MEME Coins can drive viral growth — as they did in the cryptocurrency market in 2024 — but they also often lead to pump-and-dump schemes.

For much of 2024, the liquidity of the cryptocurrency market was primarily maintained through the trading of meme coins. According to a report by CoinGecko, meme coins were the most popular theme in the second quarter of 2024, accounting for 14.3% of the market share, with the first quarter's data being very similar. These cryptocurrencies rely on fun communities and humorous branding known as "memes" to attract users and traders. Through these memes, people from all walks of life can come together for shared humor and joke objectives, and potentially reap financial rewards by trading meme coins.

As of October 8th, the market capitalization of MEME Coins has exceeded $50 billion, indicating the rapid development of the MEME community. Due to the lack of centralization in this field, these communities have become unique supporters of blockchain technology. With their representative tokens, these communities can quickly gain popularity in a matter of minutes, and hype is the fuel that drives their growth. Most tokens engage in insider trading, leading to large-scale pump-and-dump schemes. As the hype subsides, the communities begin to calm down.

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In the past few years, the influence of communities inspired by memes has skyrocketed. They highlight the evident power of vibrant communities behind projects. If a cryptocurrency project with real-world utility has a strong community like that found in the MEME Coin ecosystem, then its chances of spreading are relatively high.

The best cryptocurrency companies and projects should be built upon meme-inspired communities and projects.

Leveraging MEME Hype for Growth

At the core of meme-driven communities and their rapid expansion is a strong sense of humor, herd mentality, celebrity endorsements, and massive Fear of Missing Out (FOMO). Due to these characteristics, communities such as Dogecoin, Shiba Inu, and the recent PEPE have experienced tremendous growth. After influential figures publicly support or highlight meme coins, the fear of missing out (FOMO) on quick profit opportunities often leads to a stampede of investors. These endorsements provide a layer of legitimacy and excitement for these meme coins and their communities, creating and sustaining meme-induced hype.

Influential individuals and celebrities also use their social media fame to gain value for the MEME Coins they wish to promote. Elon Musk has mentioned Dogecoin on Twitter multiple times, leading to all-time high prices for Dogecoin. In February 2024, Elon tweeted "Dogecoin is the people's cryptocurrency," causing a 50% price increase. This year, we have seen celebrities such as Iggy Azalea, Jason Derulo, and Hulk Hogan publicly discuss MOTHER, JASON, and HULK with their fans, respectively. In most cases — as with all those mentioned — these MEME Coins ultimately become pump-and-dump schemes. Take ORC Coin, for example, a MEME Coin endorsed by crypto celebrity Davinci Jeremie, who is well-known for his early endorsement of Bitcoin when it was worth less than $1 in 2011. ORC has such a large community but lacks any substance. No utility, no real legend. As a result, the project has been stagnant for some time.

Celebrity endorsements can create powerful MEME communities, which greatly benefit projects, especially in the short term. As the community grows, so does the visibility, and other investors and fans/supporters join in. The larger the community, the higher the number of users who ultimately invest in the project. At its peak in 2021, about 3.6 million addresses held DOGE. In just over a month since its launch, SUNDOG has attracted about 150,000 followers on its social media, with a market capitalization of $339 million. The project received a 99% approval rating in the community trust section of the decentralized research and trading platform DEXTools. This represents the community's trust in the project. NEIRO is another project with an impressive community. Above all, brand loyalty is key. Even without any practical utility, these memes can create a connection between users and the meme in a short period, not just for profit. This brand loyalty is priceless.Utilizing Vampire Attacks to Transform the MEME Coin Community into a Strategic Launchpad

The obvious question here is: What is a vampire attack?

A vampire attack is a technique used by new cryptocurrency projects to poach users and liquidity from projects that dominate their niche. In most cases, the latest project is a fork of an existing one, attracting users by offering a better user experience, improved products/services, higher financial incentives, and better benefits. Then, the attacking project can formulate a growth strategy from a position that leverages competitive advantages.

Several popular protocols have faced vampire attacks, such as OpenSea, Uniswap, Cream Finance, and others. In 2022, when another NFT marketplace, LooksRare, began targeting OpenSea users, OpenSea was the industry-leading NFT marketplace. LooksRare airdropped over 120 million LOOKS tokens to active users, who had to migrate to LooksRare to claim their free tokens.

In September 2020, Sushiswap forked Uniswap's open-source code and launched a decentralized exchange (DEX) platform, subjecting Uniswap to a vampire attack. To improve upon Uniswap's status quo, Sushiswap introduced a yield-sharing feature supported by its native token SUSHI. Prior to the attack, Uniswap had over $1.5 billion in locked assets, which dropped to around $400 million post-attack, with Sushiswap gaining $1.35 billion. This severely damaged Uniswap's position as the leading DEX, forcing it to launch its native token UNI, emulating SushiSwap's yield-sharing strategy.

A variation of this attack can be adapted to launch new projects based on the momentum of existing communities. Precisely, the MEME Coin community. Industry builders do not have to directly attempt to establish a cryptocurrency community for their projects; instead, they can create a MEME Coin and promote that MEME. Once the community has grown strong through all key metrics, they can conduct a vampire attack and launch a viable project based on that MEME.

In this way, they can maintain a high market value while attracting a massive community for their new project without starting from scratch. It also provides a better long-term future for the MEME Coin and offers a faster method for new projects to build a community—almost ready-made, one could say.

Building a Sustainable Project Not Swayed by HypeThe following methods can help you create a sustainable project that transcends the initial hype.

1. Focus should be on developing projects with practical utility. The project should have an eye-catching value proposition, including creating a unique user experience, solving specific problems, or providing innovative features.

2. Tokenomics should incentivize long-term participation while curbing speculation. Factors such as utility, distribution, and deflationary mechanisms should be considered.

3. A transparent governance system should be established, giving community members the right to participate in project decision-making.

4. A clear roadmap should be formulated, outlining the project's future milestones. This action demonstrates a commitment to the long-term success of the project.

Conclusion

While meme-inspired strategies may be effective, it is important to consider potential ethical impacts, such as unfair launches, deceptive/misleading marketing, regulatory compliance, and community welfare. Builders can build communities and launch reliable Web3 projects through meme-inspired strategies, leveraging the power of hype and community.

However, this must be balanced with sustainable projects based on underlying value and utility. By reducing risks such as competition (the meme coin field is highly competitive) and over-reliance on hype, the strategy can ensure your project's long-term success.