Meme coin vs elite coin: a cultural revolution in the encryption world

ORIGINAL ARTICLE BY KERMAN KOHLI

Original compilation: Deep Tide TechFlow

I didn't expect to write this myself. In the last cycle (2021), I didn't know much about NFT, didn't buy things that didn't have "utility", and loved my Decentralized Finance coin.

This cycle, my perception has changed significantly. So what happened?

Broken promises and see through 8 years of Crypto Assets nonsense.

I entered the crypto world in 2017, and in my opinion, that is still one of the most exciting cycles in encryption (2020 followed by second). Because for the first time ever, you can raise money from anywhere in the world in less than 10 minutes. Sure, it's full of scams, but the overall innovation can't be overlooked. Ethereum is an ICO coin, along with Aave, Gnosis, and countless other coins. As someone from New Zealand/Australia, I will never be able to get close to those big capitals geographically, and ICOs give me hope that no matter where one is, the talent and the best will have a chance to stand out (assuming they are able to build and market). In the Crypto Assets space, the feeling of people huddled in front of a laptop, transferring $5 million and completing a transaction is crazy anywhere else.

Unfortunately, all good times come to an end. In 2018/2019 after that, we had to pick up the pieces, including a large number of injured retail investors and the countless lawsuits that followed. Even though encryption is an extremely risky industry, founders and investors want something "more secure." Therefore, they opted for a new model:

• Privately raise funds for early rounds
• Privately raise funds for later rounds
• Airdrop at high valuation

How to participate in these "transactions"? Become a part of the encryption elite who have the right to participate in these transactions, and then wait for your assets to appreciate. I am a net beneficiary of this model. I was fortunate to be an angel investor in certain Tokens, and their value rises significantly when they go public. Most of my investment performance comes from the public markets. I do know that very long fren and investors are making incredible sums of money in this new model. You just need to shine on Twitter now.

Now, I'm not saying that people with social capital shouldn't be able to turn it into financial capital. That's how the world works. The problem is the incentives of this system. I've written about this in various ways, but I'll take a moment to review it.

"New" mode

The problem with this new model is that it is more corrupt than the existing financial system. This is usually the case:

• The first round of investors will receive a valuation of $10 million to $50 million for any Token/Project. Given that large long Token could be worth $1 billion, you're looking at 20x to 100x pump. This round is easy to sell and usually goes to insiders. That's fine, because that's how regular VC investing works.
• Now with enough funding, the project can start construction and transportation. Once you release something, you put the anticipation of "Airdrop" in front of the user. Trading is simple, and with our products, we will eventually reward you with our Tokens. Oh, and if you use long Wallet, you'll get more long because you've improved our metrics.
• With these new metrics, projects can peddle bigger dreams. Growth-stage capital can come in and write bigger checks to these companies. If your dream is ambitious enough, you can raise $50 million on a $500 million valuation. That's where you start to get suspicious, if they're investing at a $500 million valuation, then investors need to see at least a $5 billion valuation. In order to achieve this, you need investors with the best marketing and social impact (or cash flow, which is usually non-existent at this stage). Keep them on standby, because in the next phase, you will need to work together.
• Increase your marketing and social reach as you get closer to launching your Token. More and more long people are discovering the project and Token and will use it enthusiastically in the hope of getting Airdrop. This cycle is as powerful as a 20-year-old man using steroids for fitness gains.
• Once the marketing campaign peaks, launch the Token and ensure liquidity for your investors and team members. You can also sell the secondary market in advance if you wish. What happens after this is out of your control, as people will dump their Tokens for liquidity and move on to the next project.

Note: Some teams don't execute like aspect, they will ensure that team members and investors have a proper 4-year token vesting time, execute Airdrops carefully, and work hard to get accurate data. These are the exceptions, and I hope these projects stand out.

The result of this cycle is basically a whole bunch of products and things that people don't really want, but will continue to repeat: why? because that's the only way to make money in this market. Opportunities for early and growth rounds are limited. Your only chance is to put money into an untested smart contract and hope to use a bad product on longest wallets and then get $1,000 to $10,000 months later. So what is the utility of these tokens?

