BitMEX co-founder Arthur Hayes advises caution before dismissing all memecoins as “stupid.” He believes that these coins can actually have a positive impact on the blockchain networks they are launched on. In a recent interview with Real Vision CEO Raoul Pal, Hayes argued that memecoins attract attention and bring new users and engineers to blockchains, thereby adding value to the crypto sector. He stated that the chains capable of supporting this culture will be the ones that hold value, with Solana and Ethereum being well-positioned to capture the attention generated by memes.
Hayes pointed out that the Solana network experienced significant growth in activity after a memecoin frenzy in November. Consequently, many non-meme projects also launched on the network in the subsequent months. A similar trend was observed in the Bitcoin network, which saw increased network and development activity following the influx of BRC-20 tokens and Ordinals during the same period.
Pal believes that memecoins will continue to gain popularity among younger crypto investors, taking advantage of the gaming mentality prevalent among Gen Z and millennials. He compared memecoins to gaming with money and emphasized that the attention they attract will persist in the future. To support this, he mentioned the upcoming projection of the Solana-based memecoin dogwifhat (WIF) on the Las Vegas Sphere, scheduled for the coming months. This dog-themed memecoin recently surpassed the Ethereum layer-2 network Arbitrum (ARB) in terms of total market capitalization.
While Hayes and Pal acknowledge the potential benefits of memecoins, they also acknowledge the associated risks. Franklin Templeton, a US investment firm, highlighted these risks in a recent investor note, stating that memecoins offer opportunities for quick profits but lack fundamental value or utility. Ethereum co-founder Vitalik Buterin expressed his lack of interest in memecoins but encouraged investors and developers to find ways to make these tokens useful or charitable instead of simply denouncing them.
Despite the risks, 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%, outperforming layer-1 network tokens and decentralized finance (DeFi) tokens, which gained 6% and 5.4% respectively.
In conclusion, memecoins, despite their risks, have proven to be a successful asset class within the crypto sector. Their ability to attract attention and bring new users to blockchains has been recognized by industry experts. While caution is advised, memecoins continue to gain popularity and demonstrate their potential value in the crypto space.