Crypto VC sees a ‘new class’ of profitable memecoins this cycle
According to Andrew Kang, co-founder of Mechanism Capital, this cycle capitalizing on deep “culture” can be more profitable than standard meme tokens based on animals and simple jokes.
In an April 7 post for X, Kang said a new category of “cultural coins” — memecoins focused on cultural values such as politics, brands, religion and lifestyle — have the potential to go more “viral” than popular memecoins. Last cycle like Dogecoin (DOGE) or Shiba Inu (SHIB).
“Communities with strong values and identities naturally try to convert others to their beliefs and publicly display what they like about their way of life. They are inherently viral.”
“The ideology of these communities can be about politics, religion, consumer goods, sports, lifestyle or a mix of all,” Kang added.
Kang pointed to Solana-based memecoins — Joe Boden (BODEN) and Doland Tremp (TREMP) — as recent examples of cultural coins that have grown rapidly from communities that hold “anti-activist, anti-Biden, and right-wing views.”
Boden It has grown exponentially since its launch on March 9, recording gains of over 700,000% since inception. At the time of publication, BODEN boasts a capitalization of $473 million and stands as the 191st largest token by total value according to CoinGecko data.
Donald Trump parody coin TREMP It has posted significant gains since its February 27 launch but hasn't gained as much traction as BODEN. It currently has a market cap of $73 million, according to Birdeye data.
Politics aside, Kang suggested memecoins drawing from successful consumer brands — specifically naming ZYN and MOUTAI as the company's investments — could ride on brands' coattails in the “circular economy.”
“Compared to animal coins, coins that represent consumer brands may have the added benefit of leveraging that brand's associated lifestyle for additional virality,” Kang added.
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Overall, Kang pointed out that the decision to invest in memecoins is not too far from investing in regular assets, which have yielded higher returns.
“The hardest moving assets (stocks, real estate, metals, coins, etc.) are assets that people can trust easily,” he said.
However, crypto industry experts are divided on the impact of memecoins on the sector.
BitMEX co-founder Arthur Hayes believes memecoins are a “net positive” for their respective blockchain networks, while others say they are a dangerous and speculative mess that betrays the founding principles of blockchain technology.
Regardless of their impact on the ecosystem, memecoins have established themselves as the most profitable sector in crypto in the first quarter of this year.
According to a market report from CoinGecko, the 10 largest memecoins recorded an average return of 1,312.6% for holders in Q1 2024.
“The memecoin narrative was 4.6 times more profitable than the next best-performing crypto tokenized real world assets (RWA) narrative, and 33.3 times the layer 2 narratives with lower returns in Q1 of this year,” said CoinGecko analyst. Lim Yu Kian
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