The Tokenist Editor-in-Chief, Shane Neagle writes a guest article.
Many narratives compete to be the most compelling. One may find a home listed in exceptional condition. That is a good narrative. It is important that the value of the home reflects this, even if it’s in an area with a high crime rate.
In the same way, in the cryptocurrency space, value is determined by the dynamic interaction between stories. A case in point. memecoins, AI tokens, which reflect the AI narrative that dominates the world of stock markets, have been gaining a great deal of traction in recent years.
It was Solana, the launch platform that sustainedably benefited from this traffic. SOL has a higher utility value because it must trade memetic assets, such as Fartcoin.FARTBonk (BONK).
Solana, the AI agent platform that is popular among AI agents, will also gain traffic beyond speculative memcoins. Virtuals Protocol (VIRTUAL), from Ethereum Base, expands to Solana. SOL has a more stable valuation, yet still a 24% gain over the last 3 months. This is still a small amount compared to VIRTUAL’s 271% increase and FART’s 1,309% gain in the same time period.
Crypto investors should also consider some memecoins to be utility tokens. This would allow them to have a longer-term value beyond their short-term speculative drives.
What is Utility?
The utility of recent technology could be described as a stretch of language. Official Trump (TRUMP) Memecoin has also been launched against Solana to measure the popularity of Solana’s presidency.
TRUMP has the same purpose as the Trump campaign, which was to make money from the support of Donald Trump. Hawk Tuah (HAWK) token. A large audience provides liquidity in both situations. The liquidity pool can be large enough to allow more people to take advantage of the opportunities between FOMO cycle dips.
It is possible, but only if malicious intent has been excluded via Rug pulls.
The primary use of memecoins is to monetize the following. Social contagion, tribalism, and other powerful factors can be used, but they are still dependent on speculation. For this reason, the utility of a token, especially of a memecoin, is best understood as a secondary purpose, one that can independently drive value as a byproduct of community’s engagement.
The utility of SOL, on the other hand, is directly tied to the functionality it provides, whereas the functionality that drives memecoins comes from the social media hype. This then has a direct impact on their liquidity. The value of a memecoin can be increased if it has broader utility.
In the case of TRUMP coin, that secondary purpose would be to use the memecoin as a currency to buy merchandise from GetTrumpFragrances.com, GetTrumpSneakers.com, and GetTrumpWatches.com. It could also be used as a platform to expand into new markets.
This is not the first time we have seen it. Tesla accepting Dogecoin (DOGE) for some products.
Which memecoin best exemplifies robust utility, given that its meme narrative is linked to the coin’s utility via a feedback cycle?
Shiba Inu (SHIB)
SHIB is one of the most popular memecoins, second only to Dogecoin in terms of market capital. SHIB, unlike Dogecoin as the memecoin king often promoted by Elon Musk has a limited supply. Out of a total of one quadrillion SHIB, 59% are in circulation.
With such an ample supply, SHIP token-holders often engage in burn drives – sending SHIB to burn addresses to increase scarcity. SHIB tokens are also used for a variety of other purposes. ShibaSwap DEX can be used as an exchange token against other coins and tokens or for utility fees.
ShibaSwap charges include token burning fees. Shibarium is a similar layer-2 scaling solution to Base and has the same token burning mechanism. Burn rate Shiba Inu market performance will determine the price.
SHIB’s Market Activity is Further Boosted with Futures Trading StrategiesThe most common way to bet is through perpetual contracts, which are placed on exchanges. Bettors place their money on fluctuations in the price of memcoin. Shiba has also created sub-tokens with a scarcity that is more limited. This mimics Bitcoin’s drive for scarcity, without having to spend the capital required by proof-ofwork. BONE, which is used as a token for voting on proposals and as a token of governance, is restricted to 250,000,000 tokens. LEASH, as a token that is rewarded, is also limited to only 107,646.
Last but not least, Online platforms SHIB can be used to pay for everything from betting products and domain hosting, all the way up to cannabis. SHIB, in short, has layers that go beyond the dog memetics. These layers all work together to give SHIB its staying power.
SHIB does not focus on celebrities. Its valuation does not depend on the changing waters of celebrity status. It is interesting to speculate what will become of TRUMP when the President leaves office.
What other memecoins fit the utility bill?
SHIB is a good example of what’s needed for a strong memecoin. It will be less likely that it ends up in an unusable token bag. First, let’s look at what the Market cap for the cryptocurrency Mecoin The amount of liquidity must be large. Liquidity is at risk if the amount of money in your account drops.
If there’s low liquidity in the market, memecoins may not be able to gain traction with future value drives.
You will end up with a bunch of memecoins only worth pennies. Most traders will ignore it because they wish to take part in the token campaign before its value skyrockets.
The speculative mind-set mirrors insurance premium auditingInsurers assess risks to determine accurate premiums. In the same way, traders can overexpose themselves if they overlook liquidity. Therefore, a memecoin assessment is vital to prevent loss.
However, this is a fertile ground for scammers, and they count on FOMO’s potential to attract the initial investment wave. Beware also of memecoins with large caps, such as Dogecoin (DOGE), which have an infinite token inflation.
It would also be better to divest the memecoin from certain individuals. After all, this would then tie the reputational risks of these individuals to the memecoin. This is usually unsustainable over the long-term.
A robust memecoin must have an ecosystem with a greater utility, such as Shiba Inu’s burning mechanism.
Pepe (PEPE), Bonk(BONK), and Floki(FLOKI) are all memecoins which fit these parameters. They are all extremely inexpensive, which means that they will be easy to enter in the future. There are also projects which increase tokenholder involvement. The capital tentacles are also more numerous to capture inflows.
With that said, these are still memecoins and should be treated as such – highly speculative assets. Investors are advised to keep in mind safer alternatives for memecoin exposure.
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