on a bonding curve with zero financial commitment. To prevent rug pulls, Pump.fun requires each token launched on the platform to follow a fair launch model with no presale and no team allocation. That’s been a big part of the platform’s success, with nearly $6 million in revenue over the past month and daily trading fees of over $400,000. Even blockchain foundations recognize the value of memecoins in their ecosystems, with the Avalanche Foundation announcing a memecoin fund in March and Fantom hosting a memecoin competition through the summer of 2024 (more on this later).
But How Are Memes Investable?
Memecoins are tokenized depictions of internet memes or other humorous events or concepts. They are native to blockchains and transferable, available for use in blockchain-based applications, and tradable on secondary markets like DEXes. Often expressed through their tickers, memecoins also have characters or other visuals associated with them, just like memes as most people know them today.
Behind every memecoin is a contract tied to a layer 1 blockchain or layer 2 network that specifies the name of the memecoin, its supply, and other details outlining its digital identity. A memecoin can only be deployed by launching one of these token contracts. In earlier blockchain eras, launching a token was mostly costly and difficult, as it required the technical ability to write or adjust the contract, launch it on a blockchain, and create a liquidity pool on a DEX for people to trade it. However, as explained earlier, much of the difficulty has been abstracted away by services that automatically launch tokens and create liquidity pools after users input the details of their memecoin.
Key Factors Driving memecoin Growth
- Community Engagement: memecoins often leverage strong community engagement to drive interest and investment. The use of humor and familiar cultural references creates a sense of inclusivity and shared purpose among investors, which can significantly impact the success of a memecoin.
- Market Sentiment and Speculation: The memecoin sector thrives on market sentiment. Investors are often attracted to the potential for high returns despite the lack of intrinsic value backing these assets. This speculative nature makes memecoins a highly volatile investment, influenced by trends, social media, and community hype.
- Trading Volume Trends: The shift in trading volumes from older memecoins like DOGE to newer entrants such as BODEN, WIF, BONK, and others reflects changing investor preferences.
Over the course of 2024, memecoins have outperformed other sectors in the crypto asset space, including the most senior “respected’ projects like Bitcoin and Ethereum. From Q4 2023 to Q2 2024, memecoins have averaged 500%+ returns as an index.
Despite their impressive returns, investing in memecoins carries inherent risks. The speculative nature of these assets means they are highly volatile and subject to rapid changes in market sentiment.
Memecoin Risks
The memecoin market is saturated with thousands of new launches every day, making distinguishing among them harder and harder for investors. It also fragments memecoins’ top commodity, attention, creating risks across the sector. Here are a few reasons why:
- Fragmented Liquidity: There are so many memecoins (thousands created every day) that the liquidity is fragmented. It’s hard for any one memecoin to get enough liquidity to support a multi-billion dollar market cap.
- Fragmented Communities: Community support is also fragmented. Many memecoins can’t get past the ~3,000 organic holders and, therefore, rarely last beyond a couple of weeks.
- Shady Developer Practices: Many memecoin developers are drawn in by the idea of getting “rich quick” and oftentimes take shortcuts or make sacrifices to the detriment of the long-term health of the project. Some avoid liquidity pool lockups, as well as distribute their token allocations across multiple wallets to hide ownership. This leads to a gradual dump on retail investors and no trust.
- High Gini Coefficients: Memecoins have gained popularity, but their Gini coefficient skews towards high degrees of centralization. This means that a few “whales” can manipulate the price with large buy or sell orders and create volatility.
Oftentimes, investing in risky memecoins is like playing hot potato. The teams behind these projects have opaque ownership, undisclosed allocations, and shady intentions. Retail investors will end up as exit liquidity and lose while the developers and early investors cash out.
Fantom Meme Season
As of June 2024, Fantom has unveiled Meme Season, a competitive initiative aimed at highlighting the leading memecoins on the Opera network and the upcoming Sonic chain. The competition seeks to attract new users and developers while demonstrating the functionality of Fantom’s new technology. Meme Season promises substantial rewards, with up to 10 million sFTMx in prizes.
What is sFTMx?
sFTMx is a liquid staking token on Fantom produced by Beethoven X. This new liquid token is a derivative of staked FTM. The benefits of liquid staking tokens (LSTs) are that they allow users to stake, thereby helping to secure the network and earn staking rewards while also enabling users to participate in DeFi and other onchain activities with the same capital.
