Meme coins: from internet joke to multi-billion dollar market

Overview of the meme coin market

As of June 2024, the total market capitalization of meme coins has reached approximately $63 billion. This is an impressive figure that demonstrates the massive recognition of this asset class by the crypto community. Currently, the top 6 market leaders include DOGE, SHIB, PEPE, WIF, BONK, and FLOKI — coins that started as internet jokes but have become serious players in the crypto economy.

According to the latest data, DOGE is trading at $0.13 with a 24-hour trading volume of $28.77M and a market capitalization of $21.85B. Other meme coins are also showing significant trading activity: PEPE with a market cap of $1.71B, WIF with $337.04M, and BONK with $661.51M.

What meme coins are: history and evolution

Meme coins are cryptocurrency assets that originated from internet culture and memes on social media. The pioneer in this direction was Dogecoin (DOGE), created in 2013 by programmers Billy Markus and Jackson Palmer as a fun project inspired by the popular Shiba Inu dog meme Kabosu.

DOGE was developed as a fork of Litecoin and uses the Proof of Work consensus mechanism. A key feature is the absence of a maximum supply of coins, which distinguishes it from many other cryptocurrencies.

The real explosion in the popularity of meme coins occurred during the COVID-19 pandemic when retail investors actively sought ways to protect their capital from inflation. The event related to “meme stocks” (GameStop and AMC), where the Reddit community synchronized to drive up prices of these assets, served as a catalyst for the development of a similar movement in the cryptocurrency space.

The critical moment came when celebrities began to publicly support DOGE. Tesla CEO Elon Musk significantly increased attention to the coin with his tweets and public statements, leading to a rapid rise in its price.

Why meme coins are gaining strength

The attractiveness of meme coins is explained by several factors:

Availability and Democratization. These coins often cost just a few cents or even less, allowing retail investors to acquire them in large quantities. Owning thousands or millions of coins creates a psychological sense of owning a large stake, which is significantly different from buying shares of Bitcoin or Ethereum.

Community Power Dynamics. Meme coins function as a tool for self-expression. By purchasing such a coin, a participant demonstrates their belonging to a certain subculture and support for its values. This creates a strong emotional attraction that traditional financial assets do not provide.

Institutional recognition. A significant shift occurred in 2024 when the financial company VanEck launched a meme token index tracking the six largest projects by market capitalization. This event dramatically increased the legitimacy of the asset class in the eyes of institutional investors and set a new standard in the asset management industry.

Media Attention. When reputable financial publications, including Bloomberg, began to cover news about meme coins, trading volume saw a sharp increase. Media attention attracted a new wave of market participants.

Market Leaders of Meme Coins

Dogecoin (DOGE) — the father of all meme coins

DOGE remains a recognized leader in the meme coin segment with a market capitalization of $21.85B. The formation of a fair distribution without pre-mining has made it appealing to crypto enthusiasts who value the principles of decentralization. The absence of a maximum supply means that DOGE will continue its inflationary nature, but this has not hindered the coin from maintaining the loyalty of its community.

Shiba Inu (SHIB) — contender for the throne

Shiba Inu, launched in August 2020 by an anonymous developer under the pseudonym Ryoshi, is positioned as a competitor to DOGE. The total supply is 1 quadrillion coins, of which 50% were burned and donated to charity.

SHIB has developed its own ecosystem, including a decentralized exchange (DEX), an art NFT incubator, NFT collections, and fully functional NFT games. However, the distribution with pre-mining has sparked a controversial reaction in the community, as a significant portion of coins was allocated to the creators before the public release.

Pepe (PEPE) — the revival of the iconic internet meme

PEPE was launched in April 2023, relying on the cult status of the internet meme with the frog Pepe. The total supply is 420 trillion coins. The coin quickly gained favor among internet culture enthusiasts due to nostalgia and its amusing character.

Dogwifhat (WIF) — minimalist approach

Unlike its competitors, Dogwifhat, launched at the end of 2023, only leaves one option for use - to be a pure joke coin. The current price of $0.34 with a daily volume of $1.81M indicates a sustained interest in the project.

Bonk (BONK) — Solana ecosystem

BONK introduces a meme coin on the Solana blockchain, launched in 2022. The project gained significant attention after 50% of the total supply was distributed through an airdrop among active participants in the Solana community. The current market capitalization is $661.51M.

FLOKI — hybrid format

FLOKI, named after Elon Musk's dog, attempted to combine meme culture with practical utility. An advanced ecosystem has formed around the project, including NFT marketplaces, collections, and staking mechanisms.

Milady Meme Coin (LADYS)

LADYS, launched in May 2023, aims to create a bridge between meme culture and the growing popularity of NFTs. The total supply of the coin is 888 trillion units.

Coinomics: the main source of concern

One of the critical features of most meme coins is their inflationary tokenomics. Unlike Bitcoin, which has a hard cap of 21 million coins, most meme coins either have no maximum supply or possess an extremely large number of tokens.

For example, SHIB has a total supply of 1 quadrillion coins, while DOGE has no upper limit at all. This structure creates constant inflationary pressure, which can lead to long-term devaluation. Mechanisms like coin burning or staking are not present in all projects, which further exacerbates the problem.

