BitMEX co-founder Arthur Hayes has urged caution when it comes to labeling all memecoins as “stupid,” stating that they can actually have a positive impact on the blockchain networks they are launched on. In an interview with Real Vision CEO Raoul Pal, Hayes argued that memecoins bring value to the crypto industry by generating attention and attracting new users and developers to blockchains. He emphasized that the chains capable of supporting this culture are the ones that will hold value, with Solana and Ethereum being the most well-positioned networks to capitalize on the attention generated by memes.
Hayes pointed out that last year, the Solana network experienced significant growth in activity following a memecoin frenzy in November, with many non-meme projects subsequently launching on the network. Similarly, Bitcoin’s network and development activity saw a significant increase after a flood of BRC-20 tokens and Ordinals around the same time. Pal believes that memecoins will continue to gain popularity among younger crypto investors, leveraging the “gaming mentality” prevalent among Gen Z and Millennials. He likened memecoins to gaming with money.
Both Pal and Hayes predict that the attention directed towards memecoins will persist in the future. They highlighted the upcoming projection of the Solana-based memecoin Dogwifhat (WIF) on the Las Vegas Sphere as evidence of this. The dog-themed memecoin recently surpassed the total market capitalization of the Ethereum layer-2 network Arbitrum (ARB). Despite the potential benefits, industry executives acknowledge the risks associated with memecoins. Franklin Templeton, a US investment firm, noted in a March 14 investor note that while memecoins offer opportunities for quick profits, they also come with risks due to their lack of fundamental value or utility.
Ethereum co-founder Vitalik Buterin expressed his disinterest in memecoins in a March 29 blog post. However, he encouraged crypto investors and memecoin developers to explore ways to make these tokens useful or charitable, rather than simply condemning them or engaging in “virtue signaling” towards those who trade them. Buterin emphasized the importance of embracing people’s desire for fun and finding a way for the crypto space to align with this current rather than go against it.
Despite the risks involved, memecoins have been the best-performing asset class in the crypto sector over the past month, according to data from CoinGecko. In the last week alone, memecoins listed on CoinGecko have gained an aggregate of 20%, compared to 6% for layer-1 network tokens and 5.4% for decentralized finance (DeFi) tokens.