Murad Interview: The Memecoin Supercycle Will Create Billionaires

Organized & Compiled: Deep Tide TechFlow

Guest: Murad Madhov

Podcast Source: Decypher Podcast

Original Title: The Memecoin Supercycle Will Mint Billionaires - Murad | Ep 14, Murad | Memecoin

Release Date: October 2, 2024

Background Information

Murad Madhov is an entrepreneur and investor who has proposed a unique theory: the next best-performing asset will be Memecoins, a type of cryptocurrency based on internet memes. He believes these assets will create millionaires, multi-millionaires, and even billionaires.

Reality: Why Altcoins Are Heading Towards Oblivion

• Murad discussed the current state and future of altcoins. He mentioned that since 2016, his focus on cryptocurrencies has gradually shifted towards altcoins, trying to understand their essence. Murad pointed out that all altcoins listed on Binance are performing poorly, with almost all of them declining, with only two exceptions.

• Murad emphasized that the crypto industry is not a technology-driven industry but rather an asset production and speculation industry. He believes that building a community takes time, at least a year. The success of altcoins depends on whether they can make ordinary people wealthy. He also mentioned that the relationship between altcoins and crypto technology tokens is more adversarial than simply competitive.

The Importance of Meme Coins

• Murad further elaborated on his views about altcoins, believing they are not just products of popular culture but also symbols of community. He pointed out that the success of altcoins lies in how they evolve and adapt to market demands. He reviewed the development of the crypto industry, mentioning the first Oscar wave in 2014 and the ICO boom in 2017, which he believes drove the rise of altcoins.

• He analyzed the current market changes, pointing out that many DeFi projects are listed at overvalued prices, making it difficult for ordinary investors to find truly promising projects. Murad emphasized that ordinary investors are gradually realizing that the token itself is the product, not the software. He believes that the current crypto industry is still primarily an asset production industry, with technology being a subsidiary.

Future Trends

• Murad believes that future trends will see a close integration of altcoins and communities. He is confident that only those altcoins that can continuously evolve and adapt to market changes will succeed in competition. He mentioned that market changes and trends are influenced not only by internal industry factors but also by external world influences, and both need to be analyzed together.

The Rise of Memecoins: Opening a New Era in Crypto

• Murad further explored the rise of Memecoins, referring to it as the "post-software" phenomenon. He pointed out that the market has witnessed Memecoins like Doge, Pepe, and SafeMoon reaching astronomical market caps, proving that the value of these tokens does not rely on actual products. Murad believes this indicates that software or platforms have never been the core product of crypto projects.

• He mentioned that many projects currently favored by venture capital, despite generating only $500 in daily revenue, are still trading at valuations of $7 billion, further demonstrating that their value is not based on cash flow but on "mimetic premium."

• Murad proposed a controversial viewpoint: all altcoins are essentially Memecoins, just more complex versions. He explained that if a token is neither a store of value nor distributes income, then it is a Memecoin.

The Value of Community and Tokens

• Murad emphasized that the real product is the community and the token, not the software itself. He believes this perspective can help people analyze the entire cryptocurrency universe from a new angle, rather than just focusing on Memecoins or tech projects. He mentioned that many project founders and venture capitalists claim they cannot distribute income due to regulatory reasons, but he believes this is often just a matter of their own interests.

• He warned that once income distribution begins, investment bankers will use Excel to estimate the fair value of the project, which may significantly be lower than the current market valuation. Therefore, Murad emphasized that any project without cash flow or income distribution can be considered a Memecoin, providing a new perspective for understanding the cryptocurrency market.

Views on the Future of the Industry

• In the conversation, the host mentioned that his father's interest in DeFi comes from its seemingly legitimate financial infrastructure, implying that DeFi brings some value proposition to the crypto industry.

• Murad responded that while he believes Memecoins are the new wave, this does not mean that the influx of funds into the industry will decrease. His viewpoint is that the rise of Memecoins may attract more investors and capital into the crypto industry, which still has the potential for growth and innovation.

The Importance of Memecoins and Cultural Communities in Crypto

• Murad emphasized the impact of Memecoins on crypto technology tokens, arguing that they are not an attack on crypto technology but rather a "vampire attack" on crypto technology tokens. He pointed out that many DeFi projects can operate normally without tokens, such as Uniswap, indicating that the best products do not necessarily need tokens, and the best tokens do not necessarily need actual products.

• Murad believes that ordinary investors are gradually realizing that all tokens, whether backed by technology or merely meme images, are essentially gambling tables in a casino. He mentioned that ordinary investors are starting to think about why they should bid for a gambling table that is already worth $10 billion instead of building a real community that allows ordinary people to become wealthy and achieve wealth growth. He believes that Memecoins are recreating the scenes of the ICO boom in 2016 and 2017, with the key being human motivation and demand.

The Power of Community and Cultural Building

• Murad emphasized that a real community is a key factor driving token performance. He believes a strong community is like a "cult," where members' loyalty and enthusiasm for the token lead to supply constraints, creating a "diamond hands" effect. Even when the token price rises, community members are unlikely to sell easily because their sense of identity and belonging makes them more willing to hold.

