LBank Labs View: Meme coin opens up a new paradigm for investment "Participatory gamified investment in the Z era"

TAIPEI, June 27, 2023 /PRNewswire/ -- Meme coin has always been one of the hottest topics in the cryptocurrency field and also one of the most controversial investment assets. The main reason is that people's discussions and perceptions of meme coins often revolve around speculation and getting rich quick, while overlooking the emergence of a new investment paradigm. In fact, the true value and appeal of meme coins lie not only in the speculation and wealth creation aspect, but also in the participatory, collaborative, and creatively entertaining gamified investment experience they offer. Meme coins attract attention and engagement through their naming, imagery, and storytelling, similar to the construction of a worldview in a game. They play a significant role in stimulating emotional resonance and establishing a shared narrative framework in the cryptocurrency field. Community participation and collective identity strengthen the dissemination and market promotion of meme coins. In this process, the participatory nature of meme coin investment brings about real value in terms of a "sustainable participatory economy," a "great people's era," cognitive profits dividends," and "becoming a super collaborator."

This article will delve into the narrative characteristics of meme coins and analyze the impact of their gamified investment approach surpassing speculative value.

Part 1: Why is Meme Coin so popular among investors?

Before exploring the narrative characteristics of Meme Coin, it is essential to understand the background and origins of Meme Coin. Meme Coins are a type of cryptocurrency based on blockchain technology, and they emphasize the importance of community participation and storytelling compared to traditional cryptocurrencies. Meme Coins originated with DogeCoin in 2013, with its imagery derived from the popular "Doge" dog head meme. However, the story of DogeCoin goes far beyond the scope of this image.

On April 4, 2023, Elon Musk, the CEO of Twitter, replaced the iconic blue Twitter bird logo on users' official profile pages with a cartoon avatar of a Shiba Inu dog. By showcasing a humorous side through MEME memes on social media, he established an emotional resonance with the audience of the Z generation, further enhancing his influence and popularity.

1.1 Why is Meme Coin more suitable for retail investors?

Meme Coin is a type of cryptocurrency that is issued and traded on blockchain technology. It draws inspiration from internet memes, images, and elements of popular culture, hence the name "Meme" Coin. The initial purpose of Meme Coins is entertainment and social interaction, and they often lack practical business applications. Meme Coins have a limited supply, typically defined by smart contracts. These characteristics make Meme Coin unique and popular within the cryptocurrency community. According to CMC data, Meme Coins have two distinctive features compared to other segments in the market.

Feature 1: Meme Coin projects are diverse in nature and have relatively smaller market capitalization, making them suitable for retail investors who employ strategies that involve smaller capital and casting a wide net.

Currently, there are 749 Meme projects in the market with a total market capitalization of around $14.2 billion. The average market capitalization per project is $20 million, significantly lower than Web3 (around $200 million), DeFi (around $90 million), and DAOs (around $100 million). It is roughly in the same range as community-driven projects in the NFT asset class (around $32 million).

Feature 2: Meme Coins have low initial valuations, making them attractive to community-driven investors. High-quality projects have significant growth potential and can achieve high market caps.

The top three Meme Coin projects in terms of market capitalization are DOGE, Shiba Inu, and PEPE, with market caps of $8.6 billion, $4 billion, and $400 million, respectively. DOGE has experienced a 700-fold increase in value over the course of 8 years, Shiba Inu has seen an 80,000-fold increase in value over 3 years, and PEPE has surged 100,000-fold in just 3 months from its lowest point.

1.2 External Factors Driving the Rise of Meme Coin

Meme Coin has gained popularity as a speculative asset, attracting many investors. The emergence of Meme Coin is influenced by several external factors:

a. Rise of Social Media: With the widespread adoption of social media, the propagation speed of memes and popular culture elements on the internet has accelerated. Meme Coin, as a digital asset, combines these memes and cultural phenomena with blockchain technology, providing users with a new way of interaction.

b. Community-driven Innovation: The development of Meme Coin is driven by community-led innovation. In Meme Coin projects, developers and community members often participate in the design, marketing, and promotion of the project, creating a vibrant and creative community ecosystem.

c. Financialization Trend: The surge and trading activity of Meme Coin also reflect the financialization trend in the cryptocurrency market. More and more investors are turning their attention to the cryptocurrency market, seeking high-risk, high-return investment opportunities. The price volatility of Meme Coin attracts the interest of speculators and traders, making it a tool for quick profits in the short term.

Part 2: The Narrative Power of Meme Coins

The narrative power of Meme Coins should not be overlooked. Naming, imagery, and storytelling collectively contribute to their appeal, sparking curiosity and engagement. These narratives, driven by humor, emotional resonance, and the influence of social media, attract market attention and foster unique community identities.

