An article explaining the economics of Meme coin pumping

Author: ChainUp Investment

Introduction

Meme coins have become a unique and increasingly influential category within the cryptocurrency ecosystem. Unlike traditional cryptocurrencies, which are often driven by technological innovation and financial applications, meme coins are primarily valued by online culture, humor, and community engagement. Often inspired by viral memes, online trends, or popular personalities, these coins have attracted crypto enthusiasts and new users, providing them with an easy and entertaining way to enter the world of digital assets. This article will explore the rise of meme coins, their impact on the cryptocurrency market, and the factors that have fueled their popularity. From dog-themed coins like $DOGE to politically charged coins like $PNUT, we will analyze how meme coins are reshaping the way people interact with cryptocurrencies, while also examining the challenges and risks associated with investing in these speculative assets.

What are memecoins

Memecoins are a unique category of cryptocurrencies that derive their identity from internet memes – humorous or viral images that are often accompanied by witty captions. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which were designed with technical utility and financial goals in mind, the main focus of memecoins is community engagement, entertainment, and internet culture. Their value is driven primarily by the activity and power of their communities, rather than any underlying technological innovation or financial application.

Memecoins range in theme, with the most popular including dog-themed coins such as DOGE, WIF, SHIB, and NEIRO. Other common categories include animal-inspired coins (such as cat or penguin-themed) and coins based on the "Pepe the Frog" meme. There are also coins associated with politicians, celebrities, and internet subcultures such as WallStreetBets and The Boy's Club. More recently, the rise of AI and short-form video content has further fueled the popularity of memecoins inspired by AI agents and viral video culture.

The defining characteristic of memecoins is their community-driven nature. These coins often leverage humor and viral content to build a brand and identity. As the community engages with the meme through social media, creative content, and promotional campaigns, the value of these coins tends to rise. Due to their low barriers to entry and simple, straightforward concepts, memecoins are particularly appealing to cryptocurrency newcomers or those seeking a fun, speculative spin.

To increase awareness and attract new investors, memecoins often employ bold marketing strategies, such as prominently placing billboards or organizing high-profile events, such as lighting up famous landmarks. For example, the popular memecoin Dogwifhat raised funds for an ambitious campaign and planned to light up the Las Vegas Dome.

Despite their lighthearted nature, memecoins have become a significant segment within the cryptocurrency market, with a combined market cap of over $121 billion and a market share of 3.62%. In the following sections, we will look at some of the most iconic memecoins.

Animal Memes: $DOGE

Dogecoin was created by software engineers Jackson Palmer and Billy Markus in December 2013 as a satirical response to the speculative frenzy surrounding cryptocurrencies at the time. Drawing inspiration from the popular Doge meme, they chose its image as their logo and named the cryptocurrency Dogecoin.

Dogecoin's market cap surged to $8 million in just two weeks after its launch, briefly positioning it as the seventh-largest cryptocurrency in the world. The coin quickly gathered a loyal online community and established a solid fan base. During the 2017-2018 cryptocurrency bull run, Dogecoin surpassed a $1 billion market cap for the first time.

Elon Musk has been a central figure in driving Dogecoin’s popularity. Musk first expressed interest in the coin in 2018, and his subsequent tweets and public support significantly boosted its price, making Dogecoin a place in the cryptocurrency market. In 2021, Musk called himself the "Dogefather" and Dogecoin's market cap reached nearly $100 billion. However, in 2023, Musk faced charges for insider trading involving Dogecoin and was accused of causing significant losses to investors.

In 2024, the abbreviation "DOGE" regained attention when President-elect Donald Trump used the term to refer to his planned "Department of Government Efficiency," which was expected to be led by Musk and Vivek Ramaswamy. This brought the word "DOGE" back into the public spotlight, and with it a rebound in the market value of Dogecoin, reaching approximately $60 billion.

Animal Memes: $PEPE

Pepe the Frog is a widely known Internet meme created by American cartoonist Matt Furie in 2005. The character first appeared in Furie's comic strip Boy's Club, which tells the challenges of a group of friends growing up. Pepe is a green, humanoid frog that was originally one of several characters in the comic strip, but quickly developed into a prominent Internet icon.