• He pointed out that building a community requires allowing ordinary people to achieve wealth growth. Historically, many successful crypto projects have built strong communities by allowing investors to profit. For example, Bitcoin, Ethereum, Solana, and some meme tokens like Shiba Inu and Dogecoin have attracted a large number of ordinary investors who have gained substantial returns by holding tokens, which has made them closely identify with these tokens.

Token Distribution and Wealth Effect

• When discussing airdrops, Murad pointed out that airdrops are one-time events, and most people will eventually sell them for ETH or stablecoins. He believes that unlike the wealth effect of Memecoins, the success of Memecoins lies in their dynamic token distribution, where the proportion of core holders increases over time. As small tokens develop into medium-sized tokens, the vast majority of the supply will be concentrated in the hands of committed believers, giving these tokens immense potential for future demand growth.

• Murad also mentioned that a true "cult" community needs to endure market fluctuations and tests, proving the community's steadfastness and durability only after experiencing several significant downturns. This experience makes holders in the community more resolute, enabling them to drive rapid price increases when demand arises.

Trends of Memecoins in the Crypto Market

• Murad emphasized his investment philosophy regarding the current crypto market, particularly his focus on Memecoins. He believes that Memecoins are outperforming other tokens in the market, especially against the backdrop of Bitcoin.

• Murad noted that although Bitcoin attracts a large amount of institutional investment, only 42 tokens have outperformed Bitcoin in the past year, of which 13 are Memecoins, clearly indicating market trends.

Performance of Memecoins

• Murad pointed out that Memecoins are performing exceptionally well in the market, with many Memecoins yielding returns far exceeding other types of tokens. He mentioned that over the past 40 weeks, when Bitcoin's price corrected, Memecoins were typically the strongest rebounding tokens. This trend indicates that ordinary investors' enthusiasm for Memecoins remains high.

Future Market Trends

• Murad believes that if future market cycles resemble those of the past, tokens that perform well in 2024 will continue to excel in 2025. He mentioned that historically, in the third year of each cycle, certain industries or tokens exhibit strong performance. For example, Ethereum and Ripple in 2016, and DeFi and NFT projects in 2020, all achieved significant gains in the later stages of their cycles.

Social Psychology and Investment Behavior

• Murad emphasized that investor behavior is often influenced by social psychology. He pointed out that many ordinary investors tend to mimic the investment behaviors of successful individuals around them, such as stories of friends or family profiting from Memecoins. This mimetic effect leads to more investors flocking to the Memecoins market, driving prices up.

• He mentioned that as more ordinary investors enter the market, they will tend to seek investment opportunities similar to successful cases around them, further promoting the Memecoins craze. He believes that 2025 will be a standout year for Memecoins and AI tokens, potentially seeing a "parabolic" growth.

Ethereum and Solana: The Casinos of the New Era

• Murad discussed why he is particularly focused on Memecoins on the Ethereum and Solana platforms. He pointed out that the ecosystems of these two platforms make them "casinos" in the crypto market, accumulating vast wealth and users over the past several cycles.

The Ecosystems of Ethereum and Solana

• Murad emphasized that the success of Ethereum and Solana lies in their ability to attract a large number of users and investors. He described Ethereum as a "big casino" because it became the primary medium of exchange during the ICO boom in 2016 and 2017, and continued to play a significant role in the rise of DeFi and NFTs. This has made Ethereum not just a blockchain platform but an economy where users engage in various transactions and investments.

• Solana is in a similar situation, building its ecosystem by attracting Memecoins and DeFi activities. Murad believes that other emerging blockchain platforms, such as Aptos and Sui, hope to replicate the success of Ethereum and Solana to become new options for "value storage."

Meme Coins as User Acquisition Tools

• Murad pointed out that many emerging blockchain platforms are using Memecoins as tools to attract users. He believes that Memecoins can incentivize users to engage with these platforms, increasing trading activity and liquidity. He mentioned that while the teams of these new platforms hope to enhance the value of their tokens through Memecoins, in most cases, these Memecoins are driven by teams or venture capital firms rather than by genuine community engagement.

The Importance of "Idle Wealth"

• Murad further explained the concept of "idle wealth," referring to the large amounts of assets held by investors on Ethereum and Solana that can be transferred to Memecoins. He believes that if these investors can be persuaded to allocate 5% or 10% of their assets into Memecoins, it would bring significant capital inflow to these tokens.

• In contrast, Murad pays less attention to other chains (like Tron and Aptos) because he believes these chains lack sufficient "idle wealth" and total value locked (TVL). This makes them face more challenges in attracting funds, relying on exchange listings or cross-chain transfers, which increases friction.

• Murad's viewpoint emphasizes the unique position of Ethereum and Solana in the crypto market and how they attract users and capital through Memecoins. He believes that the ecosystems of these two platforms make them the "casinos" of the crypto market, and future market trends will continue to benefit from their strong user bases and idle wealth. Meanwhile, he remains cautious about the potential of other emerging blockchain platforms, believing they need more user and capital support to achieve similar success.

