Partnered With:

Mint Ventures: Don't choose Meme for buying the dip in the bear market.

Read this article in 17 Minutes

The difficulty of containing attention, the inevitable departure of initiating teams, and the mass production of competing projects are all unavoidable situations in the meme race.

Source: Mint Ventures

Author: Alex Xu

This issue of Clips comes from a discussion on the topic of Meme among myself and other investors in a cryptocurrency community. In this article, I will elaborate on my own views to fully express my perspective.

The following article represents the author's current perspective at the time of publication, and may contain factual errors and biases. It is intended for discussion purposes only, and the author welcomes corrections from other industry professionals.

In a bear market, do not choose Meme projects for bottom fishing.

This sounds like a cliché, doesn't it? Who would choose a local dog with a lifespan ranging from a few months to a day to do long-term configuration?

However, the Meme discussed in this article refers to "blue-chip Meme" such as Doge, Shiba, Pepe, which have a large market value and have already entered the mainstream.

Some opinions believe that "new generation small market value memes" like Pepe, which have already gained considerable influence, will replicate the trend of Doge in the next bull market cycle and achieve the goal of a market value of billions.

However, in the author's opinion, when configuring cross-cycle, it may not be a good variety to buy at the bottom during a bear market.

The Value Source of Meme Token

Meme is a phenomenon of cultural and information self-replication, duplication, and dissemination. Meme tokens are tokens of encrypted projects with meme properties. One of its characteristics is that the token itself generally does not have direct value capture, and the project often parasitizes or derives from meme IP outside the encrypted world, such as Doge's Shiba Inu, Pepe's Pepe Frog, or recently popular Harry Potter, Obama, and Sonic (stacked four layers of Buff) tokens named Bitcoin. In addition to celebrities and popular culture, some widely accepted views can also be the source of memes. For example, LTC's positioning as "digital silver" relative to BTC as "digital gold" was once considered a financial meme, inheriting the dual cultural power from precious metals silver and BTC.

Unlike other commercial encryption projects such as DeFi and web3Game, Meme seems to have no business model, but its business model and PMF (Product Market Fit, a product that matches user needs) are very clear, that is: to provide the public with a highly imaginative speculative medium for cryptocurrency investors.

The so-called "providing for retail investors" refers to the concept of Meme being simple and fresh, with its concept being either strange or conflicting, making it easier to capture the attention of the public in a sea of information.

The so-called "imaginative space" refers to their lack of actual business as a gravitational force for coin prices, and only the "consensus" valuation can be sky-high.

Even the most serious practitioners in the encryption industry cannot deny that "speculation for profit" is the most important, even the primary driving force in the world of encryption. The endless stream of Meme projects is a response to this type of demand and represents a product-market fit.

And the superiority of encrypted Meme tokens compared to other traditional speculative targets is also very obvious:

· Unprecedented "Accessibility". As long as you have a cryptocurrency wallet and internet access, anyone from anywhere in the world can participate in its speculation without KYC, registration, or scrutiny, without identity barriers, and with 24/7 trading hours. In the traditional financial world, participating in the speculative frenzy of Gamestop in 20-21 was difficult.

· Information Transparency. Although it is still possible for Meme issuers to manipulate and influence code, funds, and rules, the transparency of token information, fund flow, and algorithms in encrypted Meme has greatly increased. Compared to traditional black-box Ponzi schemes, the "information starting point" for speculation is more fair.

· Diverse varieties, never lacking targets. The hard cost of initiating and creating a Meme project is very low, and projects are constantly emerging. "Opportunities are always abundant."

Unlike conventional web3 commercial projects such as DeFi, the intrinsic value growth of Meme tokens comes solely from the marginal inflow of attention and funds from future speculators (without derogatory connotations). For the former, we mainly predict the growth or decline of its business, and for the latter, we need to speculate on the voting of attention and funds from speculators in the future market.

This also means that the operators of Meme projects will mainly focus on attracting and provoking the attention of the public, guiding their attention towards the correct narrative direction, and actively promoting the spread of Fomo emotions.

The problem is that this is not only difficult, but may also not be in line with the long-term interests of the creators of the new generation Meme project.

Meme Token Lacks Moat

The development of the Meme project has obvious stages:

1. Concept and Narrative Design: To challenge the mainstream, to inspire combat emotions, to break through conventions with absurd and bizarre elements, but not to deviate too far from the masses and become esoteric.

2. Early Promotion: Attracting the attention of early speculators and whether or not to gain the recommendation of influential figures at this stage is the turning point between success and failure.

3. Shaping and expanding Fomo: The wealth stories of early participants are widely spread, greed attracts more people to enter, and people believe that what they are currently holding is not the last straw.