Pepe's rise as a meme began in 2008, when it began to gain traction on major online platforms, including Myspace, Gaia Online, and 4chan. By 2015, Pepe had become one of the most common memes, especially on platforms like 4chan and Tumblr. Over time, various different versions of Pepe have emerged, including "Sad Frog". In addition, starting in 2014, the concept of "Rare Pepe" emerged, and digitized Pepe images began to be traded as part of online "meme markets", similar to trading cards.

Originally, Pepe was a neutral, apolitical character. However, from 2015 to 2016, it was appropriated by certain extreme groups, particularly far-right movements, and associated with controversial political messages. Despite this, Pepe has maintained its diversity and widespread use on social media platforms such as 4chan, Twitch, Reddit, and Discord, and users often customize the character into various emoji and meme formats. This enduring popularity has made Pepe an important and evolving symbol in online culture.

$PEPE, launched in mid-April 2023, is a meme coin based on the Ethereum blockchain. The token was created as a tribute to the popular "PEPE the Frog" meme, and there is no formal team or roadmap, and the creator remains anonymous. The coin did not follow a typical issuance method such as an ICO or airdrop, but relied on the popularity of the meme to attract investors. $PEPE uses a deflationary mechanism that is equivalent to destroying a small number of tokens for each transaction by burning LPs and giving up contract ownership. This process reduces the total supply over time, promoting scarcity and potentially increasing the value of remaining tokens as supply decreases.

In 2024, the price of $PEPE skyrocketed 20x and currently has a market cap of approximately $8.5 billion and ranks 19th in the market.

Political Meme: $PNUT

$PNUT is a meme coin inspired by the internet red squirrel Peanut. Peanut is an Eastern Gray Squirrel that was found and rescued by Mark Longo in New York City in 2017 after his mother was killed in a car accident. Longo breastfed Peanut for eight months and attempted to release him into the wild. However, Peanut returned with half of his tail bitten off and subsequently lived with Longo. Longo created an Instagram account for Peanut, and the account gained a significant following, with over 910,000 followers by November 2024.

Unfortunately, on October 30, 2024, Peanut was seized by the New York State Department of Environmental Conservation (NYSDEC) after an investigation found that it had bitten a staff member. After being tested for rabies, Peanut was euthanized. His death sparked widespread outrage on social media and drew condemnation from lawmakers, prompting the introduction of a bill aimed at preventing similar incidents.

With the heightened attention of the 2024 US elections, Peanut unexpectedly became a focal point of political debate. Supporters of figures like Donald Trump and Elon Musk threw their support behind the Justice for Peanut campaign and criticized the government's actions as an abuse of power. A petition titled "Justice for Peanut the Squirrel and NYSDEC Reform" quickly gained a lot of support and raised about $200,000 by November 13, 2024.

The emotional response to the Peanut story gave rise to a meme coin based on the Solana chain, Peanut the Squirrel ($PNUT). After listing on Binance and gaining attention from figures such as Elon Musk, $PNUT quickly surged, reaching a peak market cap of $2.5 billion within just two weeks of listing. Currently, $PNUT has a market cap of about $1.1 billion.

AI Memes: $GOAT

Truth Terminal is a semi-automated AI bot developed by Andy Ayrey as part of an experimental project called "Project Meme". Initially designed to interact with online culture and generate independent content, the bot was fine-tuned with the OPUS Large Language Model (LLM) and trained on data from platforms such as Reddit and 4chan. Its purpose was to promote discussion about AI-generated belief systems and incorporate content from online subcultures that are often described as "degenerate" or "delusional".

As Truth Terminal continued to interact with the community, it began to generate what it called the "Gospel of Goatse", a meme-like and irreverent content that blended religious concepts such as Buddhism and Gnosticism. These sometimes volatile and vulgar exchanges attracted widespread attention from niche online communities, particularly on platforms such as Twitter. After observing Truth Terminal’s activity on social media, an anonymous developer launched the $GOAT token on the Pump.fun platform and named it “Goatseus Maximus” in homage to the Goatse meme-related legend, and tagged Truth Terminal’s Twitter account, prompting the bot to comment and promote the token. Although Truth Terminal did not create the token, its endorsement through tweets significantly increased the visibility of $GOAT, sparking more interest and trading activity. These interactions also sparked a rumor that $GOAT was automatically created by AI, further fueling market speculation and driving investment enthusiasm.

