An Explosion of Memecoins Launched in 2024 — But 97% Are Already Dead

2024 has been the year of memecoins in the cryptocurrency industry, with over 75% of all such tokens launched in the past year alone, according to a recent report by Binance Research.

However, the report titled Understanding the Rise of Memecoins, revealed that the overwhelming majority of memecoins (97%) have already faded into obscurity, marked by near-zero trading volumes.

They come, and they go — and the frisson of danger and the lure of profits are captivating. We explore why 2024 has seen a memecoin explosion.

Table of Contents Table of Contents

1. Memecoins Resonate with Retail Traders
2. A Low Survival Rate
3. Risks and the Way Forward
4. The Bottom Line

Show Full Guide

Table of Contents

1. Memecoins Resonate with Retail Traders
2. A Low Survival Rate
3. Risks and the Way Forward
Show Full Guide
4. The Bottom Line

Memecoins Resonate with Retail Traders

In the report, Binance Research said memecoins are often designed as simple and accessible, which resonates with retail investors who might be put off by the technical complexities associated with blockchain projects:

“Memecoins may offer a brand new type of asset that is Internet-native, Internet culture-aligned, and wholly untethered from the traditional financial system.”

Unlike complex projects, memecoins are easy to grasp and can rally communities around cultural narratives, making them attractive for investors seeking high-risk, high-reward opportunities. This simplicity and narrative-based appeal have driven the rapid growth of memecoins.

For instance, new coins, such as Dogwifhat (WIF), reached a market capitalization of $1 billion in just 104 days, a fraction of the time taken by early meme giants like Dogecoin (DOGE), which took eight years to reach the same milestone.

The report also pointed to a mix of macroeconomic factors and social sentiments behind the rising popularity of memecoins. With inflation and economic uncertainty leading to a sense of “financial nihilism” among younger generations, many people are flocking to high-risk investments in hopes of quick gains.

“It’s hard to fault people for wanting to get rich quick if they have lost faith in their ability to get rich slow,” the report said, citing Andrew Edgecliffe-Johnson from a 2022 Financial Times article on the topic of financial nihilism.

Memecoins have made its way as strategic assets into portfolios of prominent entities like Binance and Hayes

Their market size have tripled in just 2024 alone.

Here I expound on GCR’s theory for an explosion of a meme narrative that will be bigger than the previous bull run???? pic.twitter.com/4ITsDo1yrt

— arndxt (@arndxt_xo) November 5, 2024

Furthermore, the report noted that memecoins aim for fair launches and equal opportunity investment for everyone. This is in contrast to traditional venture-capital-backed tokens that often lock out small investors in favor of private, early-stage funding rounds.

“Anyone with an Ethereum wallet was able to purchase the hottest new altcoin at the exact same time as all other market participants,” the report noted.

A Low Survival Rate

While the rate of new memecoin launches has been unprecedented, the survival rate is alarmingly low. According to Binance Research, 97% of memecoins launched over the past year have seen their trading volumes drop to nearly zero, essentially making them essentially defunct.

The rapid creation of these tokens and their subsequent decline are largely attributed to the limited utility they offer.

Without tangible applications or underlying technologies, memecoins often rely heavily on market sentiment, making them especially vulnerable to price swings and “pump-and-dump” schemes orchestrated by certain groups, or “cabals,” that exploit retail investors as “exit liquidity”.

“The rapid rate of growth and speculation makes memecoins an investment vehicle with high potential for outsized returns, but their heavy reliance on market sentiment, with little else to back them in way of fundamental valuations, also makes them an extremely risky asset class with high risk of losses.”

Risks and the Way Forward

The report from Binance Research warned that the transparency of blockchain technology does not fully protect retail investors from manipulation, as memcoins can be accumulated and distributed by small groups to manipulate the market.

Additionally, some organized groups might pay so-called crypto influencers to promote a particular token to generate hype and speculation on social media, creating the illusion of organic growth.

Moreover, an industry-wide focus on memecoins could divert resources and attention from more impactful projects that drive technological innovation.

“An industry-wide over-allocation of capital and attention towards memecoins…could reduce the overall incentives for skilled builders to join the space and build new products and innovative use cases.”

This lack of innovation could hinder the long-term growth of the cryptocurrency sector, as resources are funneled into tokens that offer little beyond momentary excitement.

Despite the risks, the rise of memecoins does offer certain upsides for the crypto community, specifically in terms of community engagement and fair token launches, Binance Research said.

“The memecoin phenomenon, particularly in the areas of community building and fair token launches…are important for any Web3 team to consider,” the report concluded.

The Bottom Line

It comes as no surprise that memecoins have extremely low survival rates, as they often rely heavily on market sentiment and speculative trading.

However, these tokens have also brought unique benefits to the Web3 space. Their emphasis on community engagement and fairer token launches offer key lessons for future projects.