The tokenomics of meme tokens is often defined not by technical considerations, but by community preferences and humorous concepts, which contrasts with the fundamental approach of Bitcoin or Ethereum.

Volatility and Market Movements

Meme coins demonstrate extreme volatility, significantly surpassing the volatility of major cryptocurrencies with high market capitalization. The price can multiply several times after a tweet from an influencer or as a result of mass FOMO (fear of missing out).

However, this same dynamic works both ways. When the community's attention shifts to another fun asset, the price can plummet to nearly zero. Such sharp movements are due to the dependence of meme coins on community sentiment rather than fundamental value.

Rug pull scheme: the main threat to investors

Unfortunately, the segment of meme coins also attracts fraudsters who exploit the popularity of this asset class for their purposes. A rug pull scheme refers to a situation where the project's developers suddenly disappear, taking investors' funds with them. Many such incidents have occurred in recent years.

Known examples of fraud

SQUID (2021). This meme coin was inspired by the popular series “Squid Game” and has garnered significant attention. However, the developers suddenly executed a rug pull scheme, leaving investors without funds.

BALD (July 2023). The developers disappeared with the project's liquidity from Base, the second-layer network from Coinbase, which led to the collapse of the coin's value to zero.

MetaSwap ( start 2024). Investors faced significant losses when the developers suddenly withdrew all the liquidity from the project.

URF (March 2024). The developers raised $450,000 in pre-sales and then disappeared. Despite promotion from a well-known boxer and influencer, the team vanished within 24 hours of the launch.

Investment Protection: Practical Recommendations

Reducing risk in investing

1. Independent research (DYOR). Before investing capital, it is essential to thoroughly study the project: who is behind the development, what their goals are, whether there is technical documentation, a roadmap, and how the community behaves. Major red flags include anonymous teams without a history in the industry.

2. Tokenomics Analysis. Study the dynamics of token supply. Projects with unlimited or excessively large supply are subject to inflationary pressure. Pay attention to the distribution of tokens and the mechanisms that may affect long-term viability.

3. Portfolio Diversification. Do not concentrate all funds in one meme coin. Spread risks across different assets, including more stable cryptocurrencies like Bitcoin, Ethereum, Solana, and BNB.

4. Monitoring news and trends. Meme coins are sensitive to events on social media and media coverage. Use news tracking tools, join active communities, and follow influencers in the cryptocurrency space.

5. Using stop-loss orders. Automatic stop-loss orders will help minimize losses by selling the position when the price falls below the set level.

6. Avoiding impulsive decisions. Invest only amounts that you are prepared to lose entirely. Think through your decisions and resist emotional impulses and FOMO. The excitement around meme coins often leads to reckless buying decisions.

Protection against rug pull

1. Liquidity Check. Make sure that the project has locked the liquidity pool so that the developers cannot easily withdraw funds. Services like Unicrypt allow you to check the lock status.

2. Smart Contract Audit. If you have enough skills, study the project's smart contract. Look for functions that allow unlimited creation of coins or transfer of large sums. Check if the contract has been audited by reputable firms such as CertiK or Hacken.

3. Team Analysis. Anonymity of developers is a red flag. While privacy is fundamental in cryptocurrencies, it can be used for fraudulent purposes. Prefer projects with open, verifiable teams that have industry experience.

4. Community Activity Assessment. An active and organic community indicates legitimacy. Engage on Discord, Telegram, and Twitter with project supporters. Beware of projects with inflated followers and aggressive marketing tactics.

5. Roadmap Analysis. Reliable projects have a clear roadmap with realistic goals and timelines. Compare promises with actual results. Unrealistic promises and frequent deadline extensions are signs of trouble.

6. Attention to red flags. Be cautious of projects that rely solely on celebrity endorsements but do not provide information about the technology or real-world applications. High-pressure tactics (limited offers, guaranteed returns) often indicate fraud.

How to Purchase Meme Coins

Popular meme coins, such as DOGE, SHIB, PEPE, and WIF, are available on major cryptocurrency exchanges. Lesser-known projects can be found on decentralized exchanges (DEX).

Example: buying DOGE on the spot market

1. Log in to the cryptocurrency exchange of your choice. Open the trading section and go to the spot market.

2. Enter “DOGE” in the search field to find available trading pairs. Select the pair you are interested in, for example, DOGE/USDT, and open the trading page.

3. In the “Spot” section, select the order type. For a quick purchase, use a market order. Specify the amount of coins and confirm the purchase.

4. After the order is executed, the acquired coins will be deposited into the spot wallet of your account.

Results

Meme coins have transformed from an internet joke into a significant segment of the cryptocurrency market with a total capitalization of ( billion. Their growth has been driven by a combination of factors: accessibility, community strength, media attention, and increasing institutional recognition.

However, investments in meme coins remain high-risk due to extreme volatility, inflationary tokenomics, and the widespread occurrence of fraudulent schemes. Before purchasing any meme coin, conduct thorough research and invest only those funds that you are prepared to lose without harming your financial situation.

New meme coins are appearing every day, and each time traders hope that the new project will replicate the rise of DOGE or SHIB. Maintain critical thinking, follow safety guidelines, and remember that easy money is often associated with maximum capital loss risk.