Source: Gryphsis Academy
MEMEs spread through imitation. Any information that can be replicated through imitation can be called a meme. The form of information that spreads is various types of memes, such as music, ideas, or styles. The spread of memes follows the theory of a lifecycle and the transmission methods are similar to infectious disease models, but it is still difficult to quantify the criteria for strong memes.
MEMEs present in different forms during different cycles, and their characteristics and mechanisms change with the cycles. MEMEs to some extent reflect the mentality of investors and market trends in different periods, including their outlook on new technologies and narrative directions.
The current wave of meme trends in the bull market is influenced by society, psychology, economy, and technology. At this stage, MEMEs can be roughly classified into mechanism innovation, market narrative, market sentiment, meme culture, celebrity effect, and hot topic simulation. There are various gameplay mechanisms, and a reasonable strategy is needed to profit from them.
The future of MEMEs is highly controversial, and there are different opinions from institutional investors, retail investors, and Key Opinion Leaders (KOLs). MEMEs should be interesting and meaningful and should not become speculative tools.
Introduction
From Ethereum to Solana, MEMEs have always been beneficial legends. According to a report by CoinGecko, MEMEs were the most profitable cryptocurrencies in the first quarter of 2024, with the highest average return rate of top tokens reaching 1312.6%.
PANews previously analyzed the investment returns of MEMEs from the perspective of Kelly’s formula. By calculating the number of coins issued daily on the Ethereum and Solana chains and the winning rate, it was found that the winning rate was very low. Ethereum had a winning rate of 3.28%, and Solana was even lower at only 1.6%. They would eventually become slaughterhouses where players always lose.
MEMEs are a high-risk, high-reward investment game. How do they attract the masses to participate and how do they spread? Value coins vs MEMEs, where is the future of MEMEs?
1. How do memes spread?
1.1 What are memes?
“When we leave this world, only two things remain, genes and memes.”
– Richard Dawkins
MEMEs, also known as mimemes, mi, mimu, or memes, are abbreviations of the word “mimeme” derived from the Greek word “mimema,” which means imitation or replication. The concept of memes originated from the book “The Selfish Gene” by Richard Dawkins, a British evolutionary biologist. He described memes as “units of cultural transmission that can replicate and propagate themselves in the meme pool by means of imitation in a broad sense.”
The concept of memes has had a biological analogy since its inception. This analogy equates memes with genes (both can self-replicate, propagate, mutate, and respond to selection pressures) and has given rise to a new discipline called memetics.
Memes can be classified in various ways. From the perspective of pros and cons, they can be divided into beneficial memes and harmful memes. From the perspective of manifestation, they can be classified into complex memes and simple memes. From the perspective of evolution, they can be divided into symbiotic memes and parasitic memes. From the perspective of replication ability, they can be classified into strong memes and weak memes.
Currently, there are various interpretations of the concept of memes, but the most widely accepted definition is based on the synthesis of Dawkins and Blackmore, which states that memes spread through imitation. Any information that can be replicated through imitation can be called a meme. The various forms of information that spread are various types of memes, such as music, ideas, or styles.
The definition of MEMEs is even more different. MEMEs can be perceived differently by different people. In the eyes of Web2, BTC may be the biggest meme. In the eyes of mainstream coin players, even altcoins may be considered memes. But the common point among them is that MEMEs are tokens that have no practical use in the eyes of investors, exist only for speculative purposes, and rely on market sentiment for pricing.
1.2 Mechanisms of meme transmission
The meaning of “being imitated and spread” by memes implies its own iterativity, and without the act of transmission, memes cannot exist.
Therefore, the successful replication of memes relies on transmission. How are memes transmitted?
A meme goes through four steps: expression (E), transmission (T), assimilation by recipients (A), and storage in the memory system of recipients (R). After completing these four steps, memes find new hosts and complete one lifecycle of meme transmission.
