The logic behind the surge in meme coins, the biggest winner in Q1 2024

Author: Ling Yun, Miss Cat

Value investment is in vain, and memes are in the palace overnight. Today AU Research will explain to you the economic principles of Meme’s popularity and how to select reliable targets.

01 What is Meme

The term Meme was first proposed by British scholar Dawkins in his book "The Selfish Gene". He believed that it is like Just like genes in biology, culture also has a basic unit that carries the information transmitted by culture.

Meme "meme" is also translated as meme, riddle, etc. It originally comes from the Greek mimema, which means "something that is imitated". Biologist Richard Dawkins first mentioned it in his 1976 book "The Selfish Gene" and simplified it into the word "meme" which has a similar musical sound to the gene. He also applied the "theory of evolution" to the research perspective of "cultural change" and formally defined meme as: a small cultural unit that is similar to genes and spreads through continuous copying and imitation between people. Chinese scholars He Ziran and He Xuelin translated memes as "memes" in 2003.

Richard Dawkins compared the process of cultural inheritance to the evolutionary rules in biology. Meme covers a wide range of topics, including religion, rumors, news, knowledge, concepts, habits, customs, and even slogans, proverbs, slang, words, and jokes.

The replication of memes is not as accurate as the replication of genes in nature. It is not only a process of imitation, but also a process of independent re-creation. This process also follows the principle of survival of the fittest.

Just as genes jump from one person to another in the gene pool, memes jump from one person's mind through imitation in the meme pool. into another person's mind, thereby completing its own reproduction. When a meme takes over a person's mind, it's like a virus infecting a cell, turning the mind into a meme-carrying vehicle. Just as not all genes reproduce successfully, some memes have widespread effects while others quickly fade away.

02 How Meme spreads

< strong>Dawkins summarized three key factors that affect the viability of memes: viability, fecundity, and replicative fidelity.

Compared to the other two factors, sustainability is less important, because the survival of a meme depends to a large extent on the survival of the carrier force. When the owner of the brain carrying the meme dies, or the "CD" carrying the information is destroyed, the meme disappears.

Fecundity is relatively more important. If this meme is a scientific discovery, its chances of survival are largely determined by how many people are aware of the discovery, which can be roughly estimated by counting the number of times it is cited in well-known academic magazines and the magazine's sales. The stronger the reproduction ability of a meme, the more widely it can be spread, and the greater the chance of survival.

Copy fidelity refers to whether a meme can remain exactly the same when it is copied and spread. The copied and accepted meme depends on the copyer There may be differences due to differences in education background, hobbies, age and gender of the recipient. In other cases, the copied person made conscious changes when spreading the meme. A typical example is that in an academic paper, in order to match the point that the author wants to express, only one aspect of a meme is selected to elaborate or analyze it from a new angle, or it is combined with other Memes combine to form new memes. Those with high copy fidelity can be preserved intact.

03 What makes Meme popular?

Simply put, it relies on "complying with the laws of communication" to spread quickly. Therefore, when studying memes, we must first study the laws of communication, study market emotions, and understand "how to mobilize people's emotions." This requires mentioning the SIR propagation model.

This is an epidemic transmission model, but it is also applicable to information dissemination. The red line represents people who are susceptible to infection, the green line represents people who are infected, the blue line represents people who have recovered, and the horizontal axis represents time.

The core of information dissemination is to make the speed of infection exceed the speed of recovery, so that the number of infected people will continue to expand. Combining information communication and psychology, if more new people are exposed to this information, there will be a chance to infect more people.

Next, combining psychology and communication studies to find the rules of meme distribution, we will analyze from these four core elements: MEME content, environmental atmosphere, and KOL Promotion and wealth creation effect.

Main content:The essence of Meme is to use pictures to tell stories and use pictures to convey emotions. For example, $Doge is friendly to dog lovers, and it has a strong long-tail effect, that is, many people will be attracted by cute and interesting puppies, and the more they look at it, the more they like it. $PEPE, the sad little frog, was a beloved emoticon before it became a meme. Sloths are also very popular in Zootopia.

In terms of conveying emotions, the more straightforward, simple and easy to understand, the better. There is a saying in "Three-Body" that for every additional formula, one will be lost. Thousands of viewers. That's it. The more down-to-earth you are, the easier it is to spread. Being overly professional can only attract peers.

A simple summary is that those who are cute, popular in the traditional world, simple and straightforward are easy to become popular.

