Altcoins
Why Meme Coins Need Quality Market Makers with Advanced Algorithms Instead of Token Sellers
It was bound to happen. As society became more intertwined with social media and finance became more tech-savvy, the intersection of pop culture and finance was bound to intersect. Instead of a beautiful synergy between two ideas, it felt more like a head-on collision, and meme coins were born. While the first large-scale meme currency was Dogecoin (DOGE), many have followed in its wake. In the case of DogecoinWhat started as a joke to ridicule cryptocurrency has grown into a cult following, which has evolved into the same sincere community that raised money for the Jamaican bobsled team to compete in the 2014 Olympics. Many others have followed this surprise success, with the trend even spilling over into traditional finance with the “meme stock” that was Gamestop. But why have meme coins taken on a life of their own, why have they created such controversy, and what role can they play in legitimate finance? Let’s find out.
Why are Meme Coins a part of today’s society?
The idea of a meme currency is indeed absurd, and at the same time more honest than many financial instruments and collectibles. Creating value from what is essentially a meme, or a short-lived joke, is similar to any other fad. Tickle-Me-Elmo, POGs, fast fashion trends. All of these money-making ideas were born out of a resurgence of popular interest, and nothing more. What’s interesting about meme currencies is the intersection with legitimate financial tools. The world of cryptocurrencies has democratized our ability to create a fungible digital currency with a defined mintage and circulation. Instead of someone having to quickly design and mass-produce a product that leverages a rapidly evolving meme, teams can create a meme currency overnight to capitalize on its popularity quickly, and at very low cost if the team has the right talent. At the other end of this trend is the element of collectibles. Meme coins can act as a form of currency, yes, but they also behave like a limited edition collectible, and that’s what can help drive prices up, especially in the short term as popularity grows. Everyone wants in, so prices for limited supplies go up. However, it’s what the development team does afterward that can determine whether that supply crashes and disappears forever, or stabilizes and moves beyond a meme to become a legitimate cryptocurrency with a long-term community of support. This is perhaps the most frustrating aspect of meme coins in the current environment. Rogue teams could deliberately launch a coin for a pump-and-dump scheme, which will inevitably hurt those who want to get involved. However, aside from being bad form and sullying the crypto industry, more and more teams are seeing this as a short-sighted play for meme coins, as they have a place in the longer lifecycle of crypto markets. With proper TGE guidance and MEV market-making tools (organizations like Peanut trade specializing in these services, even for meme coins, meme coins can be launched for long term success.
Scams and scandals
Meme coins have long been, and still are, a source of speculative investment and potential pump-and-dump schemes when they first launch. There are a number of signs to look for to determine if a meme coin is a scam, though there are no guarantees one way or the other. Coins with a small community presence that experience a sudden spike in popularity, especially among a few influencers, may be on the rise only to crash shortly afterward. Market volume and uneven liquidity are bad signs, as is a lack of transparency and online presence from the development team itself. Whitepapers and detailed roadmaps, on the other hand, show the coin’s purpose and indicate a longer-term plan. Yet with any meme coin, as with any investment, you never invest more than you are willing to lose.
Platform and investor strategies align
For development teams looking to launch a legitimate meme coin, you need to be aware that there are predators out there looking to profit from your coin launch, even if you have the best intentions. It’s essential to be able to combat those looking to artificially inflate the price of the coin during its launch in order to sell it. Teams need to have tools in place to protect liquidity from hacker attacks. Third party arbitration robotsBut tokenomics and smart contracts need to be designed to be robust and long-term oriented from the beginning. As mentioned above, there are organizations like Peanut Trade that offer end-to-end services to guide this process, and teams may find this beneficial if they are looking to build a long-term community focused on stability and passive profit for their project’s treasury.
The long-term success of launching any token, and especially a meme currency, requires strategy and effort well before launch, but also requires a strong hand (and automated tools) on launch day, with management tools working to keep things in order until the currency can stabilize on its own. Once it does, the few that are well-managed can last for years and grow their communities into global forces.
That’s what makes our modern world so strange. The ability to create your own cryptocurrency, where things like Dogecoin started as a joke and grew into a multi-billion dollar wealth fund, where a borderless community around the world can come together around any idea they want and develop something together for the long term. It’s a strange world, but it’s pretty amazing.
Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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