The transmission process is similar to the transmission of viruses, and the transmission path can be well revealed through the infectious disease model. The infectious disease model divides the population into susceptible, exposed, infectious, and recovered individuals to simulate the transmission mechanism. Due to the short incubation period of memes, the SIR model is usually used to analyze meme transmission. The number of susceptible individuals decreases, the number of recovered individuals increases, and the number of infectious individuals first increases and then decreases, reaching a peak. This peak represents the peak of memes. Opinion polarization, opinion leaders, and emotional contagion all have different effects during the transmission process.
In addition, the transmission mechanism of internet memes is also related to the theory of social identification in psychology. Spears and Lea (1992) found through research that due to the anonymity of the internet, members of virtual communities cannot effectively display their personal traits and identities. They have to rely on the definition of certain decisions and organizations by society to help define themselves and define their interactions with others. Therefore, in the process of meme transmission, memes also shape the sense of identification with community organizations. The stronger the community consensus and identity, the stronger the transmission of memes.
An interesting phenomenon worth mentioning is that in the Pump gameplay of the Solana chain, meme holders are worried that serious projects cannot withstand the decline and will Rug, so they encourage and support the developers in the community. This indirectly reflects that a good community atmosphere has a promoting effect on both parties, thus enhancing community identification and increasing the chances of memes going viral.
1.3 Criteria for strong memes
Strong meme indicators have strong guiding significance. They can not only help individual traders judge whether a meme can successfully spread and at which stage of its lifecycle it is in but also help project teams create more viral memes.
From the perspective of biological evolution, Dawkins (1998) proposed three indicators for measuring successful memes:
1. Copying fidelity: The more faithful the copy is to the original, the more likely it is to maintain its intrinsic characteristics after several rounds of replication.
2. Fecundity: The faster the replication speed, the wider the spread of copies.
3. Longevity: The longer the survival time of the copied template in the physical world, the more copies derived from it.
Successful memes need to have all three. The reason why strong memes can spread widely is largely because they are easy to remember, not because they are important or useful. Therefore, effective memes should be those that can evoke highly authentic and long-lasting memories.
From the perspective of communication studies, Heylighen specifically described ten selection criteria such as coherence, novelty, and simplicity. This led to the design of a fitness formula for memes.
F(m) = A(m) x R(m) x E(m) x T(m)
F(m) represents the ratio of the average number of memes at a certain time unit t to the average number of memes at the previous time unit t-1.
A(m) represents the ratio of assimilation rates between the two time periods.
R(m) represents the ratio of the maximum storage time of assimilated memes between the two time periods.
E(m) represents the ratio of the number of expressions of a meme saved by a host between the two time periods.
T(m) represents the ratio of the number of expressions of a meme transmitted to a host between the two time periods.
For a specific moment, A ≤ 1, R ≤ 1, and E have no upper limit. It can be expressed 10 times, 20 times, or even hundreds of times. T also has no upper limit. If it is broadcasted, assuming there are ten thousand listeners, it is equivalent to copying the meme ten thousand times each time. In the formula above, if any factor is zero, the product will be zero. To make the fitness F>1, one strategy is to make E>1 or T>1.
By observing the transmission trends of most memes and conducting rough statistics, Heylighen found that if a meme meets certain criteria in the table above, it is likely to successfully complete the lifecycle of memes and achieve replication and transmission as a strong meme.
However, whether from the perspective of communication studies or biological evolution, it is difficult to accurately judge to what extent memes that meet which criteria are strong memes. From the perspective of finance and mathematics, the success rate of judging secondary trading indicators on memes is about 30% and there will be some errors. Liquidity, the proportion of the top ten holdings, and the number of times the project team Rugs will also affect the measurement of memes, but it is difficult to accurately quantify these indicators. The analysis of AI models or large-scale modeling may be helpful.
2. Current status and development of memes
Since the birth of Bitcoin, memes have existed in every cycle and have performed well. From Litecoin to Dogecoin, and then to NFTs and zoo memes, memes have been presented in various ways, and their characteristics and mechanisms have changed with the cycles. Analyzing their development and current status helps us better discover the answers.
