Meme coins are a very young phenomenon in the cryptocurrency space. While they are currently mostly associated with rug pulls and scams, they have the potential to evolve into something more meaningful.
BeInCrypto spoke with Charles De Hoyos, CEO of the dYdX Foundation, and at the Hong Kong Consensus about the future of meme coins and what the cryptocurrency industry can expect when Donald Trump was in the White House.
The Next Stage of Meme Coins
February was a particularly bad month for meme coins and the ripple effects on Web3 adoption.
The Libra scandal led by Argentine President Javier Milei caused over $250 million in losses for retail investors, leaving a bitter impression on the cryptocurrency community.
Many expressed concerns about how this rug pull will impact the perception of those who have never interacted with Web3, and whether it will make them forever reluctant to do so.
However, this left an interesting thought process for many players. First, Donald Trump launched a meme coin just two days before his inauguration. Then, Melania Trump followed suit a day later. President Milei decided to follow in their footsteps on Valentine's Day.
Will this become a new standard for politicians? According to De Hoyos, it depends on how you look at it.
A Tool to Gauge Market Sentiment
The TRUMP and MELANIA meme coins were used as an interesting tool to gauge market sentiment. The performance of these tokens, strategically launched the day before the presidential couple took office, reflected this sentiment.
The answer was clear: the cryptocurrency community was optimistic about the Trump presidency.
The TRUMP meme coin was also used as a tool to measure a politician's performance and market confidence in real-time. The trading was to some extent based on future political expectations.
When Trump did not mention cryptocurrency in his inauguration speech, trading volume decreased. The same happened when he imposed tariffs on Canada, Mexico, and China.
This situation was interesting to De Hoyos. According to him, meme coins can be a good tool to gauge public sentiment in such cases, but only to a certain extent.
Meme Coins' Appeal to the Younger Generation
On the other hand, meme coins provide a particularly direct and frictionless entry point into the cryptocurrency industry. Platforms like Pump.fun are particularly intuitive. On the other hand, since meme coins lack any real utility, they can become a useful tool to measure public sentiment.
"One thing I like about meme coins is that they are very honest. Meme coins have no fundamental. Meme coins have no utility whatsoever. They are very honest, and sometimes more honest than other types of coins. But meme coins are like saying 'this is worth nothing. It's completely useless. There's no plan, no roadmap.'" - Charles De Hoyos, CEO of the dYdX Foundation
Their direct nature can make meme coins valuable. However, the initial success of coins like TRUMP and MELANIA should be taken with caution. Their skyrocketing prices do not reflect the overall market sentiment, especially considering that cryptocurrency is primarily used among the younger generation.
"If you do a survey based on meme coins, you'll get a very limited and small population sample. So it won't reflect much. But if you want to know exactly what 16 to 21-year-olds are thinking, you need to go to social media, and probably more into the cryptocurrency market, because those coins will be there. But my dad doesn't buy meme coins. My dad doesn't buy meme coins, but my cousins do. So if I want to know what my cousins are thinking, I need to look more into the cryptocurrency market." - Charles De Hoyos, CEO of the dYdX Foundation
Following a similar line of conversation, De Hoyos also expressed the possibility of meme coins being used for fundraising.
Fundraising Use Cases
As cryptocurrency becomes mainstream, industry players are exploring various use cases in traditional domains.
In the case of meme coins, while these tokens lack utility, they can reach high prices if they effectively capture the support of a large community. Many have already spotted this phenomenon.
In addition to politicians, celebrities like Iggy Azalea, Jason Derulo, and Sean Kingston have also launched their own meme coins. Many have experienced rapid rises and falls, but one thing was clear: if there is a solid foundation, the project has a chance of succeeding.
So how would this mechanism work if politicians were to use meme coins as future political campaign tools? Could challenger candidates raise funds and increase awareness by launching meme coins instead of relying on traditional avenues like TV or radio ads?
De Hoyos' response to these questions was cautious and careful.
Here is the English translation of the text, with the specified terms preserved:"On the fundraising side, yes, here we have to be very careful with the wording. It's not about raising funds and expecting any returns. That becomes a security. On the charitable fundraising, political fundraising, I think there is a possibility. We've seen that in ICOs. It's a really good mechanism to build a community and raise funds."
Since meme coins operate on the Block chain, their fundraising mechanism will be much more transparent than traditional fundraising channels. However, meme coins are not old and many people use them irresponsibly. Risks need to be mitigated before meme coins are considered as political fundraising tools.
"The formula needs to continue to be improved so that it does not become toxic, and people should not suffer losses. But it will be like when running a political race, you can sell event tickets. You can sell merchandise and sell private dinners with donors. I think you can exactly replicate the same thing with cryptocurrencies and make it global. First, it will be completely transparent and readable from the outside. It will become an ICO mechanism with a different name," Dehose added.
However, safeguards need to be implemented to ensure that meme coins are used more responsibly.
