Messari data engineer Mike Kremer has become the latest to add his voice to a long-running debate, calling memecoins the “most extractive crypto phenomenon” since the ICO boom of 2017.
Solana (SOL) memecoin skeptics have become louder this week following a recent decline in pump.fun memecoin trading volumes and new data showing that the majority of traders on the platform are losing money.
In an Aug. 19 newsletter, Messari data engineer Mike Kremer added his voice to the ongoing debate, slamming memecoins as the “most extractive crypto phenomenon” since the initial coin offering (ICO) boom of 2017.
According to Kremer, while speculative bubbles and assets have always been a part of the crypto ecosystem, the retail rush toward memecoins had always “left behind some residual value.”
“During DeFi Summer, projects like Uniswap Labs launched protocols that provided real utility to the crypto economy,” wrote Kremer.
“When the speculative frenzy subsided, there was still underlying value in these tokens because they were tied to functioning, valuable services.”
However, Kremer argues that memecoins have had a “far more destructive dynamic.”
“Here, insiders or cartels create tokens like ‘supercumrocket69,’ hype them up, and lure retail investors into bidding on these ‘revolutionary’ new assets,” he said.
According to Kremer, once the price inflates, insiders begin to dump their bags, leaving tokens with no real value or utility.
The comments come amid recent ire against Solana memecoin deployer pump.fun, which critics on social-media platforms claim has made memecoins far more treacherous and dilutive than they had been in the past.
Solana memecoin deployer pump.fun has seen 1.7 million new tokens launch on its platform. A staggering 1.7 million new tokens have been launched on the memecoin deployer since its launch in January, with less than 1.5% of these tokens ever attaining a total value of more than $63,000.
Another recent piece of data suggests that 60% of pump.fun traders have lost money on the platform, while only 3% of all traders have netted gains of more than $,1000.
There is ongoing debate around the accuracy of this data though, with some claiming that it doesn’t account for realized gains.
Kremer’s criticisms also follow a sharp decline in Solana-based memecoin trading volumes, which have slumped by as much as 80% in the last two weeks.
Additionally, a new CoinShares report showed Solana exchange-traded products witnessed a record $39 million in outflows last week.Solana memecoin volumes have declined in recent weeks. Source: Dune Analytics
Or maybe it’s good for crypto?
There’s been a long-running debate about whether memecoins are actually good for the ecosystem.
Alon, the pseudonymous developer of the pump.fun platform, said the market “clearly thinks” lowered costs to memecoin deployment are a good thing, pointing to the outsized activity on the platform.
In an Aug. 7 post to X, Alon said that prior to pump.fun, the memecoin sector was marred by developers rugging liquidity pools, honeypots, and other scams.
He added that each iteration of new memecoin tech makes it “far more accessible for outsiders to join” the crypto market.
“:[Memecoins] are almost ready for mass adoption,” said Alon.
Others say that memecoins are clearly a net positive for the crypto industry, marking an “easy” entry point for newcomers despite the inherent risk involved.
In April, Avalanche founder Emin Gün Sirer told Cointelegraph that memecoins — while inherently worthless — are still useful for “social signaling” and forming strong crypto communities.
In December, Avalanche said it would begin utilizing its $100 million community fund — originally launched to support NFT artists — to start buying memecoins.
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