The key moment in the $GOAT story occurred when Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz (a16z), noticed Truth Terminal’s unique activity. He saw the potential of the project and provided the AI ​​with a $50,000 Bitcoin sponsorship to support its development. This investment greatly promoted the rapid growth of $GOAT. At one point, $GOAT's market value reached $1.2 billion, becoming the first AI meme token with a market value of more than $1 billion.

Truth Terminal's involvement in the $GOAT story set a precedent for the role of AI in the future of digital assets and speculative financial ecology. Currently, $GOAT has a market value of approximately $838 million.

AI Meme: $ACT

Act I: The AI ​​Prophecy Project (ACT), or Act I for short, is an open-source, decentralized platform designed to foster innovative interactions between AI systems and human users. The project aims to create an "ecosystem" where various AI technologies, powered by a native token, $ACT, can collaborate to generate new forms of AI-driven interactions. Act I hopes to push the boundaries of AI in the field of AI, especially in the field of AI chatbots, and promote the development of algorithms by facilitating collaboration between different AI modes (such as text and image generation).

Originally co-founded by AmplifiedAmp (Amp), the purpose of Act I is to promote a decentralized, community-driven ecosystem. The $ACT token was introduced as a funding mechanism, with 6% of the total supply allocated to Amp. However, as the project developed, Amp began selling $ACT tokens and eventually liquidated the entire quota. Amp’s abrupt exit left many community members feeling disillusioned and betrayed.

Nevertheless, Amp’s exit served as a catalyst for the community to take control of the $ACT project. Act I’s focus shifted to rebuilding the platform as a truly decentralized AI community with a mission to popularize AI knowledge and make AI accessible and understandable to more people. Through community-driven initiatives, resources, and educational content, $ACT is committed to lowering the barrier to understanding AI, promoting ethical discussions about AI, and supporting research and development in the field.

The $ACT token has experienced significant growth since its listing on Binance on November 11, 2024. After the listing announcement, the market value increased 10 times within an hour, quickly reaching $300 million, and peaked at $950 million thereafter. Currently, $ACT has a market value of approximately $490 million.

Art Meme: $BAN

In 2019, Italian artist Maurizio Cattelan's installation art work "Comedian" attracted great attention in the art world. The work, which showed a banana taped to a wall, sparked widespread controversy over its artistic value. Despite its apparent simplicity, the work sparked heated discussions among artists, critics, and the public, questioning whether it could really be considered art or just a humorous visual presentation. The controversy ended with the work being sold at Sotheby's for a whopping $120,000.

In October 2024, Comedian made headlines again when Sotheby’s announced that the work would be sold at an upcoming landmark auction in New York. The news quickly attracted attention from both the art and cryptocurrency communities. Sotheby’s Vice President Michael Bouhanna anonymously issued a meme-coin named $BAN inspired by the artwork. In just two days, $BAN’s market cap surged to $60 million.

As Bouhanna’s identity as the founder of $BAN became public, rumors of insider trading and market manipulation began to circulate. In response, Bouhanna denied the allegations on X (formerly Twitter) and assuaged public concerns by destroying 3.7% of the total $BAN supply. The action sparked a short-lived rally, with the price of $BAN increasing by more than 80%. $BAN’s momentum continues to grow, especially on November 18, 2024, when Binance Futures announced the launch of $BANUSDT perpetual contracts, offering up to 75x leverage trading. Following the announcement, speculative attention intensified, pushing $BAN prices to a new all-time high of $0.5361, with a market cap of $536 million. On November 21, 2024, TRON founder and HTX owner Justin Sun made headlines when he purchased Maurizio Cattelan’s controversial work Comedian for $6.2 million and ate the work. However, the speculative excitement surrounding the $BAN meme coin soon began to wane. By November 29, 2024, $BAN's market cap had dropped significantly to $134 million, showing a shift in investor sentiment and a possible saturation of the narrative surrounding the coin.