• Longest Tokens commit to "governance". Well, Longest Tokens are held by insiders, so your voice is irrelevant. Well, you just need to invest a lot of time to understand what the Wallet is made of and how governance voting has been conducted in the past.
• What about cash flow? Yes, some may have cash flow, but as a Token holder, will you receive it? Of course not. This may change with the UNI fee switch, but until then we're at an impasse. Key team members have become k millionaires, and from this point on, they may only care about whatever product they produce. How do you know that? You can only know when you get the inside information through discussions with people in the industry.
• What about rise? Well, the airdrops and indicators are fake, so everything is not real. Longest users and funds will go to the next "hot" project, forgetting you all about it and becoming a relic of the previous cycle. There will always be a new project with hotter investors and more long Airdrop users who will attract more long attention. Well, you need to understand the whole supply plan and when more long Token will be unlocked so that insiders don't dump on you and get out Liquidity.

The system works by perpetuating short-term, mercenary behavior through false data. People aren't stupid, and frankly, they've had enough. Now that there is a new option: meme coins, why choose other projects to enrich a large number of insiders?

A revolution within a revolution

Crypto assets are supposed to be a place where the playing field is level for all and we can distribute them transparently and fairly.

Bitcoin is a perfect example of this:

• No pre-mine
• Fair distribution through proof of work
• Except as advertised, no useful features are promised

I'm not saying that every Token needs or needs to do this, but it does represent the qualities of a Crypto Assets that make it revolutionary compared to the current financial system:

• The new dollar is printed to the person closest to the money printing machine
• The information is opaque and difficult to verify
• Value hardly belongs to the people who create it (citizens)

On many longer fronts, the current encryption system is starting to do things the same as before (Tokens are distributed to insiders, data is difficult to verify, and investors get most of the value). Instead, the meme responds in a unique way to the promise of raw encryption.

I'd like to start with a phrase that people often say

"When the hype is gone, memecoins will eventually go to zero"

I've said this a lot before, too. BUT LET'S LOOK AT THE DATA, SHALL WE? HERE'S THE DOGE MARKET CAPITALIZATION CHART SINCE 2014 (SINCE THE PRICE PUMPED TOO MUCH TO CHART CORRECTLY, THE LOGARITHMIC SCALE IS USED). This is a Token with no utility, except that the logo is a widely recognized dog called Shiba Inu.

YOU WILL MAKE MORE MONEY INVESTING IN DOGE THAN INVESTING IN NVIDIA.

So should this Token be zeroed? In fact, the opposite. It continues to climb sharply, actually surpassing Bitcoin. The return to investors is about 8000x, which is hard to ignore.

YOU MIGHT SAY "WELL, DOGE IS SPECIAL, IT'S AN OUTLIER". I think this is an untenable answer that needs to be dug deeper. LET'S TAKE A LOOK AT SOME OF THE FEATURES OF DOGE:

• No pre-mine
• It runs on a proof-of-work algorithm with no "pre-sale"
• Doesn't offer any utility other than being a cute internet joke

DOGE DOESN'T LIE. It does not favor those who have social capital. No insiders get special access. If you believe in web culture and encryption, you can get some for yourself.

But I would like to use this example to further elaborate my argument, in a different but similar way.

$DEGEN

I've written about Farcaster here before, but now there's a new way to play that we're going to see become very popular in the coming months and even years. To illustrate this, I'd like to illustrate with something different: Reddit. Recently, Reddit conducted its IPO at a valuation of $6 billion. Most of this value is created by the users of the platform. However, the best Reddit can do is give their users a chance to participate in an IPO with a multi-billion dollar valuation. They may get a nice return, but it doesn't change the trajectory of their lives in any meaningful way.

When Farcaster came out and I was writing about it, there was a little experiment going on there called $degen. The idea is very simple, you get a certain amount of $degen, which can then be distributed by commenting "50 $degen" to people who have good posts on Farcaster. The more long tip you give, the more long you'll earn. On a longer scale, it's simple, but it's also excellent at allocating value. As usual, I was skeptical and ignored the point, believing it to be "another Ponzi Scheme, because it has no utility, so it will go to zero". However, the success of $degen was in capturing the minds of the Farcaster people. With the rise of the Farcaster, the price of the $degen is also rise.

$degen is still young (only 3 months old) and will face long challenges in the journey ahead. While it represents something new and new, I think it will stand the test of time even in the face of a bear market. However, looking at a chart like this, it's easy to think "what if I invested when I was $x".

