Are Memecoins Really the New NFTs?

Memecoins

TL;DR
Memecoins have been surging this cycle while NFTs struggle, but there are similarities between the two, as both can be community driven and deliberately steer away from utility (although NFTs can be used in a variety of ways.) Where they differ, is that memecoins have improved liquidity and less friction when trading, while NFTs may thrive on a sense of exclusivity. There are several recent projects that have overlapped between NFTs and memecoins, including tokens such as BOME, MFER, ANIME, DOG, RUNECOIN, PUPS, and DECENTRALIZED.

Crypto always needs an area where volatility is wild and speculation revolves less around which project has the best fundamentals, and more around which token is represented by the cutest animal picture. Back in 2021/22, this niche–which became big enough to break out and make inroads into the mainstream–was covered by NFTs, but this time around, while NFTs have struggled, meme coins have become the focal point for degen activity.

Not surprisingly, this led a lot of observers to suggest that memecoins are the new NFTs, or at least are this cycle’s NFTs, but is that a fair assessment? Let’s figure that out by running through the similarities and differences between the two, along with how they sometimes overlap.

How Memecoins Are Similar to NFTs

Community

First off, let’s be clear that the community factor is sometimes over-emphasized, and even turns into a form of cope if prices go down. Basically, a lot of traders don’t want to be part of a community, they want to 10X their stack.

memecoins

But that said, let’s not be too cynical. Well executed NFT and memecoin projects can both–when they work well and aren’t too cabal-heavy–be strongly driven by engaged communities.

And when the market is flying, it can be a lot of fun hanging out in various Discords and watching the token you grabbed early take over the timeline. Also, when it comes down to it, community equates with holders, volume, and positive sentiment, and also with the strongest force in the known universe: FOMO, as watchers on the sidelines wrestle with whether or not it’s too late to buy in to the party.

(Lack of) Utility

Again, let’s start by clearing up a couple of points: firstly, NFTs definitely can have utility, for example as Web3 gaming items, or as tickets, or to connect up physical and digital collectibles. But at the same time, there are plenty of NFTs that make a point of advertising no roadmap, no utility, and if you look at the two most famous collections–CryptoPunks and Bored Ape Yacht Club–on first launching, neither of them emphasized any kind of utility (although BAYC has expanded a lot since then.)

And the same is true of meme coins. Like with NFTs, developers could potentially create some kind of additional use case if they wanted, but for the most part, these tokens aren’t hooked up with DeFi, RWAs or AI, they’re by definition just memes and in-jokes, and that’s usually all they’re ever intended to be.

What Memecoins Do Better Than NFTs

This all comes down to one key point: liquidity. Early NFT collections often contained 10,000 tokens, at a time when bullish conditions meant selling out a 10K collection wasn’t too much of an ask, although later on, supply totals on new launches tended to go down as markets turned bearish.

memecoins
CryptoPunks set the 10K PFP template

And what those limited numbers meant was a relatively illiquid environment, with friction associated with trading in and out of projects, minimum entry costs that became prohibitive as floor prices climbed, and all-in-all, a trading experience that could never be as smooth as regular crypto trading.

Memecoins, on the other hand, take the cultural and social aspects of NFTs, the memes and the in-jokes, the casino atmosphere and the love of gambling (or what’s been termed financial nihilism, if you think it runs deeper than that), and spread it out over high supplies of fungible units, thereby joining up elements of NFT culture with the faster pace of altcoin trading.

How NFTs Are Different

The same qualities mentioned above, that can, especially when attention is elsewhere, hinder NFTs–as in, the low supply and lack of liquidity–are exactly what differentiate NFTs from the rest of crypto and work in favor of good projects when the timing is right.

memecoins
Image credit: Bored Ape Yacht Club

The club part of Bored Ape Yacht Club was critical: when you splashed out on a PFP, or if you got in on the mint and HODLed, you gained entry to a gated circle, and the more expensive the JPEGs got, the more exclusive the increasingly celebrity-populated club became. The party didn’t last forever as BAYC prices have subsequently crashed, although that said, even now, entry will still set you back just under $50,000, which is more expensive than most IRL members clubs.

Although meme coins are driven by communities betting on prices going up, or on the virality of a well executed meme/message/vibe, the selling point is not exclusivity. In fact, it’s more often the opposite: anyone can enter, everyone is encouraged to pile in, but–importantly–it’s equally easy to leave, and you might cash in a profit on your way out.

When NFTs and Memecoins Link Up

Given the similarities between NFTs and memecoins, it’s no surprise that there are some direct links between the two, with several projects overlapping across categories. Some notable examples include:

  • Book of Meme (BOME): This Solana coin was launched by highly-respected NFT artist Darkfarms, on release powered immediately beyond a billion dollar market cap, and Book of Meme is still looking strong.
memecoins
Image credit: Darkfarms
  • MFercoin (MFER): Launched on Base by Sartoshi, the OG NFT artist behind the MFers NFT collection, this one generated initial hype on launch but quickly plummeted in price soon after.
  • Anime (ANIME): Dropped on Base by anime art-centered NFT project Capsule House, ANIME, like MFER, grabbed a good amount of attention on launch, but remains very niche.
  • DOG•GO•TO•THE•MOON (DOG): The top Runes Protocol token, meaning its on Bitcoin, DOG was airdropped to holders of Runestone Ordinals, and is currently leading the Runes charge as–at the time of writing–it’s knocking on the door of a $1 billion market cap.
memecoins
Image credit: Leonidas
  • RSIC•GENESIS•RUNE (RUNECOIN or RSIC): Another major Runes token, RUNECOIN (also known as RSIC), was distributed among holders of RSIC Metaprotocol Ordinals, and if Runes continue to expand as a category, RUNECOIN may be a key token.
  • PUPS•WORLD•PEACE (PUPS): Originally a BRC-20 token, PUPS has bridged to Runes, and also moved some of its supply across to Solana. Holders of Rune Pups Ordinals received an allocation of PUPS, and the project is associated with the Bitcoin Puppets Ordinals collection, although there’s no official link between the two.
  • DECENTRALIZED (DECENTRALIZED): Another Runes token, DECENTRALIZED was launched by Ethereum NFT project CyberKongz, and has made strong gains this month after a quiet period.
Are Memecoins Really the New NFTs? - - 2024

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