Article Rewrite:
Written by Asher Zhang
How is this bull market different from the previous one? What kind of exciting game has unfolded between institutions, crypto whales, cryptocurrency exchanges, retail investors, and project teams? How should we view the development of the meme craze in this bull market? How will the next stage of the cryptocurrency market develop?
Specialized airdrops: a battle of wits between project teams and crypto whales
Airdrops were born during the previous bull market and have gradually become specialized as they have evolved. A fierce battle has unfolded between project teams and crypto whales (professional airdroppers).
Recently, several well-known projects have started large-scale airdrops, and the market’s response has been divisive. Among them, ZKsync, Layerzero, and Taiko have been particularly representative.
Taiko chose not to disclose the rules of the airdrop, which sparked criticism from the market, forcing the project team to explain their decision. Taiko’s co-founder and CEO, Daniel Wang, responded on Discord, stating that the lack of transparency in the rules was due to the fact that transparency cannot resolve differences. The definition of “fairness” is subjective for everyone, and we cannot reach a consensus.
ZKsync, which is one of the leading projects in the ZK branch of Layer2, faced significant controversy despite high expectations. Some participants expressed their dissatisfaction, saying, “The overall hit rate is very low, with less than 700,000 addresses out of several million. The hit rate for individual addresses is around 15%, and they are all low-value. Considering the low price of ZK, it is not meaningful.” Additionally, although ZkSync has bridged many assets, its total value locked (TVL) remains relatively small.
Layerzero has faced significant market criticism due to the chaos surrounding its airdrop. According to LayerZero CEO Bryan Pellegrino, within a few hours of the start of the bounty program, they received over 3,000 reports of witches and 30,000 appeals. Under this system, chaos has also emerged. Some airdrop studio employees chose to resign and report internal accounts, addresses of airdrop whales in certain projects were reported, and there were even reports of witch groups targeting large holders and airdrop KOLs. Furthermore, there are rumors that a security agency submitted 470,000 suspected witch addresses to Layerzero all at once.
Meme season replaces altcoin season: cryptocurrency exchanges find it difficult to cope
The direct opponents of project teams in airdrops are crypto whales, but in reality, institutions, retail investors, and cryptocurrency exchanges are also deeply involved in this intense game. In fact, institutions, retail investors, and cryptocurrency exchanges are engaged in an unusual and fierce battle.
Well-known projects usually attract large institutional investments in the early stages. For example, ZKsync, Layerzero, and Taiko, as mentioned earlier, have many well-known investors. Layerzero’s investors include Animoca Brands, SoftBank CEO Rene Marcelo Claure, Avalanche Eco Fund, Polygon Eco Fund, Fantom Eco Fund, Dapper Labs, Kronos Research, Ethernity, ImToken Ventures, Matrixport, Gemini, and angel investors such as American football player Tom Brady, singer Justin Timberlake, and Nike Foundation President Maria Eitel, among others. Due to space limitations, the full list of investors is not provided in this article.
In general, institutional early-stage investors have a certain lock-up period for the tokens they receive. In most cases, investing in well-known projects in the past was a guaranteed profit. However, things are different now. Many airdrop studios and others have accumulated a large number of tokens after receiving airdrops, and their selling pressure severely inhibits long-term price increases. Before the airdrop of project tokens, airdrop studios created a large number of fake transactions, which may have caused institutional investors to misjudge the project’s valuation, reducing their opportunities for profit when the tokens are unlocked. According to a report by “BiTui,” the latest data shows that once the airdrop event ended, the weekly income of the ZkSync Era dropped by 93.88% from $1.37 million at the beginning of the year to only $83,000.
For cryptocurrency exchanges, many well-known projects have attracted significant institutional investments, have attractive on-chain data, and have a large number of token holders. As a result, exchanges are forced to list high-valuation projects. However, since many airdrop projects have a small initial circulating supply and high valuations, the on-chain activity drops significantly after the lock-up period for institutions ends, making it difficult for exchanges’ retail investors to make money from these projects.