The underlying algorithm for this is Proof of Liquid Staking (PoLS), which is a new version of the traditional PoS. PoLS allows one validator to stake on behalf of multiple delegators, effectively pooling resources to represent many accounts. This makes staking more democratic, so users with smaller balances can stake by delegating to validators from a list. Validators can then delegate their tokens to Staking Service Providers and get a share of the staking rewards. It is analogous to mining pools where miners get paid proportionally to their hash power.
Meme Season Competition Structure and Prizes
Meme Season is set to run over multiple rounds, with the first round from June 1 to June 30 and a prize pool of up to 1 million sFTMx. The structure is designed to reward both memecoin holders and development teams.
A memecoin’s position on the leaderboard is calculated using the following formula: market cap * 0.5 + gas usage * 0.35 + DEX volume * 0.15 on Opera. For example, a memecoin with a $1 million market cap, 10,000 FTM of gas usage, and 100,000 FTM of DEX volume would score 518,500. Centralized exchange volume or volume on other networks outside of Opera is not included.
Points count towards the memecoin’s position. The top three memecoins at the end of each round win. In each round, 80% of the prize pool goes to the holders of the top three memecoins and 20% to the teams behind the projects. Here’s the prize distribution for Round 1:
- 1st Place: 600,000 sFTMx (480,000 to holders, 120,000 to team)
- 2nd Place: 300,000 sFTMx (240,000 to holders, 60,000 to team)
- 3rd Place: 100,000 sFTMx (80,000 to holders, 20,000 to team)
Eligibility Criteria and Distribution Process
To receive rewards, memecoin holders must have at least $25 worth of the token, calculated based on a 3-day average after the round ends. Exclusions apply to tokens held in liquidity pools (LPs), auto-compounders, vesting contracts, or known marketing, sniper, burn, or deployer wallets.
For participants with over $10,000 in sFTMx winnings (determined by a 3-day Time-Weighted Average Price, or TWAP), confirmation of ownership of the deployer wallet through an on-chain signature and KYC is required. They must email bd@fantom.foundation to complete the process. Those with under $10,000 in sFTMx winnings will receive their rewards via airdrop within 14 days of the round ending. Terms apply.
Example Projects
Degen Express offers a fair launch platform for creators to introduce memecoins to the market, similar to Pump.fun. The platform allows users to purchase these memecoins on a bonding curve until the token's market cap reaches $75,000. Upon reaching this threshold, $12,000 of initial liquidity is seeded on the Degen Express Automated Market Maker (AMM), ensuring a fair and equitable distribution of the tokens.
SuperPumpFun: Permissionless and Secure Coin Launches
SuperPumpFun provides a permissionless launchpad designed for rapid, secure, and unruggable coin launches. On this platform, creators can launch their memecoins, which become subject to liquidity allocation upon achieving a market cap of 50,000 FTM. Specifically, 40% of the liquidity is allocated to a designated decentralized exchange (DEX), promoting market stability and enhancing the coin’s accessibility.
TailsFTM: A Hub for Token Tooling and Blockchain Gaming
TailsFTM serves as a comprehensive hub for memecoin tooling and blockchain gaming on the Fantom network. Its primary offering is a token tool that enables anyone to launch memecoins within seconds through an intuitive web interface. This user-friendly approach lowers the barrier to entry for token creation, fostering innovation and participation in the memecoin space.
Bedrock Finance: Simplifying Memecoin Launches
Bedrock Finance offers a streamlined solution for launching memecoins via a straightforward web interface. The platform utilizes advanced algorithms to ensure that tokens are safe, gas-efficient, and functionally equivalent to manually coded contracts. This automation reduces complexity and enhances security, making it easier for creators to enter the memecoin market with confidence.
Meme Season Round 1 Result
The inaugural round of Meme Season concluded at the end of the month, marking a significant milestone as the platform prepares for the debut of the Sonic chain. The rewards were allocated based on market capitalization, gas usage, decentralized exchange (DEX) volume, and the number of qualifying wallets for each memecoin. The prize distribution saw 80% awarded to memecoin holders, proportionate to their holdings, and the remaining 20% allocated to the memecoin development teams.
Winners of the First Round
1. HOOPS
- Memecoin: HOOPS
- Prize: 600,000 sFTMx (480,000 sFTMx to holders; 120,000 sFTMx to the team)
2. THC
- Memecoin: THC
- Prize: 300,000 sFTMx (240,000 sFTMx to holders; 60,000 sFTMx to the team)
3. sGOAT
- Memecoin: sGOAT
- Prize: 100,000 sFTMx (80,000 sFTMx to holders; 20,000 sFTMx to the team)
Conclusion
The rise of memecoins represents a unique convergence of internet culture, blockchain technology, and financial speculation, challenging traditional investment paradigms. This sector has not only captured the imagination of a tech-savvy generation but also demonstrated significant market impact, as evidenced by the substantial onchain activity and network engagement. Fantom’s strategic initiatives, such as the ongoing Meme Season and the forthcoming Sonic chain, position it to leverage this trend effectively, driving user engagement paired with previously unmatched technological advancements.