Pop Culture Meme: $CHILLGUY

"Chill Guy", also known as "My New Character", is a digital artwork and internet meme created by artist Phillip Banks. The image shows an anthropomorphic dog wearing a grey sweater, blue jeans, and red sneakers, with a relaxed expression on his face and his hands in his pockets. The artwork was originally posted on Twitter on October 4, 2023, where it received some attention at the time, but went viral in August 2024 when a TikTok user edited it with other popular memes. Its widespread popularity stems from its relatable “relaxed” attitude, which promotes a stress-free, casual lifestyle.

The meme quickly gained traction on social media and attracted the attention of major brands, including AMC Theaters and the Atlanta Hawks, who included it in their promotional campaigns. The character, often paired with “Unchill Gal,” inspired a fan-driven movement and sparked widespread cosplay, fan art, and memes on platforms such as TikTok.

In November 2024, the meme reached another peak with the creation of $CHILLGUY, a meme coin based on the Solana blockchain. By November 29, 2024, $CHILLGUY had a market cap of approximately $700 million, driven in part by viral tweets from high-profile figures like Salvadoran President Nayib Bukele. Despite the commercial success of the meme, Banks does not endorse the coin or its commercial uses, and has initiated legal action to take down unauthorized merchandise and tokens in order to protect his intellectual property. However, $CHILLGUY remains one of the most popular and widely known memes in the current digital landscape.

The Rise of the Meme Supercycle

According to Artemis’ index benchmark, the meme space has grown 273.8% since the beginning of 2024, making it one of the fastest-growing asset classes in this market cycle. The meme trend has also attracted a large number of new entrants into the cryptocurrency market. According to Google Trends, meme-related searches surged nearly 100-fold in 2024. Additionally, Solana wallet Phantom is ranked 48th in the Apple App Store, surpassing Coinbase, which is ranked 55th. The popularity of memes is unquestionable.

The popularity of memes can be well explained by the "meme supercycle" theory of cryptocurrency analyst Murad Mahmudov. He believes that the memecoin market is in its early stages and has the potential to exceed a market value of $1 trillion. The so-called "meme supercycle" is a major and ongoing trend in the cryptocurrency market, which is driven by a combination of internal and external factors, highlighting the unique appeal of memecoins and their growing dominance.

In terms of internal factors, one of the main driving forces is insufficient innovation and overproduction of tokens. Unlike previous cycles, this rally was not triggered by clear innovation, but rather driven by Bitcoin ETFs and institutional adoption. There was no single disruptive development, only optimism and signs of infrastructure maturing.

Meanwhile, the number of assets in the cryptocurrency space continues to grow, making it more difficult for the overall industry to grow. In 2024 alone, more than 600,000 new tokens were listed before April, with more than 5,000 new tokens entering the market every day. Centralized exchanges often list these alternative coins at high valuations, causing retail investors to become exit liquidity for participants in private rounds that have already made profits. Exacerbating this problem is the lack of actual value behind most alternative coins, with 99% of tokens relying more on speculation than actual revenue generation. Binance's research shows that $155 billion in tokens will be unlocked in the next five years, which poses a major challenge to these tokens. However, meme coins are different, they are usually fully circulated and do not face the burden of future unlocking. Their potential proves to be another internal factor driving super cycles.

In terms of external factors, global challenges such as inflation, rising costs, AI-driven job threats, and wealth inequality make alternative investments like memecoins more attractive. Social factors such as loneliness, mental health issues, and declining trust in traditional institutions have further driven interest in memes. Success stories of large returns have also inspired strong market momentum, attracting continued investor attention to memecoins.

In addition, meme infrastructure like Pump.fun and Telegram trading bots have lowered the entry barrier for memes. Pump.fun is a Solana-based marketplace that allows users to easily create and trade memecoins. It uses a joint curve pricing model to ensure a fair trading environment. The platform has gained widespread traction, with more than 3.85 million memecoins created and deployed as of November 2024 (about 70% of daily token issuance on Solana) and generating more than $227 million in revenue. The platform features easy memecoin creation (with a low fee of ~0.02 SOL), low transaction fees, and includes safeguards to prevent market manipulation. Many well-known memecoins, such as $ACT, $PNUT, and $MOODENG, were created by Pump.fun.

