Viewing the Meme Coin Craze from the Perspective of Cultural Identity and Community Building: The Ultimate Expression of Herd Behavior

Author: Jam, CloudY

Editor: Vincero, YL

Reviewer: Yasmine


It is not difficult to see that the success of Meme Coins is closely related to the spread of memes, counterculture, and the “get-rich-quick” myth that brings a lot of attention. In addition, the role played by influencers such as Musk in the Meme Coin market cannot be ignored, and his words and deeds have a very important impact on the market value of relevant projects. Looking back on the Meme market, it can be said that the Meme craze is the ultimate expression of herd mentality, and investors’ investment behavior in this situation often belongs to following the trend to buy, thus pushing up asset prices. More speculators are brainwashed by the “get-rich-quick” myth to enter the market, further pushing up asset prices, making Meme assets bubble. Except for the moment when the bubble bursts, every participant is happy.

If we need to give Meme Coins a definition, from our research perspective, it may be:

1. Project tokens with no value capture/landable products.

2. Has a large community consensus.

3. Has a strong cultural identity.

Meme Coins are usually project tokens that lack value capture or landable products, but they have a large community consensus and strong cultural identity. The combination of these characteristics has made Meme Coins widely participated in the market, while having a profound impact on the cryptocurrency community and ecosystem.

They are different from traditional blockchain project tokens, whose value is mainly based on market demand, investor psychology, and community consensus. Although they cannot provide substantial economic or technical applications, the unique properties of Meme Coins have attracted a large number of investors and community participants. Community members form a consensus system based on common interests, viewpoints, and beliefs. This consensus is based on social media, online forums, and other community communication channels, providing strong impetus for Meme Coins. The participation and support of community members are crucial to the circulation and value development of Meme Coins. They are usually closely related to specific network cultures, internet memes, or popular cultural elements. This cultural identity makes Meme Coins a asset with emotional resonance and entertainment properties. By combining with user emotional and cultural resonance, Meme Coins have formed a unique attention in the market.

BTC is the biggest Meme Coin

This allows us to say: BTC is the biggest Meme Coin.

BTC does not have deflation, only halving output, no actual use, and is traded as currency. However, BTC has experienced a huge increase in value since its inception in 2008, established a huge consensus, and has a large number of holders. BTC’s originalism has become BTC culture, which is constantly being challenged, and the Crypto Native derived from it has gradually become the pursuit of the Crypto industry.

Although BTC has some similarities with some Meme Coins, such as the lack of actual value capture and emphasis on community consensus and cultural identity, BTC’s history, market position, and social recognition make it a unique digital asset. Its value and influence far exceed that of ordinary Meme Coins and play an important role in the entire cryptocurrency field.


Meme Coins bring cryptocurrency into broader popular culture in a relaxed, playful way, and are a digital asset with entertainment and humor elements.

The origin of Meme Coins is closely related to spoofing and entertainment elements in popular culture. Take DOGE, SHIB, PEPE, and AI DOGE as examples. The rise of these projects shows the celebration of retail investors and the expression of group spirit. These projects attract users’ attention and participation through emoticons and cultural symbols, becoming hot projects in the Meme Coin market.

The success of these projects is partly due to their use of popular emoticons and cultural appeals as a carrier of communication, quickly attracting investors’ attention, and even many investors outside the circle. These emoticons and cultural symbols have spread virally on social media, making these projects quickly rise in the Meme Coin market.

By using spoofing and entertainment elements, these projects have successfully created a fun and eye-catching identity, attracting a large number of investors and participants. Their creativity and uniqueness inject new vitality into the Meme Coin market, and also demonstrate the huge influence of group spirit in Crypto.

The rebellion against the existing strong consensus will also be recognized and followed in the Crypto industry, because BTC itself is a rebellion against the real currency system. This may come from the patricide complex rooted in the hearts of Westerners, or the Oedipus complex. Therefore, Meme Coin can be said to be born in rebellious culture, rebellious against the mainstream, rebellious against rebellious mainstream…

As DOGE is to the rebellion against BTC culture, Billy Markus and Jackson Blockinglmer created Dogecoin using a photo of a Japanese female Shiba Inu dog and technology from Litecoin. Unlike BTC, Dogecoin has an unlimited supply and a very low unit price, and it was widely used from the moment it was launched, even being used as a reward currency on websites like Reddit.