2.1 Early development of memes
MEMEs did not cause a market frenzy when the concept was first born. It was not until 2013 when Dogecoin (DOGE) entered the public’s view that memes became popular.
Doge is a meme featuring a Japanese Shiba Inu dog, which originated from a picture of a Japanese Shiba Inu named Kabosu that appeared in 2010. After Billy and Jackson launched Dogecoin (DOGE), it gained widespread attention on websites such as Reddit and was used as a currency for tipping. Two weeks after its creation, the daily trading volume exceeded that of Bitcoin.
In 2014, Doge was selected as the “Best MEMEs of the Year” by Time magazine and appeared in mainstream culture. In 2021, with the multiple endorsements of Elon Musk, the price of Dogecoin (DOGE) soared. The success of Dogecoin (DOGE) laid the foundation for the prosperity of memes and brought about new types of coins. These new coins were initially launched on the “Alternative Cryptocurrency” subforum of Bitcointalk using Proof of Work (PoW) methods.
During different periods, different memes will rise. Looking back at the ICO frenzy in 2017, most projects provided detailed whitepapers to attract investments with their technological innovations. During this period, most memes were more serious, and their visions aimed to go beyond memes and make practical innovations.
During the DeFi boom, projects focused more on explaining their economic and liquidity advantages to attract participants. At that time, memes mainly revolved around animals, food, and other themes. In addition, NFT projects were also considered memes in the early stages. Some of the most representative NFTs include CryptoPunks, Bored Apes, Pudgy Penguins, and others.
The current trend of memes relies more on emotional drives. Projects no longer pursue technological innovations but focus more on narrative directions and market trends. This phenomenon may reflect a certain degree of fatigue in the market, where investors, after experiencing a long period of technology-oriented investments, are gradually seeking more IQ50 ways to participate in the market. In this mode, Pump has emerged, attracting a large number of players through low-cost means.
Looking back at the development of memes, the characteristics of memes can reflect the mentality of investors in different periods and the current market trends. MEMEs include the outlook on current technologies and the capturing of market hotspots.
2.2 Analysis of memes on major public chains
MEMEs can bring prosperity to public chains. From Doge to Bome, memes have become a unique cultural symbol and means of communication in Web3. Major public chains all have a place for memes.
Currently, some of the high-market-cap memes are mainly deployed on Ethereum, Solana, Base, Bitcoin (BRC20, etc.), and other chains.
In the top 500 market cap memes, Ethereum has the most, followed by Solana and Base. These chains provide a platform for the development of memes and have a large user base and active communities, which are conducive to the spread and prosperity of memes.
Conclusion
MEMEs are a form of cultural transmission that spreads through imitation. They have become a unique cultural phenomenon and communication method in the Web3 era. Understanding the mechanisms and characteristics of memes can help us better understand their spread and development. Analyzing the current status and future trends of memes can provide insights into the investment opportunities and challenges in the cryptocurrency market.Rewritten Article:
In the current bull market, the Solana blockchain has seen a flourishing ecosystem of MEMEs, with many of them deployed on Ethereum and Solana chains. The rise of MEMEs on Ethereum can be attributed to the fact that most of them are early-stage MEMEs, such as PEPE and SHIB, which are part of the early narrative logic.
Unlike Ethereum, the MEMEs on the Solana chain, with DOGE as the central focus, encompass a wider variety of animal-themed MEMEs. The gameplay is also more susceptible to market sentiment, especially with the emergence of BOME. On the other hand, MEMEs on Base chain are more inclined towards capturing technical trends and building social ecosystems.
