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Particularly as Solana-based memecoin trading volumes have dropped and new data shows most pump.fun traders are losing money, memecoin critics have been more vociferous this week. In an Aug. 19 email, Messari data engineer Mike Kremer joined the criticism by characterizing memecoins as the “most extractive crypto phenomenon” since the 2017 ICO explosion. Unlike other speculative booms in cryptocurrencies, Kremer contends, memecoins have had a “far more destructive dynamic.” Often leaving some residual value, they also Insiders, he notes, frequently develop these tokens, promote them, and then discard them, therefore leaving regular investors with worthless assets.
Data indicates that only 3% earned profits of more than $1,000 while 60% of traders on the memecoin deployer pump.fun have lost money. Solana-based memecoin trading volumes have also decreased by up to 80% over the last two weeks; last week, Solana exchange-traded instruments experienced record $39 million in withdrawals.
Still up for debate, however, is whether memecoins are eventually good for the crypto economy. Pointing to the great activity on the network, Alon, the pseudonymous creator of pump.fun, contends that reduced costs to memecoin deployment are a beneficial development. According to him, memecoins are almost ready for broad use and are becoming more easily available to newbies.
Others, such as creator of Avalanche Emin Gün Sirer, have argued that while memecoins are essentially useless, they nevertheless have value in the crypto space as they encourage community and keep users active with the technology. In accordance with this perspective, Avalanche said in December that it will begin purchasing memecoins using its $100 million community fund, originally set aside for NFT artists, therefore showcasing their potential to draw more individuals into the crypto scene.
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