Market Is Not Down, You Just Need Memecoins

gm gm,

Uptober may not have come as planned, but it looks like the dips are for memecoins. 

Memecoins may have started as a joke with $DOGE, but in the last 6 months, memecoins have consistently ranked among the top four narratives in the market. 

You’ve seen Moo Deng, right? It quickly captured mindshare on Solana, reaching an ATH market cap of $322 million in just 3 weeks of its launch. Very moo, much deng. 

Our thesis is that memecoins do well because of virality — capitalizing on the attention economy and our shortening attention spans (The converse is also true. RIP graveyard of memes). Iggy Azalea knows this. Post Mother Rodeo, her coin $MOTHER, skyrocketed by 56%. 

When Drift listed $MOTHER last week, we saw $124K in volume within 24 hours of going live. Less than a week later, and it did $666K in volume. From a trader's perspective, memecoins have a fast feedback loop. 

So, what's driving this memecoin supercycle, and will it stay? 

The 2024 Memecoin Boom 

Every year has had a significant meta. In 2017, it was ICOs. 2021 saw NFTs take center stage. Now, 2024 is shaping up to be the year of memecoins. 

Solana has been at the center of this memecoin supercycle, kicking it off with $WIF in December. Post $WIF, Solana experienced a barrage of different memecoins flooding the Solana ecosystem. 

Case in point: 

• Memecoins dominated mindshare with 10.44 % in Q1 and 14.34% in Q2. In fact, memecoins were the most profitable narrative with top tokens yielding returns of over 1,000% in Q1. 

• $POPCAT isn’t the only memecoin flipping marketcaps (it recently flipped LIDO). $BONK flipped ATOM in marketcap in the last 24 hours. 

• $MOODENG launched in mid-September, quickly gaining mindshare of 3.65%, just behind $BTC, $ETH & $SOL with a market cap of over $200 million. It has increased by more than 2000% since Sept 20. 

• AI was another top-performing narrative of 2024, yet even with the hype, the total market cap of memecoins sits at roughly 2x of AI coins. (And we are not even talking about the FDV of AI tokens)

What’s Behind the Memecoin Supercycle?

From FOMO to fed rate cuts, there’s a host of factors propelling the meme supercycle: 

• Ease of Creation and Trading: Platforms like Pump.fun have simplified the process of creating and launching tokens. To date, over 2.1 million tokens have been deployed on Pump.fun. 

• Macro Economic Factors: With rate cuts and a stimulus package by China, there's new liquidity flowing into crypto. With memecoins at the top of the mindshare pyramid and price growth, a part of that liquidity has flown into memecoins.

• Institutional Involvement: Big firms like Stratos and Brevan Howard are actively trading memecoins, adding liquidity and legitimacy to the market.

• Regulatory Landscape: While many tokens face regulatory scrutiny, memecoins pull through since they make no pretense of memecoin investors relying on the managerial efforts of anyone as per US securities law. 

Memecoins: More than Speculation

Andrei (Managing Partner of DWF Labs) mentioned that memecoins are a crucial user acquisition tool for crypto as an industry (not just L1s and L2s). Memes are entertaining. They’re quick to capture attention and can onboard new users towards ecosystems. 

Take Base, for example. At its peak, the memecoin market on Base reached impressive proportions, with a combined market cap of $1.87 billion and a 24-hour trading volume exceeding $168 million. 

Tokens like Brett (inspired by Pepe's friend) and Toshi (named after Brian Armstrong's cat) gained quick popularity, pushing trading volumes noticeably higher. Thus, contributing to the ecosystem’s growth. 

It’s bullish when your memecoin bag does partnerships. By launching projects that integrate with popular memecoins, new applications or infrastructure can quickly tap into an existing user base. 

Projects like BONK are leading the charge in developing DeFi integrations through dApps like Bonkbot, Bonkswap, and OpenBonk. Memecoins are finding utility beyond simple trading.

While platforms like Sanctum allow users to stake SOL and earn memecoins through wifSOL, turning meme investments into yield-generating assets. Yield-generating memes, anyone?

It goes without saying — the risk to reward ratio is high. And if you’re trading memecoin on Drift with leverage, trade responsibly.

The next big memecoin could be just a tweet away. Or you know, hold on closely to your brain rot friends.

Just Driftings’

• Drift raised $25 million in funding led by Multicoin Capital: The funding will accelerate Drift’s mission towards building the most liquid, composable, and capital-efficient DeFi platform. 

• New PERP Markets: $MOTHER, $TON, $MOODENG 

• Drift hits over 40 billion in total trading volume: Drift has processed over $43 billion in trading volume, with $500 million in deposits across 200,000 users

• BET’s growth: BET has crossed $27.1 million in total BET volume, with 1,750 total betters who have placed 12,900 bets. The recent Lando Norris market resolved with $580K total volume. More F1 markets are coming. 

• New BET market: Will Kain Warwick win against David Hoffman? 

Solana Ecosystem News

• Solana tops all chains in monthly net inflows: Solana surpasses all other blockchains combined in net Inflows over the last month.

• Unlonely moves from Base to Solana: Unlonely taps into the growing appeal for consumer-focused projects on Solana and the high velocity of capital that the ecosystem provides.

• Breakpoint 2024 broke records: Breakpoint 2024 set new records for the Solana conference series with over 6,000 attendees from around the globe.

Driftors on CT

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.