Whether you love them or hate them, memecoins are dominating the cryptocurrency scene in 2024. Despite the risks involved in investing in these new coins, Emin Gün Sirer, the founder of Avalanche, believes that they are bringing value and new users to the cryptocurrency ecosystem.
In an exclusive interview with Cointelegraph’s Ezra Reguerra at Token2049 in Dubai, Gün Sirer discussed the benefits and drawbacks of memecoins across various blockchain protocols, including Bitcoin, Ethereum, Solana, and Avalanche. These memecoins have made some people wealthy while causing others to lose their investments.
According to Gün Sirer, memecoins are great for the industry because they attract and engage people, keeping them excited and focused on the potential of the underlying technology. Despite critics arguing that memecoins have no real value, Gün Sirer believes they serve a purpose by attracting newcomers to the cryptocurrency space.
Gün Sirer, who has been in the industry for a long time and is financially conservative, initially criticized coins like Dogecoin and Shiba Inu. However, he has come to realize that memecoins have a purpose that may not be obvious to older generations. He sees them as a way for younger, risk-taking crypto enthusiasts to showcase their ability to identify promising projects.
So, what is the purpose of memecoins? According to Gün Sirer, it’s all about social signaling. Just as some people use a Bored Ape Yacht Club NFT as their profile picture to show off their trading success, memecoin traders use these coins as a way to signal their financial gains.
Gün Sirer also noted that most memecoin traders don’t hold their tokens for the long term. Instead, they constantly adjust their holdings based on the movement of value between different memecoins. This requires being at the forefront of the memecoin community and making accurate predictions, which is not an easy task.
As a result, memecoins have a “premium” associated with them, attracting individuals who understand the memes and can act early on promising projects. Avalanche, in particular, has seen a thriving memecoin culture on its protocol.
Gün Sirer revealed that the Avalanche Foundation was one of the first players in the cryptocurrency ecosystem to embrace memecoins and actively encourages the community to grow. He believes that the influx of users to Avalanche is directly linked to the popularity of memecoins.
In conclusion, memecoins may be controversial, but they are undeniably making waves in the cryptocurrency world. While their value may not be apparent to everyone, Gün Sirer sees them as a valuable tool for attracting new users and allowing risk-taking enthusiasts to showcase their trading skills.