Due to these reasons, many well-known projects reach new all-time highs upon listing, and the market increasingly lacks retail investors willing to buy in. However, due to the low circulating supply of these projects, their valuations remain high, resulting in the phenomenon of retail investors not buying in. As a result, retail investors have started to shift their focus to the meme market, as fair launches and the potential for rapid wealth accumulation are highly attractive. However, meme coins are not of interest to institutional investors. Eddy Lazzarin, the CTO of venture capital firm A16Z, tweeted, “Memecoins have changed the way the public, regulators, and entrepreneurs view cryptocurrencies. At best, they appear to be a risky casino or a series of false promises masking a casino.”
The real reasons behind the prosperity of the meme economy
Since 2023, Bitcoin has led the meme craze, with ORDI, based on the BRC20 token standard, experiencing a significant explosion. Subsequently, a series of derivative innovative standards such as ARC20 and SRC20 were launched, attracting a lot of attention in the market. In addition to the Bitcoin ecosystem, Solana has also produced many meme leaders in this bull market, such as WIF, BONK, BOME, GUMMY, and MANEKI. Apart from the Bitcoin and Solana ecosystems, NOT in the recent Ton ecosystem and DEGEN in the previous Base ecosystem have also received market attention.
It is undeniable that one of the main reasons retail investors are unwilling to buy in to institutional offerings is their shift to the meme market. However, why do the truly successful and profitable meme projects mainly focus on Bitcoin and Solana, with some also focusing on Base and Ton? What are the underlying reasons behind this? The real driving force behind the meme craze in this bull market is what?
This article believes that the fundamental reason behind the prosperity of on-chain memes is the financial prosperity driven by technological advancements. When numerous public chains were experiencing stagnation in their development, Bitcoin and Solana brought new hope to the blockchain industry through their technological advancements.
Bitcoin has a strong security consensus, and if powerful applications can be built on top of it, it could rival traditional finance. This has been the belief of a faction within the Bitcoin community, which is why Bitcoin has forked into BCH and other variations. After the upgrade to SegWit and the subsequent Taproot upgrade, Bitcoin has further improved its scalability. It is this technological “unleashing” that made it possible for the Ordinals protocol to emerge, which then sparked the craze for memes. Since DeFi and other applications have already matured on the Ethereum network, it is relatively easy to migrate to the Bitcoin network, and Unisat quickly gained popularity in the crypto market. Subsequent new protocols on the Bitcoin network have all made significant technological breakthroughs. Although BRC20 appeared early and had strong consensus, it could cause UTXO congestion and pose a long-term threat to the BTC network. ARC20, on the other hand, is favored by the technical community due to its simple colored coin transfer model and Bitwork’s POW mining paradigm, but it is not perfect as it relies on SegWit for data storage and has encountered difficulties in token splitting. SRC20, on the other hand, can operate without an indexer, but it does not solve the problem of dust created by data storage on the BTC network. Runes is currently devoted to solving these issues. Each technological breakthrough is accompanied by a leading token. Just like Bitcoin had no use value when it was first created, the same is true for these tokens; subsequent imitations and copies often struggle to sustain their value.
Since 2023, although Solana has been impacted by the FTX collapse, its technological capabilities are not to be underestimated, and it is expected to drive the breakout of Web3 applications in terms of performance. The DePIN track is especially promising, with projects such as Helium, Render Network, IO Net, and Nosana gaining attention on Solana. The hottest projects on Solana are also attracting attention due to their high valuations, leading to a spill-over effect of funds. Base relies on Coinbase, while Ton relies heavily on Telegram, and their large user bases have brought attention to some meme leaders.
Applications are king: embracing the new era of Web3
Since the upgrade to DenCun, Layer2 transaction fees have significantly reduced, and performance has improved noticeably. At the same time, ZKsync, as one of the most promising projects among the Layer2 Four Kings, launched its token, indicating that blockchain technology has entered the application stage. The false prosperity created by airdrop studios is meaningless; the fundamental solution to the current market’s lack of buyer demand lies in creating value to support token prices. Only by creating real value can project teams, retail investors, institutions, and exchanges work together to create a truly massive blockchain revolution dividend.