The Evolution of Memecoins: From Banks to Memes in an Instant

• In this conversation, Murad discussed the value and future trends of Memecoins, emphasizing the shift between traditional finance and the crypto market, and how it affects the development of Memecoins.

The Valuation of Memecoins and Its Relation to Blockchain

• Murad mentioned that while the valuation of Memecoins may exceed that of certain blockchains themselves, this is often coincidental. He believes that the choice of blockchain is important for initial valuations (e.g., below $3 billion) because the "idle wealth" on these chains can drive the rapid growth of Memecoins. However, as the market develops, the value of Memecoins may become less related to the blockchain they are on.

The Impact of Centralized Exchanges

• Murad predicts that by mid-2025, many excellent Memecoins will be listed on centralized exchanges, further promoting their circulation and acceptance. He mentioned that trading platforms like Robinhood are emerging, allowing users to quickly purchase Memecoins through traditional bank accounts, eliminating the complexities and fees of blockchain transactions. This simplified purchasing experience may attract more ordinary investors into the Memecoins market.

The Optimal Range for Risk and Return

• Murad discussed the market capitalization range he focuses on, which is Memecoins valued between $5 million and $200 million. He believes this range offers better risk-return ratios. While some large Memecoins may continue to rise, he believes there are better investment opportunities among medium-cap Memecoins. He does not recommend investing in low-cap Memecoins due to their higher risks and volatility.

Classification of Memecoins

• Murad classified Memecoins into two categories: one is "PvP" (player versus player), similar to quick trading and speculation; the other is "PvE" (player versus environment), which involves building communities and long-term investment in Memecoins. He stated that he prefers the latter, focusing on long-term community building rather than short-term quick trading.

Holding Strategy and Future Outlook

• Murad plans to hold almost all Memecoins for the next 14 months, reassessing in October or November 2025. He believes this will be a super cycle for Memecoins, emphasizing the concept of a "belief super cycle," encouraging investors to stop short-term trading and focus on community building and long-term holding.

Accelerationism and the Dynamics of Memecoins

• Murad delved into the production speed of Memecoins, the importance of community building, and his views on investment strategies. He believes the current market environment encourages the rapid growth of Memecoins while also changing the risk-return dynamics for investors seeking potential winners.

The Accelerated Production of Memecoins

• Murad proposed the concept of "Memecoin accelerationism," emphasizing that the number of new Memecoins appearing daily is increasing dramatically. He predicts that in the future, there may be hundreds of thousands of new Memecoins created each day. This phenomenon makes it more challenging to find true winners in this market, as the sheer volume of new projects dilutes investors' attention and capital.

The Importance of Community

• Murad emphasized that building a strong community typically requires at least a year. He believes that established communities (i.e., "cults") have a competitive advantage in the future because they can provide higher support and loyalty. He prefers to invest in Memecoins that already have a solid community foundation rather than chasing newly emerging projects.

Changes in Risk and Return

• Murad pointed out that as the market changes, the risk-return profile of investing in small Memecoins is declining, while the risk-return profile of investing in mature Memecoins communities is rising. He mentioned that in the past, small-cap Memecoins had greater upside potential, but now large-cap Memecoins offer better opportunities for growth. He prefers to choose those Memecoins that are priced lower but have active communities.

Avoiding Cabals

• Murad discussed the phenomenon of cabals in the Memecoins market, referring to small groups manipulating the market to influence Memecoins' prices. He expressed his opposition to such centralized manipulation, preferring to choose decentralized, organically growing Memecoins. He hopes the projects he invests in can discover prices without human intervention, maintaining fairness and transparency.

Navigating the Memecoins Industry

• Murad discussed the future development trends of the Memecoins industry, particularly how to find investment opportunities in an increasingly competitive environment. He mentioned that as more participants enter the market, ordinary investors may face more challenges, but he believes that focusing on genuine communities and "culture" can lead to successful paths.

Challenges for Ordinary Investors

• Murad believes that many ordinary investors may incur losses when trying to speculate on Memecoins, ultimately realizing that Memecoins built on strong community foundations (i.e., "cults") are better investment choices. He advises investors to skip small-cap projects because their chances of success are extremely low, with about a 95% probability of not being profitable.

Identifying Genuine Communities

• Murad emphasized that there is a lot of fraud in the Memecoins industry, especially since many influencers do not genuinely have investors' interests at heart. He mentioned that 99% of influencers may be manipulating the market, using their influence to sway Memecoins' prices. He suggests that investors create a checklist to identify genuine communities, looking for projects that perform well across multiple dimensions, including fair token distribution and active community support.

Future Trends of Memecoins

• Murad predicts that future Memecoins will shift from simple humorous images and animal themes to more complex and serious themes. He believes that Memecoins are essentially "tokenized communities," and in the future, there will be Memecoins related to various concepts, including every word, number, sentence, etc. He believes that in such an environment, only a few truly valuable Memecoins will stand out.

The Rise of Movement Coins

• Murad proposed a new classification—"movement coins," which are tokens that not only represent communities but also embody certain philosophies or beliefs. He believes that the successful Memecoins of the future will be those that can evoke strong emotional responses. He refers to this as the "belief super cycle," suggesting that these tokens will represent higher levels of culture and movements.