As the trading volume of Solana memecoin decreases, the argument turns negative
Memecoin skeptics are concerned about the collapse of Solana-based memecoin trading this week and recent data showing that most of Pump.Fun's traders are losing money.
In the year In an August 19 newsletter, Mesari's data engineer Mike Cramer became the latest to add his voice to the long debate, calling memecoins “the most extractable cryptocurrency phenomenon” since the 2017 ICO boom.
He argued that while speculative bubbles and assets have always been part of the crypto ecosystem, the retail rush to the latest crypto fad has always “left behind some residual value.”
Kremer suggests DeFi summer fruit compared to ‘memecoin mania' Source: Messari
“During the summer of DeFi, projects like Uniswap Labs launched protocols that provide real service to the crypto economy,” Kramer said.
“When the speculative frenzy subsided, there was still value in these tokens because they were tied to practical and useful services,” he added.
However, Kremer argues that memecoins have a “more destructive dynamic.”
“Here, insiders or cartels like SupercumRocket69 create, promote, and lobby retail investors to bid on these ‘revolutionary' new assets,” Kremer said.
He added that once the price is inflated, insiders dump their wallets, leaving the tokens with no value or use.
The whole process is a zero-sum game in which prices are not only redistributed, but destroyed.
It comes amid recent outrage at Solana's memecoin deployer pump.fun, which critics on social media say has made memecoins more manipulative and deceptive than in the past.
Since its launch in January, a staggering 1.7 million new tokens have been launched on the memecoin platform, with less than 1.5% of these tokens reaching a total value of over $63,000.
Another recent data indicates that 60% of pump.fun traders lost money on the platform, while only 3% of all traders made a net profit of more than $1,000.
There is ongoing debate over the accuracy of this data, however, with some arguing that it does not account for actual profits.
Kramer's comments follow a sharp decline in trading volume for Solana-based memecoin, which has dropped by 80% in the past two weeks.
Additionally, a new CoinShares report shows that Solana-traded products recorded a record $39 million in outflows last week.
Solana memecoin volumes have decreased in recent weeks. Source: Dune Analytics
Or could it be good for crypto?
However, there has been a long-running debate about whether memecoins are actually beneficial to the ecosystem.
Alone, the anonymous developer of the pump.fun platform “clearly thinks” that reducing the costs of deploying memecoin is a good thing, which indicates the high activity on the platform.
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In an August 7th post for X, Alon said that before pump.fun, the memecoin sector was corrupted by developers ruining liquidity pools, honeypots and other scams. Each new iteration of memecoin technology makes the crypto market “more accessible for outsiders to join,” he added.
“[Memecoins] They are almost ready for mass adoption,” Alon said.
Source: Alon
Others say that memecoins are a clear positive for the crypto industry.
In April, Avalanche founder Emin Gün Sirer told Cointelegraph that memecoins — while inherently worthless — are still useful for “social tokenization” and creating strong crypto communities.
“They're great for the space because they bring people in, get them excited, engaged and focused on what the technology can do.”
In December, Avalanche said it would start using a $100 million community fund — initially to support NFT artists — to buy memecoins.
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