Memes are crypto distilled to its essence: social trends, wry humor and the lure of ridiculous profits all wrapped up in a token that doesn’t do anything. It’s not for Warren Buffett, but it is for a huge range of ordinary people looking for fun, community and a lottery ticket out of the backwater they live in.
“The meme is the alpha,” says Danny Yang, founder of OnChainMonkey, referring to the insane returns against other metrics. Memecoins gamify the investment process as investors swoop in to follow intangible trends from election results or jump on the latest coin minted 10 minutes after the UnitedHealthcare CEO shooting suspect was arrested. Very 4Chan-esque.
Building communities, social bonds and having fun are all part of the attraction of memecoins. “Humans are social creatures, and memes are about people who find entertainment in the same thing,” Yang says.
“The meme itself is irrelevant. It’s a social game that needs lots of players who judge the meme by how many people might want to play that game.”
But apart from good dumb fun and the chance to make money, what are the real use cases for useless memecoins?
PNUT was struck down but became more powerful as a memecoin. (Elon Musk, X)
Use case 1: Bypassing US securities laws
First and foremost, let’s clear something up — the uselessness of memecoins is itself a particular use case. They get around the US securities regulations that squashed the ICO boom. In addition, memecoins specifically aren’t captured by the Australian Securities and Investment Commission’s proposed expanded crypto powers. How could they be? They don’t do anything.
“It’s actually safer to release a memecoin today with no use case, than it is to launch a token that’s useful,” wrote a16z Crypto managing partner Chris Dixon.
US securities law focuses on the Howey test to determine what constitutes an investment contract. Memecoins,…
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