Environmental factors: This environment includes the macro environment and economic cycle. This bull market has brought a large number of outsiders into the industry, and they cannot understand the complex technologies such as oracles, re-staking, security measures, and smart contracts. Meme is something they can understand and the price is very cheap. You can buy thousands of them with 10U. If you get a zero, it will be ten times the coins. How many idiots can make multiple zeros in an hour, so it’s easy to get started.

This round of bull market meme explosion is also affected by the downturn of the traditional economic cycle. To put it simply, it is a downgrade of consumption in the currency circle. Except for beautiful countries, most countries have experienced economic weakness in the past two years. Under such circumstances, the public's desire to explore new technologies will decrease, just like animals hibernating, living in a behavior that consumes low energy and is easy to absorb. In this case, the meme market will become more popular.

KOL promotion: The creation, distribution, pool building, and KOL promotion of a meme and community promotion are necessary. An indispensable link. No matter what the level of KOL is, you will find that what they write and what they say are very inflammatory, making people want to believe it. Many prices in the currency circle come from bubbles, and bubbles come from consensus, so meme marketing will inevitably include KOL promotion and community communication.

Having said this, let me give you some risk tips: You may see several community leaders shouting for XX coins at the same time. At this time, you You will also be brainwashed by the overwhelming number of public accounts and think that a certain meme is particularly valuable. After rushing in, I found that it was either harvested by the person selling the trading robot, or it was taken over by the top of the mountain, or it was reset to zero in ten minutes.

Paying attention to KOLs in the English area and different countries will help you judge the cultural value behind the meme. Cross-cultural consensus is the true consensus.

Wealth creation effect: The reason why Meme can develop into a mainstream track now is because of its myth of making wealth easily and missed opportunities. The FOMO (fear of missing out) panic is a must-have. While pulling up the market to convince people, while promoting the myth of wealth creation, so and so made 30 million US dollars in two hours, while spreading fomo fear in the community, it is also a common marketing method of meme, and it is also in line with the laws of communication.

04 What is Meme Coin

The mapping of Meme culture in the encryption field is undoubtedly various memecoins and various meme NFTs. Memecoins are a subcategory of cryptocurrencies that focus on popular internet memes, pop culture references and viral internet trends. Famous examples of this type of meme include different versions of the Japanese Shiba Inu Kabosu and Pepe the Frog cartoons, and even extend to celebrities like Elon Musk.

According to a recent report from CoinGecko, the memecoin industry has become the most profitable sector so far this year.

The report shows that among the coins with the highest market capitalization, memecoin has the highest average return at 1,312.6%. By the end of the quarter, Memecoin, which launched in March, had joined the list of the top 10 Memecoins by market capitalization, including Book of Meme (BOME), Brett, and Cat in a Dogs World (MEW). Far beyond RWA and AI tracks.

Memecoin’s creators utilize various themes to attract the attention and trading volume of crypto market speculators. In many cases, well-known KOLs and forums such as Reddit have also joined the Memecoin craze. Unlike other cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH), which are primarily digital currencies, developers often create memecoins only as light-hearted social experiments that bring limited technical value.

Many consider memecoin to be a refreshing departure from the seriousness of traditional cryptocurrencies. Memecoins invites a new generation of users to engage with blockchain technology in an approachable and unconventional way. However, others believe that Memecoins are an extremely risky asset that will undermine the legitimacy of ambitious blockchain projects. Whether you’re meme-chasing or not, it’s still important to understand how memecoins work, where they are most commonly used, and some of the risks you should be aware of before jumping into the space. Today we will discuss the analysis of Meme and cryptocurrency.

05 History of memecoins

The concept of memecoins can be traced back to the early days of cryptocurrency , it did not arouse much enthusiasm in the market at first. It was not until the emergence of Dogecoin (DOGE), the original representative of memecoin, in 2013 that Meme came into the public eye. Dogecoin was created as a joke by software engineers Billy Markus and Jackson Palmer. Its logo is the popular Shiba Inu "Doge" at the time. Although it originated as a humorous attempt, Dogecoin's low unit price and fast block generation speed made it quickly popular in the currency circle.

Bitcoin is essentially the largest Memecoin. The value of Bitcoin comes from people’s consensus. This consensus is based on the belief in decentralization and relies on cryptography. Learn technology to achieve it. At present, we usually call those cryptocurrencies that are based on pure consensus, jokes, and have rapid spread effects but lack technological innovation as meme coins.

From online rewards on websites such as Reddit.com, a commonly used community in Europe and the United States, to charitable donations from international non-profit organizations, Dogecoin has become a commonly used medium of exchange. And not just a joke. Following the success of Dogecoin, a series of memecoins inspired by internet trends and jokes emerged: tokens like Pepe (PEPE) (inspired by the sad frog) and Shiba Inu (SHIB) gained attention on their own merits, and ignited the cryptocurrency community.

