SEC and venture capital oppression? Attention economy? Crypto KOLs discuss the reasons behind the meme explosion

Compilation | Wu Talks about Blockchain

Original link:

https://x.com/nic__carter/status/1850530740217196766

As the 2024 US election approaches, the discussion about memecoin in the crypto community has become a hot topic on Twitter. Its dramatic price fluctuations, rapidly growing user base, and antagonism to the mainstream financial world make it a unique market phenomenon. On the evening of October 27, several well-known influencers in the crypto world launched a heated discussion on the future direction of memecoin.

Omid Malekan: memecoin and economic populism

The cause was that Omid Malekan, a professor at Columbia Business School and a blockchain writer, published a long article about memecoin on the X platform. (Omid Malekan has long been known as an "explainer" for explaining complex cryptocurrency phenomena to the public in a concise and easy-to-understand way.) Omid Malekan first wrote in the tweet: "Memecoin itself is a manifestation of economic populism. They are a rebellion against the token economics supported by venture capital."

He pointed out that the popularity of memecoin reflects investors' dissatisfaction with the existing token issuance mechanism, especially those tokens manipulated by venture capitalists, which often lack transparent distribution and fair circulation mechanisms. Malekan further explained that the current phenomenon is partly driven by regulatory policies led by SEC Chairman Gary Gensler and Senator Elizabeth Warren. The strictness of these policies forces the crypto market to take extreme measures such as geo-blocking airdrops and VPN blocking.

However, Malekan believes that if the Republicans win the upcoming US elections, these policies will change significantly and the regulatory environment may become more relaxed. He wrote: "A Republican victory will bring back mechanisms such as ICOs and airdrops, which can bring real economic benefits to token holders, which memecoin lacks." He concluded that if the US cryptocurrency regulation returns to rationality, it will have a negative impact on the memecoin market as the market will refocus on decentralized applications (dApps) and other projects with more practical value, leading to a long-term bear market in the memecoin market. "Every joke has an end," Malekan warned investors, suggesting that memecoin will eventually make most people lose money.

Nic Carter: The memecoin phenomenon under SEC pressure

Later, Nic Carter, a well-known crypto venture capitalist and partner of Castle Island Ventures, quoted Malekan's long article and expressed his own views. Carter pointed out in a tweet: "Memecoin is largely a response to the SEC's oppressive regulation. If the SEC finds reason, the demand for trading memecoin will decrease."

Carter further explained that while demand for memecoin may decrease, there will always be a segment of the population that will continue to trade memecoin because it has been doing so for a decade. Carter stressed that the appeal of memecoin comes from its suggestion of equality, but he also pointed out that "once the so-called 'evil VCs' - institutional capital - learned how to exploit memecoin, they coordinated their activities to drive the price of memecoin up, and ordinary investors would only learn about it when the token had already reached a market value of $1 billion." Carter warned of the potential inequality in the memecoin market, that institutional capital would eventually take over these seemingly grassroots market opportunities.

Cobie: An early-stage opportunity for memecoin

Another KOL, Cobie, responded to Carter’s tweet, saying: “The reason why memecoin is popular is that people want to buy assets that can rise in price, rather than assets that have already reached billions of dollars in valuation and have been falling for a long time.” Cobie pointed out that it is becoming increasingly difficult for ordinary investors to participate in non-memecoin projects at an early stage, because most projects have gone through multiple private rounds by the time they are officially listed. He believes: “Even if the SEC’s policy turns to support DeFi, the reality is that no one wants to buy assets on Binance.”

Andrew Kang: Re-examining token economics design

Andrew Kang, a partner at Mechanism Capital (also better known as a crypto short who went from 0 to nine figures), also joined the discussion. Kang criticized the existing token lock-up design, arguing that long-term lock-ups not only do not bring positive effects, but increase market instability. "It is better not to set a lock-up period for investors, but to put as many tokens as possible into circulation on Day 1."

Kang further explained: "Long-term unlocking periods will only postpone the problem and become a constant problem for the project parties." He advocated that more tokens should enter the market circulation at the token generation event (TGE), believing that this can avoid the market volatility caused by subsequent long-term unlocking. He pointed out: "All market participants are potential sellers, and locking positions will not change this. A free market trading environment is the best choice to solve the long-term volatility of the crypto market."

Toly Yakovenko: memecoin is entertainment

Compared to the serious discussions of the above KOLs, Toly Yakovenko, co-founder of Solana Labs, jokingly replied to Malekan’s tweet: "Trading memecoin is a form of entertainment. It's like a Keynesian beauty contest, guessing what people think is the most interesting. Trading other assets is work. If possible, people would prefer to work less and have more fun." Toly Yakovenko's point of view emphasizes the irrational side of memecoin, that is, investors prefer to use it as a form of entertainment rather than a serious economic behavior.

Murad Mahmudov: memecoin and the global money supply

Finally, Murad Mahmudov, a meme influencer who recently rose to fame on Token 2049, also joined the discussion. Murad responded to Malekan’s long post, saying, “99% of memecoin buyers don’t care about politics at all. The rise of memecoin is directly related to the continued growth of the global money supply, not the result of an election.”

Murad stressed that the increase in global money supply is a key factor driving the rise of memecoin, and even Trump's victory will not change this fact. He further stated: "Memecoin buyers don't even care about trading assets that have legitimate income and open fee switches. The increase in global money supply makes attention more important than fundamentals and cash flow." In his view, as liquidity in the global economy becomes more and more rampant, attention resources in the market gradually replace traditional economic foundations and become the key to determining the value of memecoin.