For most of 2024, the crypto markets' liquidity has been kept up through trading memecoins. According to a CoinGecko report, memecoins were the most popular narratives in the second quarter of 2024, capturing 14.3% of the market share. The numbers were very similar in the first quarter. These cryptocurrencies rely on fun communities and a brand of humor known as memes to attract users and traders. Through these memes, people from all walks of life can come together for a shared goal of banter and jokes with the promise of financial reward by trading the memecoins. 

The market capitalization of memecoins — more than $50 billion as of Oct. 8 — shows how enormous and fast meme-inspired communities can grow. The lack of centralization in the niche makes the communities unique proponents of blockchain technology. These communities, riding on the backs of their representative tokens, go viral in minutes with loud hype as the fuel that powers them. Most of these tokens get inside-traded, which results in massive pump-and-dump. And as the hype reduces, the communities begin to quieten down. 

In the last couple of years, the influence of meme-inspired communities has grown in leaps and bounds. And they highlight the clear power of a vibrant community behind projects. If a crypto project with real-world utility has a strong community like the ones in the memecoin ecosystem, its chances of going viral are relatively high.

Related: Ditch the memecoins — They won't motivate the next bull run

The best crypto companies and projects should be built on the back of meme-inspired communities and projects. In the next paragraphs, I'll explain how this strategy can work. 

Leveraging the meme hype for growth 

At the heart of meme-driven communities and their rapid expansion is the presence of heavy humor, herd mentality, celebrity endorsements, and massive FOMO. Communities like those of Dogecoin, Shiba Inu, and recently PEPE have experienced huge growth because of these features. The fear of missing out (FOMO) on an opportunity to make quick gains after an influential figure publicly endorses or highlights a memecoin often produces a blanket-like effect of investors thronging the project. These endorsements give these memecoins and their communities a layer of legitimacy and excitement, creating and sustaining a meme-inspired hype.

Crypto arket share of CoinGecko categories in the second quarter of 2024. Source: CoinGecko

Influencers and celebrities also leverage their popularity via social media to get memecoins they are interested in pumping in value. Elon Musk repeatedly tweeted about Dogecoin, which caused the price to reach its all-time highs. In February 2024, Elon tweeted “Dogecoin is the people’s crypto”, and this saw the price rise by 50%. This year we've seen celebrities like Iggy Azalea, Jason Derulo, and Hulk Hogan publicly talk about MOTHER, JASON, and HULK respectively to their followers. In most cases—as with all of these mentioned—these memecoins end up as pump-and-dumps. Take the ORC coin for example, a memecoin endorsed by crypto celebrity Davinci Jeremie, widely known for his early endorsement of Bitcoin when it was still priced under $1 in 2011. ORC had such a big community but lacked any substance to it. No utility, no real lore. As a result, the project has remained stagnant for some time.

Celebrity endorsements lead to strong meme communities which does wonders for the project, especially in the short term. As the community grows, the visibility increases, and other investors and fans/supporters get to join. The larger the number of people in the community, the higher the number of users who would eventually invest in the project. At its peak in 2021, about 3.6 million addresses were holding DOGE. In just over a month since its launch, SUNDOG has garnered about 150,000 followers on its socials, with a market cap of $339 million. The project has a 99% positive vote in the Community Trust section of decentralized research and trading platform DEXTools. This represents the trust of the community in the project. NEIRO is another such project with an impressive community. Above all of this is brand loyalty. In no time, even without any real utility, these memes cause a user-to-meme connection beyond just being in it for profit. This kind of brand loyalty can not be bought.

Turning memecoin communities into strategic launchpads using vampire attacks 

I know the obvious question here is: What’s a vampire attack? 

A vampire attack is a technique used by a new crypto project to snatch users and liquidity from a project that's dominating its niche. In most cases, the latest project is usually a fork of the existing project and it will attract users to it by offering a better user experience, improved product/service, higher financial incentives, and better benefits all around. This attacker project can then develop growth strategies from a position where it can leverage competitive advantages. 

Examples of some popular protocols that have faced vampire attacks include OpenSea, Uniswap, Cream Finance, etc. OpenSea was the NFT industry-leading marketplace in 2022 when LooksRare, another NFT marketplace, started to target its users. LooksRare airdropped over 120 million LOOKS tokens to active users who had to migrate to LooksRare before they could claim the free tokens. 

Uniswap experienced its vampire attack in September 2020 when Sushiswap forked Uniswap's open-source code to launch a Decentralized Exchange (DEX) platform. To improve on what Uniswap had, Sushiswap introduced a revenue-sharing feature backed by its native token, SUSHI. Before the attack, Uniswap had over $1.5 billion in locked assets, which fell to around $400 million after the attack, and Sushiswap gained $1.35 billion. This damaged Uniswap's position as a leading DEX so much that it had to launch its native token, UNI, following in the revenue-sharing footsteps of SushiSwap.

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A version of this attack can be adapted to launch a new project on top of an existing community's momentum. Memecoin communities to be exact. Instead of trying directly to build a crypto community for their project, builders in the industry can create a memecoin, and market that meme. Once the community has grown through all the important metrics, they can carry out a vampire attack and launch a solid project based on that meme. 

This way, they can sustain high market capitalizations, while attracting a huge community for their new project without building from scratch. It also gives the memecoins better long-term futures and a way for new projects to raise communities faster—you can say almost ready-made.

Building a sustainable project beyond the hype 

The following ways are how you can build a sustainable project that goes beyond the initial hype.

  • There should be a focus on developing a project with real-world utility. The project should have a compelling value proposition involving creating a unique user experience, solving a specific problem, or offering innovative features. 
  • The tokenomics should incentivize long-term participation while discouraging speculation. Factors like utility, distribution, and deflationary mechanisms should be considered. 
  • A transparent governance system that gives community members the power to participate in the project's decision-making should be established. 
  • A clear roadmap that outlines the project's milestones for the future should be developed. This action demonstrates a commitment to the long-term success of the project. 

Final word

While the meme-inspired strategy can be effective, it is important to consider potential ethical implications like unfair launches, deceptive/misleading marketing, regulatory compliance, and community well-being. With the meme-inspired strategy, builders can build communities and launch solid Web3 projects, leveraging the power of hype and community.

However, this must be balanced with a sustainable project that runs on underlying value and utility. By mitigating risks like the competition (the memecoin space is highly competitive) and overreliance on hype, this strategy can ensure the long-term success of your project.

Evan Luthra is a guest columnist for Cointelegraph and crypto entrepreneur. He sold his first company, StudySocial, for $1.7 million at the age of 17 and developed more than 30 mobile apps before he was 18. He became involved with cryptocurrency in 2014 and is currently building CasaNFT. He is also invested in more than 400 crypto projects.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.