Potential Beyond Speculation
Meme coins are a very new addition to the cryptocurrency industry. Due to their early stage, their purpose and utility are likely to change, according to Dehose.
"I think meme coins are very young as a phenomenon. As they come and go, this may be the second wave of meme coins. They may quiet down a bit because there have been some challenges and bad meme coin episodes recently. But ultimately, I think they are a very good tool to show people interest and support. In the future, I can imagine people buying meme coins and no longer calling them meme coins."
Meme coins lack inherent utility and primarily reflect a certain internet culture, but are often used for speculative trading. Over time, Dehose hopes that people will use meme coins less as a betting tool and more as a means to support specific individuals or projects.
"In the past, you could buy merchandise. For example, if you were a fan of a rock band, you would wear that rock band's t-shirt. More and more people will say 'I own this token because I like this band'. And we want to move away from the binary speculation on meme coins. We want people to be able to express themselves financially and express their opinions through meme coins. But without any expectations."
For this to happen, industry stakeholders can take specific steps to better educate the public on the pros and cons of meme coins.
Need for Industry-Led Standards
Dehose believes that regulatory authorities should regulate certain aspects of cryptocurrencies, but meme coins are not a top priority. This responsibility should be delegated to industry leaders.
"As industry practitioners, should we define a better framework for meme coins? I think so. As a social layer, should we all agree that meme coins should not start with 1 billion coins on day one, should not be hyped, and should not be promoted? If people still want to go, we can't stop them, but we shouldn't advertise it."
He also said that industry stakeholders can implement specific safeguards to reduce the possibility of rug pulls or pump and dump schemes. This would make meme coins less toxic as they continue to emerge, and the overall design healthier.
"When launching a meme coin, we should start with some industry standard. You can only release 20% of the supply at launch. You have to own and lock X amount of the supply with your own money. After various milestones, you can release additional tokens."
If industry stakeholders create standards for the meme coin market to protect new investors, they provide a toolbox of information tools. These tools can help avoid negative experiences and enable long-term participation in the cryptocurrency sector.
"So we hope that by creating standards, we can make more meme coins readable. Ethereum should release a standard and say 'if you want to launch a meme coin on Ethereum, you have to follow this'. And this will continuously analyze who the issuer is, what their total ownership is. Did they issue everything at once? Are they issuing slowly with clear milestones and roadmaps? How concentrated are the holders? Are those holders locked or unlocked? Are they accumulating very quickly? We can start to understand who it is. Is the market information manipulated or organic?"
He also shared some advice for investors willing to take on the risks.
Taking Responsibility for the Risks
Dehose has been involved in the cryptocurrency industry since 2011. During this time, he has never met an honest trader who got rich from meme coins. According to him, this is simply unrealistic.
Instead, success in this industry requires three things: patience, planning, and risk management.
"You need to have patience. If you're too stressed, adjust your positions and risk tolerance. Approach cryptocurrencies with a plan. Write your plan down on paper. If you act on emotions, your emotions can get too strong and you may want to cry. If you have a plan, adjust your risk tolerance, and define your strategy, you won't be stressed even if you lose $100 on meme coins," Dehose explained.
Dehose learned these lessons through his experience in the industry. He also said that the most successful people he has met have applied these concepts to their approach.
"The people I've met who have been successful in cryptocurrencies have all been in the space for a long time. They either came with patience, developed patience, or solidified their conviction. If you don't have conviction, again, adjust your positions," Dehose told BeInCrypto.
He also left some advice for more experienced industry participants.
In the end, Trump is a politician
It is no secret that the majority of the cryptocurrency community welcomed the presidency of President Trump. Trump's campaign promise was that he would become the next "cryptocurrency president", and the launch of the meme coin just days before his inauguration gave confidence that he would keep his promise.
However, Trump is a politician. His agenda is not limited to cryptocurrency, and industry participants must remember this.
"In my opinion, some cryptocurrency traders are smart, but many are politically naive. Trump is still a politician. He tried to engage with various communities, including the cryptocurrency community, and regain access to the White House. But 48 hours after he became president, cryptocurrency was not his top priority. Trump's agenda is America First, not cryptocurrency. He quickly signed several new bills and imposed tariffs, but he said he would look more closely at cryptocurrency," Dowse explained.
Through these words, Dowse did not overlook the proactive measures Trump has already taken. He believes that under President Trump, cryptocurrency will have more room for activity than under previous presidents.
Dowse also emphasizes that the industry should not expect immediate results from the current president.
"So I think people were a bit naive, but overall it will take more time. But I think it's very good news for the cryptocurrency market. Progress won't be immediate, but progress will be made. We've seen him replace the heads of the CFTC and SEC. Now we have a cryptocurrency czar. So the good news is that everything will change. But you can't change regulations very quickly. There's no magic wand to quickly implement a strategic stockpile across the entire U.S. market," he said.
Keeping this in mind will help industry participants adjust their expectations.