As the blockchain ecosystem evolves, the continued proliferation of memecoins will likely spur further innovation, community engagement, and new use cases, thereby solidifying their place within the broader cryptocurrency landscape. The ongoing success and adaptation of memecoin competitions like Fantom's Meme Season will play a critical role in shaping the future of this dynamic and culturally significant sector.
Disclaimer: This report was commissioned by the Fantom Foundation. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
The cryptocurrency market has recently been swept by an extraordinary wave of memecoin activity, marking memecoins as one of the highest-performing sectors since the beginning of the year. This phenomenon has drawn considerable attention from investors and traders alike, significantly impacting onchain activity and network dynamics.
The rise of memecoins has led to a notable increase in onchain activity, resulting in elevated gas prices, intensified network congestion, and increased fee revenue for the L1 protocols. Since the fourth quarter of 2023, the number of active onchain traders has more than doubled. This surge reflects the compelling pull of memecoins in attracting both new and existing participants to engage more actively within cryptocurrency ecosystems.
Fantom, with its currently ongoing memecoin competition and upcoming Sonic chain, is well positioned to not only capitalize on the memecoin craze but also handle the surge in users and transactions. As blockspace across the industry continues to get cheaper, more abundant, and more reliable, new use cases that were previously uneconomical or infeasible become unlocked. It’s this new world of blockchain use cases and usability that Fantom’s transition to the Sonic chain and its improved performance is looking to spearhead.
Memecoins
Memecoins have inarguably carved out a space in the crypto world. Despite criticisms about their lack of utility or intrinsic value, memecoins remain one of crypto’s top use cases, spreading far and wide while accumulating significant value.
At their core, memes are ideas, symbols, or behaviors shared within subcultures. The COVID-19 pandemic period demonstrated the power of memes, specifically the rise of meme stocks like GameStop and AMC. “Meme-investing” suddenly became a new trend in the mainstream. Meanwhile, crypto was yet again ahead of the curve as memecoins had already been conceptualized and popularized many years prior. Dogecoin, one of the first memecoins, arguably started the trend 10+ years ago, and today, the combined market cap of memecoins is over $60 billion. This trend shows the growing financial connection between non-fungible token project holders and a future where communities, cultures, and trends will rely on financial instruments for unity and speculation.
Market Impact and Cultural Relevance
Despite their playful nature, some memecoins have evolved beyond simply silly images. They represent the intersection of blockchain technology, internet culture, and frictionless gambling. memecoins leverage their cultural relevance to challenge traditional notions of value and investment. They embody the spirit of irreverence and absurdity, often thriving on the very characteristics that would be considered liabilities in more conventional financial instruments. This unconventional approach has attracted a dedicated following, particularly among younger, tech-savvy investors who are drawn to the blend of humor and potential financial gain.
Moreover, memecoins reflect a broader trend within the cryptocurrency market — the growing influence of social media and online communities in shaping market dynamics. Platforms like Twitter, Reddit, and TikTok play a crucial role in the promotion and dissemination of memecoins, with often a single tweet or YouTube video sending their value sky high or to zero. This phenomenon underscores the importance of community engagement and the power of collective sentiment in the digital age.
With the progression of blockchain technology, like highly performant base layers and frictionless token deployment projects like Pump.fun, the creation of memecoins has never been more accessible or easier. Memecoin deployers can choose a name, ticker, and image for their new token, and trading starts on a bonding curve with zero financial commitment. To prevent rug pulls, Pump.fun requires each token launched on the platform to follow a fair launch model with no presale and no team allocation. That’s been a big part of the platform’s success, with nearly $6 million in revenue over the past month and daily trading fees of over $400,000. Even blockchain foundations recognize the value of memecoins in their ecosystems, with the Avalanche Foundation announcing a memecoin fund in March and Fantom hosting a memecoin competition through the summer of 2024 (more on this later).
But How Are Memes Investable?
Memecoins are tokenized depictions of internet memes or other humorous events or concepts. They are native to blockchains and transferable, available for use in blockchain-based applications, and tradable on secondary markets like DEXes. Often expressed through their tickers, memecoins also have characters or other visuals associated with them, just like memes as most people know them today.
