Western KOLs discuss the reasons behind the Memecoins craze: SEC and venture capital pressure? Attention economy?

Wu said blockchain
2024-10-30 23:38:42
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As the 2024 U.S. election approaches, discussions about memecoins within the crypto community have become a hot topic on Twitter.

Written by: nic carter

Compiled by: Wu Says Blockchain

As the 2024 U.S. presidential election approaches, discussions about memecoins have become a hot topic on Twitter within the crypto community. Their dramatic price fluctuations, rapidly growing user base, and confrontational stance against the mainstream financial world make them a unique market phenomenon. On the evening of October 27, several well-known influencers in the crypto world engaged in intense discussions about the future of memecoins.

Omid Malekan: Memecoins and Economic Populism

The discussion was sparked by a lengthy post on the X platform by Omid Malekan, a professor at Columbia Business School and blockchain writer. (Omid Malekan is well-known for explaining complex cryptocurrency phenomena to the public in a clear and understandable manner, earning him the title of "explainer.") In his tweet, Omid Malekan first wrote, "Memecoins themselves are a manifestation of economic populism; they are a rebellion against the token economics supported by venture capital."

He pointed out that the popularity of memecoins reflects investors' dissatisfaction with the existing token issuance mechanisms, particularly those tokens controlled by venture capitalists, which often lack transparent distribution and fair circulation mechanisms. Malekan further explained that this phenomenon is partly driven by the regulatory policies led by SEC Chairman Gary Gensler and Senator Elizabeth Warren. The strictness of these policies has forced the crypto market to adopt extreme measures such as geo-blocked airdrops and VPN bans.

However, Malekan believes that if the Republican Party wins in the upcoming U.S. elections, there will be significant changes to these policies, and the regulatory environment may become more lenient. He wrote, "A Republican victory will bring back mechanisms like ICOs and airdrops, which can provide actual economic benefits to token holders, while memecoins lack such benefits." He concluded that if cryptocurrency regulation in the U.S. returns to rationality, it would negatively impact the memecoin market, as the market would refocus on decentralized applications (dApps) and other projects with more practical value, leading to a prolonged bear market for memecoins. "Every joke has to come to an end," Malekan warned investors, implying that memecoins will ultimately lead to losses for most people.

Nic Carter: The Memecoin Phenomenon Under SEC Pressure

Next, renowned crypto venture capitalist and Castle Island Ventures partner Nic Carter referenced Malekan's lengthy post to share his views. Carter pointed out in his tweet, "Memecoins are largely a reaction to the SEC's oppressive regulation. If the SEC finds reason, the demand for trading memecoins will decrease."

Carter further explained that while the demand for memecoins may decrease, there will always be a portion of people who continue to trade them, as this phenomenon has persisted for a decade. Carter emphasized that the appeal of memecoins comes from their implication of equality, but he also noted, "Once those so-called 'evil venture capitalists'—that is, institutional capital—learn how to exploit memecoins, they will coordinate activities to drive up memecoin prices, while ordinary investors will only find out when the token's market cap has already reached $1 billion." Carter warned of the potential inequality in the memecoin market, where institutional capital will ultimately take over these seemingly grassroots market opportunities.

Cobie: Early Participation Opportunities in Memecoins

Another KOL, Cobie, replied to Carter's tweet, stating, "The popularity of memecoins is because people want to buy assets that can appreciate in value, rather than those that have already reached valuations in the billions and are in long-term decline." Cobie pointed out that ordinary investors find it increasingly difficult to participate early in non-memecoin projects, as most projects have already gone through multiple rounds of private funding by the time they officially launch. He believes, "Even if the SEC's policies shift to support DeFi, the reality is that no one wants to buy assets on Binance."

Andrew Kang: Reassessing Token Economics Design

Andrew Kang, a partner at Mechanism Capital (also known for being a major crypto short-seller from zero to nine-figure assets), also joined the discussion. Kang criticized the existing token lock-up designs, arguing that long-term lock-ups not only fail to bring positive effects but also increase market instability. "It's better not to set lock-up periods for investors, but to allow as many tokens as possible to enter circulation on day one."

Kang further explained, "Long-term unlock periods only postpone the problem and become a constant challenge for project teams." He advocated for more tokens to enter market circulation at the token generation event (TGE), believing this could avoid market fluctuations caused by subsequent long-term unlocks. He pointed out, "All market participants are potential sellers; locking up tokens does not change that. A free market trading environment is the best solution to the long-term volatility of the crypto market."

Toly Yakovenko: Memecoins as Entertainment

In contrast to the serious discussions of the previous KOLs, Toly Yakovenko, co-founder of Solana Labs, humorously replied to Malekan's tweet, "Trading memecoins is entertainment. It's like a Keynesian beauty contest, guessing what people find most interesting. Trading other assets is work. If possible, people would prefer to work less and entertain more." Toly Yakovenko's viewpoint emphasizes the irrational aspect of memecoins, where investors are more inclined to treat them as a form of entertainment rather than a serious economic activity.

Murad Mahmudov: Memecoins and Global Money Supply

Finally, the recently prominent meme influencer KOL Murad Mahmudov also joined the discussion. Murad replied to Malekan's lengthy post, stating, "99% of memecoin buyers don't care about politics; the rise of memecoins is directly related to the continuous increase in global money supply, not the result of a single election."

Murad emphasized that the increase in global money supply is a key factor driving the rise of memecoins, and even a Trump victory would not change this fact. He further stated, "Memecoin buyers don't even care about trading assets with legitimate income and open expense switches. The increase in global money supply makes attention more important than fundamentals and cash flow." In his view, as liquidity in the global economy becomes increasingly rampant, the attention resources in the market gradually replace traditional economic fundamentals, becoming the key determinant of memecoin value.

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