Humble Beginnings of Dogecoin
Dogecoin (DOGE) was created in 2013 as a “joke”, and it is now one of the top 10 largest assets in crypto by market capitalization. While there have been thousands of tokens that have come and gone in the 10+ years that DOGE has been around, it is one of the very few that has had three cycles of good performance and has made a new high vs BTC (in 2021).
DOGE also was doing roughly the same amount of daily volume as BTC and ETH during the week or so that price went vertical before peaking. It also reached a market cap of almost $100B, and returned over 28,000% in roughly six months.
Crypto natives that were around in 2021 remember the mania that sent DOGE to $0.69, peaking with Elon Musk making jokes about Doge on Saturday Night Live. While there is no “inherent value” in meme coins, it is hard to ignore the virality of memes, and crypto has proven to be an efficient way to monetize that virality and attention.
Solana Dogs
Bonk
In the beginning of the current cycle, meme coins had meaningful moves. In May 2023, PEPE (after Pepe the frog, a very famous internet meme) pumped to over a $1.5B market cap over a period of around a month. However, in October of 2023, right around the time that SOL began its run from $20 to ~$120, BONK became the DOGE of Solana, returning 13,000% in just a few months.
For many market participants that were around last cycle, this new “dog coin” on Solana was very reminiscent of DOGE. People quickly began to give BONK a target of DOGE’s peak market cap, as everyone was aware of how crazy meme coins got last cycle.
Dogwifhat
In November 2023, another popular dog meme was turned into a token, called “dogwifhat”, or WIF. Similar to Doge, the dogwifhat meme features a real-life shiba inu dog, however, this one is wearing a knit hat. It sounds ridiculous, I know. That is, until you hear about the $4.3M NFT sale of the original image, similar to the Doge NFT sale from 2021.
WIF has quickly risen to prominence, surpassing BONK in market cap and becoming the leading meme coin on Solana. It currently trades at roughly a $4 Billion market cap at the time of writing, and it has only been in existence for approximately four months.
The WIF move over recent months has caught even the biggest bulls off guard. However, WIF is still not listed on Coinbase and the community recently raised $650k to put the meme on the Las Vegas sphere for a week (https://cointelegraph.com/news/dogwifhat-price-hits-record-high-las-vegas-sphere-crowdfund).
Where is the best place to speculate on memes?
Solana has been the primary chain for meme coin speculation thus far this cycle, as it is very cheap and easy to use. This speculation and influx of users has caused Solana on-chain volumes to flip Ethereum on occasion over the last few months.
Aside from BONK and WIF, Solana is the home to other popular meme coins in recent months such as political memes like Jeo Boden (https://www.coingecko.com/en/coins/jeo-boden) and Doland Tremp. There are also prominent cat memes such as Popcat and Shark Cat, along with many others. We can expect Solana to be the main chain for the “decentralized casino” this cycle.
Now that Ethereum’s Dencun upgrade is live, Layer 2’s are much cheaper to transact on, and activity has recently picked up there as well.
Coinbase’s L2, Base, has been a beneficiary of the upgrade, and meme coin speculation is beginning to accelerate on Base. Daily volume has exploded on Base in part due to lower fees post-Dencun upgrade and increasing meme speculation as new tokens continue to pop up.
Many people expect Base to be the “retail chain” L2, as it has the backing of Coinbase, and the Coinbase smart wallet could potentially onboard millions of existing users very easily. If this happens, we could see a speculative altcoin and/or meme coin bubble similar to what we’ve seen on Solana over recent months.
Meme coins are driving volume on Base, and momentum on base is likely to continue as transactions are much cheaper after the Dencun upgrade.
Popular meme coins on Base include Brett (after Pepe the frog’s friend), Toshi (named after Brian Armstrong’s cat), and Keyboard Cat (a popular internet meme over the past few decades).
As activity on Base increases, we can expect some of the base meme coins to take off like Solana ones did. We have yet to see a $1B market cap meme on Base, but its only a matter of time until that changes.
Legitimate investment or a fad?
Memes like Doge have proven to be lindy and stick around for multiple cycles. Many have seen the stories of people making millions of dollars on DOGE (and the many that lost money), and wonder - are meme coins a legit investment opportunity? Are they a short-term trade? Is this just another bubble that is ready to pop?
Obviously, none of us have a crystal ball, but we can certainly use the past and maybe even a little bit of sociology and investor psychology to form a thesis.
In today’s world where we’ve been battling inflation and younger generations are struggling more financially than generations before them, investment philosophy differs intergenerationally. Many are uninterested in the traditional 60/40 portfolio and don’t have the disposable income to invest in a 401k, as they are struggling to just get by in today’s world. Rent in many major cities has become unaffordable, and purchasing a home is difficult for many. Purchasing power has dwindled as wages have not kept up with the cost of integral expenses such as healthcare, housing, and college tuition.
All of the above culminates in financial nihilism - or the idea that upward mobility is no longer achievable and is out of reach for most people. This leads to increased risk taking in markets, leading to assets like meme coins catching a much larger bid and garnering much more attention than many ever anticipated. Travis Kling writes about the concept of financial nihilism in much more detail here - (https://twitter.com/Travis_Kling/status/1764696621097378299).
Other people have come up with theses discussing variations of a “meme coin supercycle” where meme coins continue to grow as a percentage of the total crypto market cap and command immense attention (see https://twitter.com/kelxyz_/status/1763684444651536741).
Finally, from the legendary DegenSpartan, some sarcasm that definitely has some truth to it. As crypto natives are well aware, this market trades primarily on narratives. While the underlying tech of some projects is very sound, attention tends to drive flows, and meme coins are incredible at grabbing attention and creating momentum.
One last thing from the great GCR (if you know you know) - the decentralized casino is always the fastest horse when macro conditions are full risk on. What conditions are more risk-on than BTC breaking it’s all-time high?