Opinion by Mark Basa, director at HOKK Finance
Crypto hasn’t had the easiest start of the year. With a market cap down to below $1 trillion, from its highest point of $3 trillion at the end of 2021, the prolonged crypto bear market we know as crypto winter is here and needs to be reckoned with.
What does that mean, specifically, for meme tokens?
Since they are meant to go viral like the memes they take their cues from, they have greatly benefited from the unprecedented euphoria we saw in 2021, as well as the meteoric influx of capital that followed. But with crypto markets in freefall alongside global financial markets, meme tokens will have to adjust their models if they are to survive long term beyond the traditional hype-marketing that fuels demand.
In the new age of finance, the concept of “meme utility” refers to currencies based on memes that will become legitimate ways to conduct commerce. Meme tokens have the best branding in the industry when it comes to customer loyalty, and a dire cult following, so they should not be underestimated.
Owners of these meme token projects know that a community of die-hard online enthusiasts is what makes them special, and what’s allowed them to pull through until now. But in order for them to survive a “crypto winter” and build a serious business, they will need a solid strategy of diversifying their product offerings with new and exciting things that they can be sure their token holders will love.
Few have survived the meme-token journey, and even fewer have a real-world utility. I saw this trend happening: Young people disconnecting with banks and using meme tokens for commerce. I joined HOKK Finance, aka Hokkaido Inu, one of the first meme tokens, and I led the company to transform into a DeFi ecosystem so people and crypto companies could tap into the future of money. Upon HOKK launching onto the market in April 2020, it reached an organic, $800m market cap. Hokkaido Inu was born and rode the wave of meme-season. Today, it’s a totally different ball game. It is a team of 36 mostly volunteers and registered in Dubai as a distributed ledger technology provider, and has opened a $10m series A to compete against both meme tokens and DeFi platforms that have their own challenges.
On the other hand, it’s true that “it’s during crypto winters that the best entrepreneurs build the best companies,” as David Marcus, who ran Payments/Crypto at Meta, tweeted on January 24. He continued: “This is the time again to focus on solving real problems vs pumping tokens.”
We’ve already seen a product built on the ashes of the last crypto winter become a juggernaut: OpenSea, the first and largest marketplace for NFTs, was founded in December 2017, and —well, we all know what happened next. We can all agree that 2018 wasn’t an easy year for cryptocurrencies as a whole, so it’d be safe to assume that OpenSea wouldn’t survive, but fast-forward to January 2022 and the company is now valued at $13.3 billion.
I believe it will become increasingly easy to distinguish between projects that have the ability to follow through and build on what they’ve started, and ones that really shouldn’t have garnered that much attention in the first place. One example is Shiba Inu (SHIB), the dog-themed meme coin inspired by the Shiba Inu dog, which was launched in 2020 and had barely one million wallet addresses by April 2022. In July 2022, the figure rose to 1.2 million, highlighting a 200.000 wallet increase in just three months and within the context of an especially nosediving market.
We can see that certain crypto trends just simply don’t last forever, and we predicted that a massive downtrend of meme tokens would eventually come. That time may have come, but the fact that coins like SHIB and ELON (the Elon-Musk-inspired meme token “expected to be the next big name in the meme coin community”) continue to thrive is confirmation that what we need is a fundamental switch in focus, not total abandonment of the game.
It’s certainly not easy to pivot into a more serious DeFi player with meme-token branding, but along with others following the same lead, we know how important it is to do this for the longevity of the project, and also -crucially- the community.
In fact, evolving a meme token into something more than just a crypto trend requires something of a fine balance between adapting, quickly and necessarily, and keeping to your roots. For example, managing to leverage educational or charitable interests into real and tangible results. This is what Pawthereum, “a cryptocurrency project with animal welfare at its core,” is doing. The organisation implements a small tax on each transaction, which it then donates to animal charities. As of writing, it has raised almost half a million dollars.
I believe that it’s exactly by creating fun and creative ways to send, spend, and invest money that the key players of the future will claim their name and fortune. Sure, the popularity of meme tokens is mainly driven by cultural and entertainment factors, but their real-world utility use will be what keeps them alive. As another very online trend, the Facebook-boomer inspirational quotes, would say: “In the depth of winter, I finally learned that there was in me an invincible summer.” Much wisdom, such economic benefits.
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