The bull market is very different, why has the "shanzhai season" transformed into "Meme season"?

Author: BitPush Asher Zhang

Compared to the previous bull market, this round of the bull market is significantly different. In what aspects does this manifest? What kind of exciting game has unfolded between institutions, crypto whales, exchanges, retail investors, and project parties? Regarding the current Meme craze, there are obvious divergences in the market; how should we view the development of this Meme trend? In the future, how will the next phase of the crypto market develop?

Airdrop Professionalization: A Battle of Wits Between Project Parties and Whales

Airdrops originated in the last bull market, and through development, project airdrops have gradually become professionalized, leading to an intense game between project parties and whales (professional airdrop hunters).

Recently, several well-known projects have begun large-scale airdrops, and the market is no longer just applauding; controversies have been ongoing, with ZKsync, Layerzero, and Taiko being particularly representative.

Taiko chose not to disclose airdrop rules, leading to widespread criticism, and the project team had to step in to explain. Taiko co-founder and CEO Daniel Wang responded on Discord, stating that the lack of transparency is because transparency cannot resolve disagreements, and everyone has a strong subjectivity regarding the definition of 'fairness'; we cannot unify and do not attempt to reach a consensus.

ZKsync, the last of the four Layer 2 kings to issue tokens, is the most anticipated but also faces significant controversy. Some participants have stated, "The overall witch rate is very high; after all, out of millions of addresses, there are less than 700,000 left. The hit rate for personal addresses is around 15%, all low-income. With ZK prices so low, it’s not very interesting." Additionally, data shows that while zkSync has many bridged assets, its TVL remains relatively small.

Layerzero's "rumor report" has also received extensive market commentary, exposing the chaos of airdrops. According to LayerZero CEO Bryan Pellegrino, over 3,000 witch reports and 30,000 appeals were received within hours of the bounty activity starting. Under the mutual explosion system, chaos began to emerge. Employees from airdrop studios chose to resign and report internal accounts, a certain project's airdrop whale address was reported, and users targeted whale/airdrop KOL witch clusters for concentrated reporting. There were even reports that a security agency submitted 470,000 suspected witch addresses to Layerzero at once.

Meme Season Replaces Shitcoin Season: The Market's "No One Takes the Bait" Phenomenon, Exchanges in a Dilemma

The direct opponents of project airdrops are the project parties and airdrop whales, but in reality, institutions, retail investors, and crypto exchanges are also deeply involved. In fact, institutions, retail investors, and exchanges are engaged in an unusual and intense game.

Typically, well-known projects have significant institutional investments in their early stages, such as ZKsync, Layerzero, and Taiko, which have many renowned investors. Among them, Layerzero's investors include: Animoca Brands, SoftBank CEO Rene Marcelo Claure, Avalanche ecosystem fund, Polygon ecosystem fund, Fantom ecosystem fund, Dapper Labs, Kronos Research, Ethernity, ImToken Ventures, Matrixport, Gemini, and angel investors like American football player Tom Brady, singer Justin Timberlake, and Nike Foundation chair Maria Eitel, among others. Due to space limitations, this article will not list them all.

Generally, early institutional investors have a certain lock-up period for their tokens. Previously, investing in well-known projects was mostly a sure win, but that is no longer the case. This is because a large number of airdrop studios hold significant stakes after receiving airdrops, and their selling pressure severely suppresses long-term price increases. Before the project token airdrop, airdrop studios created a large number of fake transactions, which likely led institutional investors to misjudge the project’s valuation, greatly reducing their chances of making a profit when the lock-up period ends. According to BitPush reports, the latest data shows that once the airdrop event ended, ZkSync Era's weekly revenue plummeted by 93.88% from $1.37 million at the beginning of the year to just $83,000.

For exchanges, many well-known projects have numerous institutional investments, attractive on-chain data, and many token-holding users. Under the influence of these factors, they have to list overvalued projects. However, many airdrop projects have very little circulating supply in their early stages, leading to high valuations. As the lock-up periods for institutions end, the on-chain activity of these projects experiences a cliff-like decline, and their ability to generate profits cannot withstand the massive selling pressure. This makes it difficult for retail investors on exchanges to make money from these projects.