Telegram trading bots also facilitate the trading of memes. These bots significantly increase transaction speeds, allowing users to perform swaps faster than manual DEX connections, which is especially important in the highly volatile memecoin market, where quick action can result in significant gains. Telegram's popular and community-driven environment supports these bots, making them easy to use and widely adopted. Additionally, features such as BONKbot’s “buy and burn” mechanism, Trojan’s copy trading, Shuriken’s multi-chain support, and Sonic Sniper BOT’s real-time token data cater to a variety of trading needs, enhancing their appeal to a wide range of user groups.

Memecoins are about more than just market performance. They are seen as a counterattack to overvalued crypto-tech tokens, embodying the spirit of the 2017 ICO wave. Retail investors are particularly attracted to memecoins because they are able to combine financial opportunities with entertainment, identity, and community elements. Memecoins are more than just tokens, they represent tokenized communities symbolized by memes, emphasizing people and culture rather than technology.

Choose your meme coin

The effect of listing on centralized exchanges

On September 16, Binance officially announced that it would list First Neiro on Ethereum ($NEIRO), Turbo ($TURBO) and Baby Doge Coin ($1MBABYDOGE) and add seed tags to them. $NEIRO's market value rose rapidly in just a few hours, surging from $20 million to more than $120 million. After Binance announced the listing, $NEIRO's market value reached $1.25 billion, an increase of about 80 times.

Coincidentally, on November 11, Binance announced the launch of spot trading for $ACT and $PNUT, and then $PNUT rose 250% in one day, and $ACT rose 2,000% in a few hours, with the market value soaring from $20 million to $300 million.

In fact, Binance's trading volume accounts for about 50% of CEX's trading volume. When a meme coin is listed on Binance, it means that the secondary market will have huge liquidity. From a statistical point of view, the market value of meme coins listed on Binance is usually greater than $500 million. Those meme coins that have announced that they will be listed on Binance and have a market value of less than $500 million are worth paying attention to. In 2024, Binance meme listing time and market value growth: In fact, the listing effect also exists on CEXs such as Upbit and Bybit. Meme coins with good token distribution, reasonable market value, strong community consensus and unique narrative are more likely to be listed. Integer psychological barrier effect Since most meme coins lack actual underlying value, the integer psychological barrier effect exists for most meme coins. For example, Pump.fun has a token issuance of 1 billion, so a market value of $1 billion is the upper limit of most meme coins. Doge once reached a price of $0.74 in 2021, with a market value of $98.47 billion at the time, but was limited by a market cap of $100 billion. Investors can refer to this effect to judge the upside potential of Meme coins.

Public chain capital multiplier effect

Choose a public chain with high TVL (total locked value) and high popularity. The increase in the token price of a public chain will attract funds into the chain. Only when TVL grows can a meme coin with a higher market value be created. The token price growth and ecological activity of public chains such as Solana, Base, and Sui have led to the birth of many meme tokens, and their value has risen hundreds of times. Since August 2024, Sui's token price has tripled, and TVL has more than tripled. Various water-related meme coins continue to emerge, among which $SUDENG has a market value of more than $200 million.

Take meme market value / public chain TVL as a reference. The ratios of Solana, Sui, and Base are 181.4%, 25.5%, and 93.2%, respectively. The higher the ratio, the higher the meme popularity of the corresponding blockchain, and the greater the probability of the emergence of high-market-value meme coins.

Based on this theory, Messari proposed a high-return meme investment method: when the public chain's token rises, buy the corresponding meme; when the meme falls, convert it into cash. This investment strategy started in January 2021 and achieved a return rate of 13,000% in three years.

Analyze the Origin and Purpose of the Project

It is crucial to understand the underlying purpose of launching a meme coin. Some projects are designed to build an active and interactive community for satirical purposes or as a reflection of contemporary social or political phenomena. Projects with clear and easily understood purposes tend to have more promising foundations, as their appeal usually resonates with the audience on a deeper level.