Behind every memecoin is a contract tied to a layer 1 blockchain or layer 2 network that specifies the name of the memecoin, its supply, and other details outlining its digital identity. A memecoin can only be deployed by launching one of these token contracts. In earlier blockchain eras, launching a token was mostly costly and difficult, as it required the technical ability to write or adjust the contract, launch it on a blockchain, and create a liquidity pool on a DEX for people to trade it. However, as explained earlier, much of the difficulty has been abstracted away by services that automatically launch tokens and create liquidity pools after users input the details of their memecoin.
Key Factors Driving memecoin Growth
- Community Engagement: memecoins often leverage strong community engagement to drive interest and investment. The use of humor and familiar cultural references creates a sense of inclusivity and shared purpose among investors, which can significantly impact the success of a memecoin.
- Market Sentiment and Speculation: The memecoin sector thrives on market sentiment. Investors are often attracted to the potential for high returns despite the lack of intrinsic value backing these assets. This speculative nature makes memecoins a highly volatile investment, influenced by trends, social media, and community hype.
- Trading Volume Trends: The shift in trading volumes from older memecoins like DOGE to newer entrants such as BODEN, WIF, BONK, and others reflects changing investor preferences.
Over the course of 2024, memecoins have outperformed other sectors in the crypto asset space, including the most senior “respected’ projects like Bitcoin and Ethereum. From Q4 2023 to Q2 2024, memecoins have averaged 500%+ returns as an index.
Despite their impressive returns, investing in memecoins carries inherent risks. The speculative nature of these assets means they are highly volatile and subject to rapid changes in market sentiment.
Memecoin Risks
The memecoin market is saturated with thousands of new launches every day, making distinguishing among them harder and harder for investors. It also fragments memecoins’ top commodity, attention, creating risks across the sector. Here are a few reasons why:
- Fragmented Liquidity: There are so many memecoins (thousands created every day) that the liquidity is fragmented. It’s hard for any one memecoin to get enough liquidity to support a multi-billion dollar market cap.
- Fragmented Communities: Community support is also fragmented. Many memecoins can’t get past the ~3,000 organic holders and, therefore, rarely last beyond a couple of weeks.
- Shady Developer Practices: Many memecoin developers are drawn in by the idea of getting “rich quick” and oftentimes take shortcuts or make sacrifices to the detriment of the long-term health of the project. Some avoid liquidity pool lockups, as well as distribute their token allocations across multiple wallets to hide ownership. This leads to a gradual dump on retail investors and no trust.
- High Gini Coefficients: Memecoins have gained popularity, but their Gini coefficient skews towards high degrees of centralization. This means that a few “whales” can manipulate the price with large buy or sell orders and create volatility.
Oftentimes, investing in risky memecoins is like playing hot potato. The teams behind these projects have opaque ownership, undisclosed allocations, and shady intentions. Retail investors will end up as exit liquidity and lose while the developers and early investors cash out.
Fantom Meme Season
As of June 2024, Fantom has unveiled Meme Season, a competitive initiative aimed at highlighting the leading memecoins on the Opera network and the upcoming Sonic chain. The competition seeks to attract new users and developers while demonstrating the functionality of Fantom’s new technology. Meme Season promises substantial rewards, with up to 10 million sFTMx in prizes.
What is sFTMx?
sFTMx is a liquid staking token on Fantom produced by Beethoven X. This new liquid token is a derivative of staked FTM. The benefits of liquid staking tokens (LSTs) are that they allow users to stake, thereby helping to secure the network and earn staking rewards while also enabling users to participate in DeFi and other onchain activities with the same capital.
The underlying algorithm for this is Proof of Liquid Staking (PoLS), which is a new version of the traditional PoS. PoLS allows one validator to stake on behalf of multiple delegators, effectively pooling resources to represent many accounts. This makes staking more democratic, so users with smaller balances can stake by delegating to validators from a list. Validators can then delegate their tokens to Staking Service Providers and get a share of the staking rewards. It is analogous to mining pools where miners get paid proportionally to their hash power.
Meme Season Competition Structure and Prizes
Meme Season is set to run over multiple rounds, with the first round from June 1 to June 30 and a prize pool of up to 1 million sFTMx. The structure is designed to reward both memecoin holders and development teams.
A memecoin’s position on the leaderboard is calculated using the following formula: market cap * 0.5 + gas usage * 0.35 + DEX volume * 0.15 on Opera. For example, a memecoin with a $1 million market cap, 10,000 FTM of gas usage, and 100,000 FTM of DEX volume would score 518,500. Centralized exchange volume or volume on other networks outside of Opera is not included.