4. Larger-scale adoption: Logging into large-scale trading platforms, getting rid of the label of "Chinese dog" and becoming a true popular speculative target.

5. Maintaining attractiveness: Defend the market share of existing attention and speculative capital.

Still in the early stages, the Chinese dog breed Meme has fragile vitality. Under the premise of large cycle configuration, this article mainly discusses the "Meme blue chips" that have entered the 4th and 5th stages.

As mentioned earlier, the operation of the Meme project actually relies on the attention of the public, and the transfer of public attention is inevitable. The transfer of attention is much easier than the user's funds, product usage habits, and preferences for specific brands.

More importantly, the cost of trying to create a meme is so low, which means that existing memes face endless competition for the attention and resources of speculators.

However, facing the attention competition from newcomers like Meme, the existing Meme actually has very limited means to maintain its existing attention share. Take Shiba as an example. It was born as a Meme in the bull market and gained market attention by a "sophisticated operation" that combined novelty and topic, which was to airdrop 50% of its tokens to Vitalik. With the help of Doge's rise, it firmly secured the position of "the prince of the dog world".

However, after logging into various top CEXs, the gradual decrease in its topic and attention gathering ability became inevitable. Despite later frequent actions by the Shiba project team, including building their own Dex, building their own L2, issuing NFTs, creating a metaverse and games, and other "achievements", attempting to transition from pure Meme to business-oriented projects, both business performance and coin price have been disappointing. Its DEX Shibaswap has only $21 million TVL, and its coin price has also significantly underperformed the market over the past year.

Comparison of the price trend of Shib and BTC within one year, source: coinmarketcap

It is not easy for Meme projects to transform into business projects. On the one hand, business projects require more detailed planning and execution of strategies, products, and technical steps, challenging the project's operational capabilities from different dimensions. More importantly, the clumsiness of "working hard" appears unattractive, which contradicts the initial anti-mainstream, evil, subculture, and high posture of Meme project construction, further eroding the gradually dissipating charm of Meme.

The degree to which business-oriented projects can build a certain competitive barrier based on their business model varies, while Meme-oriented projects often lack the means to maintain their intrinsic value, and the dissipation of attention from speculators is inevitable, while efforts to do things often have a counterproductive effect.

Meme's team also lacks the motivation to maintain it in the long term

In this era of scarce attention to speculation, the success of the new generation of memes is rarely accidental, and most of them are planned and promoted by centralized cluster forces. This force mostly comes from the collusion of multiple forces, in addition to funding and trading platform resources, it also requires the assistance of KOL at the right time, access to powerful business resources (PEPE project was born for less than a month, and was included by opensea as one of the payment methods) and so on.

However, after a Meme becomes successful, the cost of maintaining its consensus and attention becomes increasingly high. For Meme teams, a smarter approach is to use a horse racing method to earn more money from the previous Pepe and create more "meme experiments" with different styles and narratives, hoping for the birth of the next Pepe. These new "Pepes" that they create and push to the market also compete for the attention of the "old Pepe".

Due to the fact that the core team of the Meme project is mostly anonymous, their decision to stay or leave the project is far less burdensome than that of the founders of other commercial projects. The shedding of the controlling team's skin has further worsened the situation of the old Meme project.

Example: Dogecoin and Bitcoin

When you get to this point, you may want to give a counterexample. "Doge, born in 2013, can revive in the last bull market. Why can't Pepe, as a new generation of meme?"

Doge is precisely a positive example of most Meme's vitality declining with the cycle. Because Doge's outstanding performance in the last bull market is the result of Musk's personal huge influence injection. The "project manipulated by the world's richest man Musk" itself is a new meme that has taken off for Doge. If we exclude Musk's explicit or implicit support for Dogecoin since 2019, I believe that Dogecoin's own meme elements have already faded in the rapidly changing narrative of encryption.

Litecoin, born in 2011, occupies a strong meme of "Bitcoin is gold, Litecoin is silver". However, without other new memes and influences injected, the trend of each cycle is gradually weakening.

Actually, the best counterexample to the "Meme coins cannot cross cycles" is not Doge, but Bitcoin. As the originator of meme coins, it is still a favorite of both new and old crypto investors and a cornerstone of asset allocation. However, as the first meme in the history of crypto investment and the starting point of all crypto projects, Bitcoin's meme power comes from its unique and scarce "orthodoxy".

The difficulty of containing attention, the inevitable departure of team initiators, and the mass production of competitive projects.

Investing in Meme is ultimately a highly skilled craft that emphasizes "quick and efficient" execution.

About the Author

Alex Xu, Research Partner at Mint Ventures, specializes in comprehensive fundamental analysis of DeFi, stablecoins, and the music industry. With over 10 years of experience in market operations and growth strategy, he believes in value investing.