One of the notable cases of innovative gameplay mechanisms is PEOPLE and SLERF. While Web3 focuses on consensus, MEMEs prioritize consensus. PEOPLE, a deep experiment of MEMEs on DAO, gathered nearly 20,000 people from around the world during the ConstitutionDAO event. It was created by innovators Graham Novak and Austin Cain with the goal of auctioning a print version of the US Constitution from 1787. This became the first crowdfunding project to protect world historical documents and achieved a hundredfold return at the time. On the other hand, SLERF gained popularity due to the project’s operational mistakes, which forced the founder to repay the funds, resulting in a fair distribution and sparking a frenzy.
The direction of market narratives influences the rise of certain types of MEMEs. There is a time lag between the primary and secondary markets, and MEMEs themselves reflect the pursuit of new technologies. For example, when the AI narrative dominated the secondary market, AI-themed MEMEs such as AIDOGE and AIBB quickly surged in popularity. Additionally, events such as Women’s Day and Chinese New Year can also trigger increases in related tokens like LADYS. Mentioning specific events or individuals like NVIDIA’s conference or CZ’s court appearance can also lead to the issuance and fluctuation of tokens like NVEDUA and FREECZ. However, most of these MEMEs quickly return to zero after the event ends.
The market sentiment is difficult to predict, but it often triggers consensus among people and ignites market enthusiasm. For example, BOME founder Pool’s actions quickly ignited the market due to its grand strategy.
Strong memetic culture plays a significant role in the popularity of MEMEs. DOGE gained popularity even before its token sale, and PEPE’s memes spread widely before the token was released. These examples demonstrate the existence of strong memetic forces prior to the emergence of tokens. Additionally, MEMEs with artistic characteristics often have a stronger impact, possibly due to the inherent uniqueness of art during the assimilation phase.
The influence of celebrities is also significant. Elon Musk’s endorsement of Dogecoin led to the “DOGE to the moon” phenomenon. Anatoly Yakovenko, the founder of Solana, launched SILLY during Halloween, which gained remarkable attention. Within two weeks of launch, SILLY reached a market cap of $70 million, with over 8,600 holders and a total value locked on the chain of $1.2 million. The mention of Argentina in Musk’s tweet immediately led to smart investors discovering and buying related tokens, resulting in substantial profits.
Some MEMEs are related to hot topics and often ride the wave of hype, making it difficult to distinguish true gems from false ones. However, there is still room for speculation in the short term.
To become strong MEMEs, certain conditions must be met. Although MEMEs may seem like a game of luck, they still require a high level of market intuition.
MEMEs have gained significant attention in this bull market due to various factors, including the lack of a mainstream narrative that can match the popularity of Bitcoin ETFs. Although value coins have not performed as expected, MEMEs can continue to engage crypto enthusiasts and become a potential melody. Furthermore, the development of decentralized exchanges and the continuous improvement of public chain performance have significantly reduced the cost of token issuance and player participation.
Official support from public chains has further attracted a large number of active users and enhanced their reputation and ecosystem. However, it has also created negative impressions due to the wild growth of some projects. Solana chains have seen a decline in MEMEs, while Base chains have chosen to support them, reflecting the different development stages and strategies of the two public chains.
The rise of MEMEs is closely related to the concept of Fair Launch, which aligns with the values of Web3. Fair launches are more inclusive and provide a simple way for the next generation to experience the latest DeFi applications and introduce them to Web3.
The market’s fear of missing out (FOMO) and the highly viral nature of social media and images attract users to participate in MEMEs. This FOMO sentiment also serves as an outlet for retail investors’ dissatisfaction with institutions.
The promise of overnight wealth attracts numerous players to participate in MEMEs. Their simplicity and accessibility lower the entry barriers for players, as they do not require a deep understanding of complex technical principles.
This bull market operates differently from previous ones, and MEMEs align with the narrative and psychology of retail investors. MEMEs represent the primitive nature of the unregulated financial jungle and face many challenges. However, as a cultural phenomenon and popular investment trend, MEMEs have become an integral part of the crypto market. In the face of a complex market environment, it is crucial to prioritize profit as a reward for good risk management, as relying solely on luck will eventually be punished by the market.