What I'm trying to illustrate with this article is what you can achieve by actually participating. One of the biggest $degen holders I know of is Cooper Turley. He's been very involved with Farcaster and $degen. His public Wallet holds close to $250,000 in $degen, purely through participation.

These stories are what I came to encryption the world for, not to deduce the same corrupt system with new projects.

During the rise of $Degen, it is now being used as a marketing strategy for startups. Alex Masmej, who is building the intersection of TikTok and encryption, has $degen as the main coin for their product, Dracula. This creates a symbiotic relationship between Dracula and $degen. Meme as a marketing channel is becoming a more prominent theme in the future. I'll expand on that further in the next section.

Despite the fact that $degen has a small amount of pre-allocation and has sold Token to "Farcaster" insiders, the amount is long small, which I personally think is reasonable. Despite seeing the rapid pump of $degen, I hold very little $degen due to my mid-curving strategy.

$WIF

Dogwifhat。 The most hated meme on encryption Twitter right now. When I first heard about it, I was disgusted. I remember thinking, "Those filthy people are making garbage again." However, after learning about this dog's story, I found it engaging enough to change my mind. I hold a small portion of $WIF and I'm quite late to the game (the market capitalization is already in the billions).

You see, the photo of dogwifhat started long before it became a Token. It is a wildly popular internet meme that is full of life. After you look at this picture, you can't help but say, "That's a pretty cute dog with a hat."

In late 2023, a Solana developer launched $wif. However, after the Token pumped sharply two days ago, he sold his share for $32,000, leaving a "clean" distribution. There is no remaining supply. If he hadn't sold, his share would now be worth more than $1 billion. Considering that the distribution of Tokens is basically first-come, first-served, WIF has grown to an unprecedented scale.

$wif very easy to understand: it's just a cute puppy with a hat. There is no need to worry about investors peddling to you, no commitments, no cash flow. It is what it is.

It is hilarious and deceptively simple at the same time. But longest people may miss it.

Zoom in on the field of view

"But, author, are you really suggesting that we should all buy Tokens that actually do nothing, only cute dogs or communities, and have no other value"?

First of all, whether you decide whether to auto-invest or not is your own problem, not the scope of this article. When you look at the top 100 Tokens on CoinGecko, you will see that there are a large number of Tokens:

• There isn't any real utility after the surface is lifted, most of it is a lie
• It is possible to face huge dumping by investors
• Does not generate any cash flow

So relatively speaking, meme coins and "utility" tokens are the same. Tokens that I prefer to be honest about where I am and don't require me to analyze 100 different variables while working on other things.

"But when the Bear Market comes, will they all fall to zero"?

Well, guess what, everything big dumps between 50% and 99% in a bear market. What you describe is no different than any other Token. At least for memecoins, there are no lies or false promises, like a large longest of Tokens will eventually be revealed. AI / L2 / ZK Token is currently the biggest perpetrator of this trend. They falsely represent their technology, have an oversupply of Tokens, and list at ridiculously high valuations. I hate these Tokens.

Crypto Assets is plagued by lies, and it's an industry full of corruption. The meme coin, in an unusual twist of events, became the answer to the struggle. It can be said that this is a revolution within a revolution.

Now they're easy to buy (Solana), easy to understand (cute dogs), and honest (no complicated technical or financial jargon to confuse you).

Whether you like it or not, they're here to stay.

They will drop in value in 2-3 years like other products on the market, but I bet the best memes will survive in our minds and make huge returns in the Bull Market of 2028, just like Dogecoin.

The question is: Are you a good meme connoisseur, or are you a stupid person buying fraudulent altts that developers are trying to make money quickly and run away?

The future of Crypto Assets

Meme coins may also represent a future of financial nihilism, where people escape poverty through gambling. There should be another option, to be able to invest in technologies that make humanity happier or more productive at the lowest price. It's not just about selling such dreams.

While I can choose to spend my time on memes, I believe that with better identity, reputation, and data primitives, we can create a better on-chain society. This is where I choose to take the time and build accordingly. Based on my recent article about Airdrops, I learned a lot behind the scenes longing and I'm excited to share it with you guys.

I hope these new products will help solve the problems we are currently experiencing with Crypto Assets.

However, for now, Meme coins may be the best honest alternative.

Disclosure, as much as I'm bullish on memes, I still keep memes below 5% of my portfolio. I anticipate that as the meme coin shows sustained staying power and is overlooked by the elite, this proportion will rise significantly and will increase significantly.

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