Firstly, the naming of Meme Coins is often closely tied to their narratives. The names themselves may be witty and amusing or associated with popular culture and internet phenomena. Such names pique curiosity and the desire for exploration, capturing people's attention. For example, Dogecoin derives its name from a humorous dog meme image found online, while Shiba Inu is named after a Japanese dog breed, establishing a connection to Dogecoin's story. These names not only possess an element of amusement but also forge an emotional bond among community participants.

Secondly, imagery plays a significant role in Meme Coins. As visual representations of Meme Coins, the images are often closely linked to the narratives behind the coins. These images are drawn from popular culture, memes, and other internet phenomena, enjoying broad recognition and emotional resonance. For instance, Dogecoin is represented by an adorable and goofy Shiba Inu, while Pepe is a widely recognized meme image. These images possess inherent entertainment value and appeal, evoking emotional connections with Meme Coins.

However, the narrative power of Meme Coins extends beyond naming and imagery; the storytelling aspect is equally crucial. These stories, created and propagated by community participants, inject richer meaning and appeal into Meme Coins. The construction of narratives can encompass the origin of the coin, its development journey, community activities, future vision, and more. These stories are often disseminated through social media, forums, news coverage, and other channels, attracting more attention and engagement.

The narrative power of Meme Coins shapes a completely different investment paradigm. The conventional, dry, and serious investment paradigm transforms into a cultural identity, participatory co-creation, and gamified investment paradigm imbued with entertainment and creativity.

1. The narrative power of Meme Coins sparks curiosity and a desire for exploration, fostering emotional connections and community identification. Community participants strengthen their bonds by engaging in the construction and dissemination of narratives, forming a collective identity. Through sharing, commenting, and creating related content, they further propel the spread and market promotion of Meme Coins. Overall, the narrative power of Meme Coins is a vital source of their attractiveness and influence. Through unique naming, graphic design, and underlying storytelling, Meme Coins capture people's interest and participation. This narrative power goes beyond superficial entertainment; it becomes a way of community engagement and collective identification, allowing investors and community members to establish emotional connections with Meme Coins and form a shared narrative framework.
2. The narrative power of Meme Coins holds unique significance in the cryptocurrency field compared to traditional financial assets. Unlike traditional financial assets, Meme Coins transform investors and community participants into protagonists and creators of narratives through their engagement in narrative construction and dissemination. They can contribute to the creation and propagation of stories by sharing their own narratives and perspectives, influencing and shaping the community ecosystem of Meme Coins. This sense of participation and creativity injects new vitality and momentum into the development of Meme Coins.
3. The narrative power of Meme Coins also offers new avenues for the promotion and popularization of digital assets. Traditional financial markets are often perceived as dull and complex, struggling to attract the participation of the younger generation. Meme Coins break away from the conventional notions of seriousness and formality associated with investments in the traditional financial sector, endowing digital assets with more entertainment value and creativity. Through narrative construction, Meme Coins cease to be just financial instruments; they become symbols of culture and community. This innovative form of investment provides opportunities for the younger generation to participate in the digital asset market, fostering the development and innovation of the digital economy.

3.1 The Story of Dogecoin: From Joke to Market Dominance

DogeCoin was initially created as a meme and a joke, with its image originating from a funny dog picture circulating on the internet. However, with community participation and promotion, DogeCoin gradually transformed into a cryptocurrency with significant market value and community support. The story of DogeCoin embodies the power of community and the spirit of collective creation. Its success goes beyond the image itself and is built upon a resonance with the concepts of community consensus and openness.

DogeCoin stands out as the most successful meme coin, largely due to the involvement of one of the most influential community members globally: Elon Musk. Elon Musk, the founder of Tesla and SpaceX, is also a well-known entrepreneur and investor active on social media platforms. He has tweeted multiple times about DogeCoin, expressing interest in and support for the currency. His tweets and statements have wide-ranging influence, quickly capturing market attention and participation. Elon Musk's involvement and promotion have elevated DogeCoin's visibility in the media and public eye. With its unique logo featuring a cheerful dog and a vibrant community culture, coupled with Musk's endorsement, DogeCoin has attracted more attention and interest, thereby increasing its exposure and market recognition.

3.2 The Story of Shiba Inu: The Path to Success through Multiple Elements

The story of Shiba Inu incorporates various elements, including the skyrocketing narrative of DogeCoin, the visual similarity between Shiba Inu and Doge's dog head images, and an innovative token distribution approach. The shaping of this story creates a sense of anticipation and potential returns for the new project. The success of Shiba Inu teaches us that the story of a meme coin can be created through the fusion of multiple elements, resulting in unique charm and appeal.