Based on these reasons, many well-known projects hit new highs upon listing, and the market increasingly lacks retail investors to take the bait. However, due to the low circulation of these projects, their valuations remain high, resulting in a phenomenon where retail investors do not take the bait. Retail investors have begun to shift to the MEME market, as fair launches and the potential for sudden wealth are highly attractive. However, for institutional investors, they often look down on Meme coins. A16Z's CTO Eddy Lazzarin tweeted, "Memecoins have changed the perception of cryptocurrencies among the public, regulators, and entrepreneurs. At best, it looks like a high-risk casino or a series of false promises masking a casino." This has led to the phenomenon of "institutions not taking the bait."

What Are the Real Reasons Behind the Prosperity of the Meme Economy?

Starting in 2023, Bitcoin first ignited the MEME craze, with ORDI, based on BRC20, experiencing a massive explosion, followed by the popularity of BRC20 protocol tokens. Subsequently, a series of derivative innovative standards like ARC 20 and SRC 20 have attracted significant market attention. Besides the Bitcoin ecosystem, Solana has also produced the most Meme leaders in this bull market, such as WIF, BONK, BOME, GUMMY, and MANEKI. In addition to the Bitcoin and Solana ecosystems, the recent NOT in the Ton ecosystem and the previous DEGEN in the Base ecosystem have also garnered market attention.

It is undeniable that retail investors' reluctance to take institutional positions is a major reason for their shift to the Meme market. However, why are the truly explosive or profitable MEMEs primarily concentrated in Bitcoin and Solana, with some in Base and Ton? What are the underlying reasons for this? What is the real driving force behind the explosion of Memes in this bull market?

This article believes that the fundamental reason for the on-chain MEME prosperity is still the financial boom driven by technology. When the development of many public chains stagnated, Bitcoin and Solana brought new hope to the blockchain industry through their technology.

Bitcoin has a strong security consensus; if powerful applications can be built on it, it can compete with traditional finance, which has been a belief among some in the Bitcoin community. This is why Bitcoin has forked into BCH and others. After the Bitcoin SegWit upgrade, Bitcoin underwent the Taproot upgrade after many years, further expanding its capacity. It is this technical "unblocking" that made the Ordinals protocol possible, leading to the inscription craze. Since DeFi has matured on the Ethereum network, it is relatively easy to migrate to the Bitcoin network, and platforms like Unisat quickly swept through the crypto space. New protocols continuously emerging on the Bitcoin network actually represent certain technological breakthroughs. Although BRC 20 has a strong consensus, it can cause UTXO congestion, which may harm the BTC network in the long run. ARC 20 is favored by the tech community for its simple colored coin transfer model and Bitwork's POW mining paradigm, but its reliance on SegWit for data storage is not perfect, and subsequent token splits have encountered some issues. SRC 20, while not dependent on indexers, has not solved the dust problem it creates for the BTC network. Runes is currently focused on addressing these issues. Each technological breakthrough typically gives rise to a leading token, just as Bitcoin had no use value at its inception; the same applies here, as imitations often struggle to maintain value.

After 2023, although Solana experienced the impact of the FTX collapse, its technological strength should not be underestimated. It is expected to drive Web3 applications beyond the mainstream, particularly in the DePIN track, with many projects like Helium, Render Network, IO Net, and Nosana. The latest hot projects on Solana are also these well-known projects, and as they reach high valuations, funds exhibit an overflow effect, which has led to the Meme tokens on Solana benefiting from this capital overflow. Base relies on Coinbase, while Ton largely depends on Telegram; due to its large user base, some Meme leaders have also gained market attention.

Application is Key: Welcoming the New Era of Web3

Since the DenCun upgrade, Layer 2 transaction fees have significantly decreased, and performance has improved markedly. Meanwhile, ZKsync, once one of the most promising projects among the four Layer 2 kings, has launched its token, which can largely be seen as blockchain technology entering the application phase. The false prosperity created by airdrop hunting is meaningless; whether it can support token prices through value creation is the fundamental solution to breaking the current market's "no one takes the bait" phenomenon. Only by creating real value can project parties, retail investors, institutions, and exchanges work together to generate true and substantial blockchain revolution dividends.