Investor Labels Memecoins as Web3’s ‘Trojan Horse’

Memecoins are drawing new users into the crypto industry, facilitating broader adoption of DeFi protocols and the entire Web3 ecosystem, according to Pantera Capital’s managing partner, Paul Veradittakit.

Memecoins-A Trojan Horse For Web3

Memecoins have been all the rage lately. Are they a bubble? Or can they add real value to web3?

In this Thread, I’ll share 3 critical insights to understand memecoins and their vast potential.

Let’s dive in! pic.twitter.com/d5HC2P0wXw

— paul.nft (@veradittakit) April 11, 2024

The investor highlighted several features of such coins that could benefit the industry.

In his view, memecoins successfully capture user attention, broadening the discussion of digital assets on social media.

This strategy is easily explained, Veradittakit believes. The more traders participate in trading, the faster the token’s price rises. He cited the dofwifhat project (WIF) as an example, whose community managed to raise 690,000 USDC to display the coin’s mascot on the ‘Sphere’ in Las Vegas. In anticipation of the promotion, the asset grew by 50%.

Memecoin participants find more creative ways to bring attention to their tokens.

For instance, holders of a viral memecoin depicting a dog with a knitted hat successfully raised $700k to put their meme on the Las Vegas sphere.

As a result of the anticipated publicity, the… pic.twitter.com/SeLQRUHg9D

— paul.nft (@veradittakit) April 11, 2024

Memecoin teams also successfully leverage current societal narratives. This is evidenced by the rise of tokens associated with politicians’ names during the U.S. presidential election year, Veradittakit noted.

Memecoin projects strive to maximize accessibility and awareness of their coins. In contrast, the NFT segment, according to many, suffers from a lack of these qualities, the expert stated.

“The underperformance of NFTs is often attributed to marketplaces like Tensor and Blur operating in an order book style. The real issue lies in distribution,” Veradittakit emphasized.

He pointed to the potential of memecoins to significantly boost on-chain activity. Solana was the first example in this regard. The blockchain’s economy was severely impacted by the FTX collapse in November 2022, but just a month later, an airdrop of a ‘dog coin’ helped revive it, and according to some, even saved it, Veradittakit recalled.

The airdropped memecoin became a rallying point for Solana, rapidly integrating into hundreds of DeFi protocols & apps on the platform. Activity rebounded.

Some, like @joemccann, state that the memecoin may have even saved Solana DeFi. pic.twitter.com/TPOhIttjIv

— paul.nft (@veradittakit) April 11, 2024

“Ultimately, memecoins are a Trojan horse for cryptocurrencies. These attention-grabbing assets can not only enhance the efficiency of applications and networks. They are also the best way to connect the next generation to the latest DeFi protocols and the rest of Web3,” concluded the investor.

Some industry experts have criticized the memecoin boom, fearing a bubble burst. CryptoQuant’s founder and CEO, Ki Young Ju, stated that such projects harm the crypto industry. He compared the situation to the ICO mania of 2018, which resulted in most investors losing their funds.

Conversely, Messari’s head of research, Martje Baas, believed that memecoins play an important role in attracting new users to cryptocurrencies. Former BitMEX CEO Arthur Hayes and macro investor Raoul Pal also saw value in these assets for the industry.

As reported by Cointelegraph Magazine, one in six memecoins in the L2 network Blast turned out to be a scam.