In terms of increasing exposure and spreading awareness, Shiba Inu learned from the experiences of DogeCoin. In 2021, the Shiba Inu team transferred a significant amount of Shiba Inu tokens as a community donation to Vitalik Buterin. This action garnered widespread attention and triggered a series of market fluctuations. Additionally, Elon Musk has also expressed interest in and support for Shiba Inu tokens on social media. He has posted tweets related to Shiba Inu, generating discussions and attention across social platforms.

The combination of these factors contributed to Shiba Inu's rise in prominence and market recognition. The story of Shiba Inu demonstrates how a meme coin can leverage various elements to create its own unique appeal and generate interest among investors and the community. By incorporating successful elements from previous meme coins like DogeCoin while adding new twists, Shiba Inu was able to capture attention and attract a following of its own.

3.3 The Story of Pepe: Image, Association, and Innovative Token Distribution

Pepe is a well-known meme image that serves as a countercultural symbol. In certain internet communities, people use the Pepe image to express attitudes of rebellion and resistance against mainstream culture, attracting a following of individuals who resonate with this rebellious atmosphere. However, the story of Pepe extends beyond the image itself. The story of Pepe is closely linked to the skyrocketing narrative of DogeCoin and the association with meme images, while also incorporating an innovative token distribution approach. The creation and dissemination of this story further enhance community engagement and market attention. The example of Pepe illustrates how the story of a meme coin can be shaped by leveraging images, associations, and innovative token distribution methods to create its unique value.

In addition to DogeCoin, ShibaInu, and Pepe, there are many other meme coins that possess unique stories and narratives. For example, SafeMoon has attracted attention through its story of anti-money laundering measures and an automatic liquidity locking mechanism. Elongate has touched hearts through its story of charitable donations and community building. These stories are closely linked to meme images, but more importantly, they construct a broader narrative framework that inspires community engagement and market attention.

Part 4: How can investors improve their success rate in meme coin investments?

The narrative nature of meme coins brings value beyond the images themselves. However, we must also recognize the risks and challenges associated with them. Unlike traditional investments based on fundamentals, meme coin investments require individuals to immerse themselves in the community, understand the meme culture within, and be willing to participate in building and promoting the project. Engaging in meme coin investments solely with speculative motives, lacking an understanding and belief in the community culture, exposes oneself to significant price volatility risks.

So, how can ordinary users identify meme coins with growth potential? Here are a few aspects to consider:

1. Conduct thorough research: Before investing or participating in any meme coin project, thorough research is crucial. Understand the project's background and community culture. Engage in community discussions, follow the project's social media accounts, and assess the project's broad appeal and existence of genuine demand and use cases. A meme coin project that aligns with market demand is more likely to succeed.
2. Evaluate community support: A meme coin with growth potential requires strong community support. Observe the project's community activities, social media engagement, interaction and participation among community members, and more. An active, loyal, and creative community often serves as an important indicator of project success.
3. Understand the project's innovativeness: Meme coins with growth potential often possess innovative and unique features. Understand the project's innovation in terms of technology, design, or functionality. Does it have associations with popular cultural memes or unique use cases? These innovative aspects will help the project stand out in the market.
4. Assess the project's development plan: Examine the project's historical performance and past achievements. Look into whether the project has achieved actual milestones, launched products or services, and consider the feedback and evaluations from the community.
5. Understand the market competition: Assess the market competition that the project faces. Check if there are similar meme coin projects and understand their advantages and disadvantages. A project that can stand out in a competitive market may have greater potential.

Most importantly, investing and participating in meme coin projects require individuals to conduct a comprehensive risk assessment and make decisions based on their financial situation and risk tolerance.

For ordinary investors who may not be able to actively track the real-time hotspots within meme communities, they can rely on external resources to enhance their ability to identify high-quality meme projects. For example, they can pay attention to exchanges that have strong capabilities in discovering meme coins, such as LBank, which has performed well in this wave of meme frenzy. Over the past few months, LBank has made significant contributions to meme coins by providing opportunities for community ecosystem development and organizing various collaborative activities. LBank was the first exchange to list prominent meme projects in the PEPE, PSYOR, and BEN tracks. Among them, the most remarkable performance was seen with PEPE, which experienced a 170x increase from its listing to its peak on LBank.

Conclusion

As a new form in the cryptocurrency space, meme coins go beyond their association with meme images. Their true value lies in the stories and narratives behind them. The storytelling aspect of meme coins attracts numerous investors and community participants, driving the growth of their market. However, it's important to acknowledge the investment risks and market uncertainties associated with meme coins. By understanding the narrative characteristics of meme coins in-depth, we can look beyond simple meme images and recognize the potential and opportunities they offer. Meme coins are more than just images; they are virtual worlds constructed through stories and narratives that captivate people's interest and involvement. When exploring and investing in meme coins, we should pay attention to the content of the stories, community participation, and the project's sustainability. Only then can we better understand and harness the value of meme coins and contribute to the development of the cryptocurrency space.

SOURCE LBank