Points count towards the memecoin’s position. The top three memecoins at the end of each round win. In each round, 80% of the prize pool goes to the holders of the top three memecoins and 20% to the teams behind the projects. Here’s the prize distribution for Round 1:
- 1st Place: 600,000 sFTMx (480,000 to holders, 120,000 to team)
- 2nd Place: 300,000 sFTMx (240,000 to holders, 60,000 to team)
- 3rd Place: 100,000 sFTMx (80,000 to holders, 20,000 to team)
Eligibility Criteria and Distribution Process
To receive rewards, memecoin holders must have at least $25 worth of the token, calculated based on a 3-day average after the round ends. Exclusions apply to tokens held in liquidity pools (LPs), auto-compounders, vesting contracts, or known marketing, sniper, burn, or deployer wallets.
For participants with over $10,000 in sFTMx winnings (determined by a 3-day Time-Weighted Average Price, or TWAP), confirmation of ownership of the deployer wallet through an on-chain signature and KYC is required. They must email bd@fantom.foundation to complete the process. Those with under $10,000 in sFTMx winnings will receive their rewards via airdrop within 14 days of the round ending. Terms apply.
Example Projects
Degen Express offers a fair launch platform for creators to introduce memecoins to the market, similar to Pump.fun. The platform allows users to purchase these memecoins on a bonding curve until the token's market cap reaches $75,000. Upon reaching this threshold, $12,000 of initial liquidity is seeded on the Degen Express Automated Market Maker (AMM), ensuring a fair and equitable distribution of the tokens.
SuperPumpFun: Permissionless and Secure Coin Launches
SuperPumpFun provides a permissionless launchpad designed for rapid, secure, and unruggable coin launches. On this platform, creators can launch their memecoins, which become subject to liquidity allocation upon achieving a market cap of 50,000 FTM. Specifically, 40% of the liquidity is allocated to a designated decentralized exchange (DEX), promoting market stability and enhancing the coin’s accessibility.
TailsFTM: A Hub for Token Tooling and Blockchain Gaming
TailsFTM serves as a comprehensive hub for memecoin tooling and blockchain gaming on the Fantom network. Its primary offering is a token tool that enables anyone to launch memecoins within seconds through an intuitive web interface. This user-friendly approach lowers the barrier to entry for token creation, fostering innovation and participation in the memecoin space.
Bedrock Finance: Simplifying Memecoin Launches
Bedrock Finance offers a streamlined solution for launching memecoins via a straightforward web interface. The platform utilizes advanced algorithms to ensure that tokens are safe, gas-efficient, and functionally equivalent to manually coded contracts. This automation reduces complexity and enhances security, making it easier for creators to enter the memecoin market with confidence.
Meme Season Round 1 Result
The inaugural round of Meme Season concluded at the end of the month, marking a significant milestone as the platform prepares for the debut of the Sonic chain. The rewards were allocated based on market capitalization, gas usage, decentralized exchange (DEX) volume, and the number of qualifying wallets for each memecoin. The prize distribution saw 80% awarded to memecoin holders, proportionate to their holdings, and the remaining 20% allocated to the memecoin development teams.
Winners of the First Round
1. HOOPS
- Memecoin: HOOPS
- Prize: 600,000 sFTMx (480,000 sFTMx to holders; 120,000 sFTMx to the team)
2. THC
- Memecoin: THC
- Prize: 300,000 sFTMx (240,000 sFTMx to holders; 60,000 sFTMx to the team)
3. sGOAT
- Memecoin: sGOAT
- Prize: 100,000 sFTMx (80,000 sFTMx to holders; 20,000 sFTMx to the team)
Conclusion
The rise of memecoins represents a unique convergence of internet culture, blockchain technology, and financial speculation, challenging traditional investment paradigms. This sector has not only captured the imagination of a tech-savvy generation but also demonstrated significant market impact, as evidenced by the substantial onchain activity and network engagement. Fantom’s strategic initiatives, such as the ongoing Meme Season and the forthcoming Sonic chain, position it to leverage this trend effectively, driving user engagement paired with previously unmatched technological advancements.
As the blockchain ecosystem evolves, the continued proliferation of memecoins will likely spur further innovation, community engagement, and new use cases, thereby solidifying their place within the broader cryptocurrency landscape. The ongoing success and adaptation of memecoin competitions like Fantom's Meme Season will play a critical role in shaping the future of this dynamic and culturally significant sector.
Disclaimer: This report was commissioned by the Fantom Foundation. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