MEMEs have evolved into diverse gameplay mechanisms. While some have profited greatly from them, most players end up losing everything. MEMEs are not solely based on luck; having a good strategy is essential to profit in the harsh financial market.
When interacting on the blockchain, wallet and contract security are paramount. Various tools support the detection of contract security, and basic portfolio tracking applications integrate these functions. Additionally, it is necessary to guard against rug pulls, burning pools, and other scams.
In the early stages, the main gameplay of MEMEs focuses on discovering early-stage Alpha projects. Since the cost of project issuance and user participation is still relatively high, players primarily aim to increase their chances of winning. Basic judgments can be made by observing pool sizes, market caps, liquidity, and the top 10 holders’ positions. Factors such as Twitter followers, community activity, and website completeness should also be considered.
With the rise of MEMEs on the Solana chain, their gameplay has become more diverse. Twitter followers and community activity alone cannot be used as a single evaluation metric. MEMEs now have faster trading rhythms, with high-frequency launches, which have also revived the trading bot market.
Pump, a platform dedicated to creating and trading MEMEs on Solana and Blast, has gained popularity due to its unique gameplay. It utilizes a bonding curve mechanism, which is more suitable for the issuance and trading of new tokens. By directly linking token prices to supply through a mathematical function, it does not rely on the two assets in the liquidity pool, unlike AMMs.
Participating in Pump is straightforward, and when the market value of a MEME reaches $69,000, the platform automatically provides $12,000 of liquidity to decentralized exchanges like Raydium and executes a burning mechanism to stabilize the token price and increase scarcity. Pump’s low entry costs have attracted a large number of players, and the platform generates significant daily income, exceeding $400,000. However, the lack of technical barriers means that Pump’s profitability relies solely on scarcity.
The interface design of Pump is simple yet captivating, and it quickly changes with the latest trends. MEMEs such as Michi (michi), USA (American Coin), and SC (Shark Cat) have emerged on Pump. The wealth effect on the platform attracts a multitude of players.
Various indicators can be used for trading MEMEs, but there is no definitive golden indicator. Following a framework-based indicator may improve the success rate, but it can also lead to missing out on potential opportunities.
Trading strategies can be based on sentiment-driven analysis. It involves judging the degree of FOMO at each stage of the propagation chain. This strategy requires high sensitivity, along with a list of quality communities and KOLs.
Technical strategies focus on signal trading, on-chain data analysis, and the use of trading bots. They include strategies such as tracking smart money, suitable for major market trades, and sniper strategies that require establishing selection criteria and using bots for assistance. Strict execution of strategies by bots can significantly increase the success rate but may result in missing out on potential opportunities.
Financial mathematics-oriented strategies involve analyzing candlestick charts, chip distributions, and other factors. Different strategies are employed based on pool sizes, capital volumes, and gameplay. These include daily players who participate in medium-sized pools to ensure project rug-proofing and long-term holders or swing traders. With the popularity of Pump, some players strategically position themselves in early-stage hotspots and conduct trades through Pump.
Risk warning: Participating in MEMEs carries extremely high risks and may result in the loss of the entire investment.
The future of MEMEs is a topic of debate among various institutions. Some view MEMEs negatively, while others see them as an interesting social activity that can attract more people to join Web3. MEMEs are also seen as an entry point for the next generation to experience the latest DeFi applications and introduce them to Web3. However, defining what qualifies as a high-quality MEME and what projects can be considered as such remains difficult at this stage.
Bitcoin, as the biggest memetic coin in the Web2 era, raises questions about whether those who initially supported it were gambling for quick wealth or investing in blockchain consensus. The unregulated financial jungle may eventually give birth to memetic coins under the capital consensus, or it may evolve into memetic coins that track equality and freedom. The future of MEMEs is worth anticipating.
Lastly, it is important to remember not to treat deconstructed elements as the ultimate answer to problems before learning how to construct them.