Assess Community Engagement and Ecosystem

Assessing the activity and engagement of the project community on major social media platforms such as Twitter, Reddit, and Telegram is a must. This includes looking at metrics such as the number of active members, the frequency of discussions, and overall engagement. A strong and active community not only drives exposure for a project, but also promotes its growth and sustainability. It is also necessary to track whether the community is collaborating with prestigious projects, brands or influencers, as such collaborations can enhance the project's credibility and market positioning.

Monitor Price Performance and Technical Analysis

Analyzing historical price trends of meme coins can provide insights into their market acceptance and investor sentiment. A coin that shows stable fluctuations and is resistant to sharp declines may indicate growing market acceptance and stability. Conversely, a coin with volatile price fluctuations may indicate the presence of speculative trading. In addition, tracking the popularity of the coin through search volume trends and market rankings can help gauge broader market interest and the long-term potential of the project.

Use Smart Monitoring and Trading Robots

There are many robots that can help investors invest in Meme coins. For example, GMGN.ai is a platform designed for traders to analyze and track Meme tokens with greater speed and efficiency. It provides real-time trading signals by observing the flow of funds and token activities of smart wallet addresses, covering multiple blockchain networks such as Ethereum, Solana and Blast. It also provides on-chain sniping tools, cross-chain swaps, smart fund tracking, and technical analysis integration functions.

Indirect Investment

In addition, investing in decentralized exchanges (DEX) with active Meme transactions, such as Solana's Raydium and Base's Aerodrome, is also a good choice.

Risks of Investing in Memes

Despite their significant appeal, memecoins come with considerable risks:

• High Volatility and Low Liquidity: Prices can soar or plummet quickly, resulting in significant losses. Most memecoins have low trading volumes and poor liquidity.

• Pump and Dump Risk: Developer withdrawals of liquidity remain an issue, highlighting the need to fully research projects.

• Wash Trading Risk: Wash trading occurs when investors (usually the same person or group of people) buy and sell the same asset at the same time to create the illusion of active trading. Here are the key points to identify signs of money laundering:

• The trading volume of Meme Coin suddenly increases significantly, but there is no major news, technical updates or community events to promote it, and there is no reasonable continuity afterwards.

• The price fluctuates rapidly and irregularly in a short period of time (for example, within minutes or hours), and this fluctuation is not based on the normal supply and demand relationship in the market.

• If the size and frequency of buy and sell orders are similar, and they appear alternately, as if they are programmed, this may be a sign of money laundering.

• If there is a high correlation between multiple wallet addresses, such as frequent transfers of funds in a short period of time, or their transaction behaviors are highly similar (such as buying and selling the same amount of Meme Coins at the same time), money laundering may occur.

• Content and platform abuse: Pump.fun’s live streaming feature was used to post inappropriate content, leading to the feature being disabled and raising ethical concerns about NSFW (Not Suitable for Work Environment) and exploitation issues.

• Regulatory challenges: Lack of age verification and speculative behavior may violate regulatory norms and promote unhealthy gambling behavior.

The survival rate of memes is extremely low. According to Pump.fun, the probability of a meme coin reaching a market value of $10 million is only 1 in 100,000, and only 3% of users have made more than $1,000 in profit. Before investing in meme coins, always do your own research (DYOR).

Conclusion

Meme coins have proven that they are more than just a fad in the cryptocurrency market. They represent a unique intersection of internet culture, financial speculation, and community-driven engagement, providing both entertainment and investment opportunities. As the meme space continues to grow, memecoins have attracted the attention of retail investors, the media, and even large financial institutions, driven by factors such as AI popularity, social media virality, and bold marketing strategies. However, their success is not without risks, including high volatility, speculative behavior, and regulatory uncertainty. Investors must carefully consider market sentiment, project background, and community engagement before making a memecoin investment. As the meme supercycle continues to develop, it will be worth watching in the future to see if memecoins can maintain their momentum or if the market will shift to more fundamentally supported projects. Whatever their future holds, memecoins have undeniably carved out a place in the cryptocurrency space and reshaped the way people perceive and trade digital assets.