In the subsequent development, the rise of DeFi (decentralized finance) and the NFT (non-fungible token) craze have provided opportunities for more Memecoin experiments fertile soil.

06 memecoin and NFT

Memecoin also took advantage of the NFT craze, turning viral The role of the Internet changes into unique digital assets that users can own and trade. For example, a Memecoin project might create a limited edition NFT that contains popular elements related to their token. Users can buy, sell or trade these NFTs on various NFT markets. This allows meme lovers to not only retain a piece of Internet history, but also to support their favorite meme projects. Rare Pepes and the subsequent Fake Rares series are examples of some of the earliest NFT projects developed from viral internet memes.

Shiba Inu Coin (SHIB), one of the most popular meme projects in the cryptocurrency space today, has also launched its own "Shiboshis" NFTs. The collection includes 10,000 Shiba Inu-inspired cartoon characters that holders can use to fight within Shiba Eternity—one of the SHIB project’s more popular gold-earning games (earn coins by playing games).

Like many other popular NFTs, Meme NFT holders have established private communities for their collections, and some communities allow holders to participate in exclusive threads Follow the event and have a chance to obtain related products.

07 memecoin and Defi

DeFi refers to a series of blockchain-based Financial applications that recreate traditional financial services in a decentralized manner. Memecoins leverages DeFi protocols to create innovative ways for users to participate in the use of their tokens, beyond simple speculation and speculation, to staking, mining, and providing liquidity.

Staking: Memecoin holders can stake their tokens on DeFi platforms to earn rewards. These rewards can be in the form of additional Memecoin or other tokens, providing users with an incentive to hold and actively participate in the Memecoin ecosystem.

Shiba Inu Coin project is a prime example of how Meme projects can thrive by incorporating DeFi elements into their protocols. SHIB token holders can use its ShibaSwap platform to exchange ERC-20 tokens and perform various tasks to earn SHIB and two other native tokens, BONE and LEASH. DoggyDAO, as a decentralized autonomous organization (DAO), provides token holders with additional benefits by granting them voting rights on key protocol decisions.

Mining: Mining mainly involves lending the Meme coins you hold to others in exchange for interest through smart contracts. Memecoin’s DeFi platform uses these loans to facilitate various activities, including trading or providing liquidity, and users mine Meme coins and are compensated for their above-mentioned contributions.

Providing liquidity:Memecoin can also create a liquidity pool, and users use their own Meme tokens to provide it to others. Trade on decentralized exchanges. This operation process allows users to earn a portion of transaction fees and contribute to the liquidity and efficiency of the Meme coin market, and can also receive corresponding compensation benefits.

08 Risks of memecoin investment

Due to the viral nature of Memecoins, many projects While there have been significant gains before, some projects have suffered sudden collapses.

1. Extreme volatility: The value of a meme coin can soar one moment and plummet the next, leaving investors vulnerable to Significant financial losses. It has a strong speculative nature, so it is particularly susceptible to sudden rises and falls due to sudden market changes influenced by a core figure (such as Musk), news or Internet trends.

2. Overreliance on sentiment:Many new meme coins often lack underlying technology or tangible use cases, which can lead to their value being completely Depends on market sentiment. While some meme coins have found creative ways to integrate NFTs, decentralized finance (DeFi), or community-driven initiatives, many projects focus primarily on the emotional value of humor and irony. This lack of fundamental technical value still easily makes Meme a castle in the air.

3. Market manipulation:The concept-driven nature of Meme coins may attract bad actors who want to profit from the hype. Sometimes it will deliberately create false market news and community fraud to drive up the price of a currency and sell off its holdings at price highs, which often results in unsuspecting investors facing significant losses. These schemes take advantage of the speculative and emotional nature of Meme currency trading, so investors need to conduct careful research when placing heavy positions in Meme coins.

4. There are many scams:Many Meme projects are launched by anonymous or pseudonymous developers, which makes it difficult to evaluate the motivation behind the tokens. Credibility and intent. Nowadays, there are many pre-sale memes. After the payment reaches a certain amount, the development team runs away. There are also people who steal the official account and change the pre-sale payment address, which will bring great risks.

09 Conclusion

Generally speaking, Memecoins represent digital currency, Internet culture and An interesting blend of humor. As Memecoins continue to attract attention and grow, how will they shape the broader cryptocurrency landscape, and how will they find amazing applications beyond their comedic origins, and how will early value be discovered? When is the best time to enter the market to balance risk and reward? The AU Research team will continue to bring you more detailed explanations of tools and technology lines.