SHIB is the rebellion against DOGE culture. “Ryoshi” created Shiba Inu with the intention of building a new dog coin on Ethereum using DOGE’s Srypt mining algorithm and promoting SHIB as a “dog killer.” Unlike DOGE, SHIB aims to establish its own ecosystem and release a series of products, such as Shibaswap, SHIBOSHIS NFTs, SHIBA Eternity Game, SHIBA Metaverse, Shibarium Layer 2, etc.

PEPE is the rebellion against the dog IP and the entire Meme Coin. On the PEPE official website, we can see: “the most memeable memecoin in existence. The dogs have had their day, it’s time for Pepe to take reign.” PEPE is advertised to overthrow all Inu and dog coins, without pre-sales, burning taxes, self-owned LP tokens, and contract control. It aims to subvert the current meme and become the king of memes. PEPE is able to achieve this because the PEPE meme has a deep history and consensus: as early as the BTC era, the PEPE meme was circulating as an IP on the 4chan forum and recorded on the BTC ledger. “Rare Pepe” was launched as an NFT on BTC’s CounterBlockingrty platform in September 2016.

Attention Economy

However, for a Meme Coin to truly be a Meme Coin, it requires sufficient and continuous attention.

Thousands of Meme Coin contracts are deployed every day, but only those that receive attention are considered Meme Coins. Otherwise, they are just stray dogs.

It is not only Meme Coins but also the entire market that is currently dominated by the attention economy.

When we look back at the once popular Meme Coins, we can see that the rise of these projects demonstrated the celebration of individual investors and the expression of unique culture.

1. Most projects gained initial attention through airdrops and emoticons. For example, popular projects used airdrops to grab attention (AI DOGE) or gained the attention of well-known emoticon users (PEPE).

2. After gaining some early users, these projects used popular emoticons and cultural IPs as a means of communication to spread virally through social media, quickly attracting the attention of investors, even those outside of the circle, resulting in the rapid rise of these Meme Coins. Being mentioned by KOLs such as CCTV or Musk is the best way to spread and attract attention.

3. Meme Coins are mostly launched through Fairlaunch to complete the initial issuance. Therefore, it can cause a huge increase with a small amount of funds and use community communication to attract attention. Each doubling and zeroing out will further attract the attention of more users, causing Fomo emotions.

4. The continuous and persistent brushing, combined with early buying and long-term holding to gain a large amount of wealth, breaks the myth of getting rich, and pulls user emotions to the extreme.

5. The entire development path uses Listing on different level exchanges as a project volume milestone, gaining incremental user attention of different volumes. Therefore, being listed on Binance is often the short-term top of Meme Coins, that is, entering the stock attention game. Whether the coin price can remain stable depends on the project’s cultural acceptance and consensus strength.

Emoticons as a traffic carrier

Emoticon culture, as a traffic product, spread rapidly in the Internet era and aroused the resonance of users. Emoticons, as a tool for transmitting information and group emotions, provided the basis for Meme Coin’s dissemination. Through existing emoticon IPs, Meme Coin was able to spread quickly on social media platforms, forming a viral market effect.

Emoticons are a collection of symbols that express emotions, expressions, or meanings in the form of images or icons. They are usually used on social media, chat applications, and online forums. Emoticons use cute, funny, or exaggerated images to convey emotions and intentions in a concise and intuitive way, enhancing people’s expression ability in online communication.

Emoticon culture spread rapidly in the Internet era and became a unique network language and popular cultural phenomenon. Emoticons are not only tools for expressing emotions, but also have social and cultural meanings. Emoticon culture is a traffic product that develops with the development of the Internet. As a carrier of information and emotions, emoticons can quickly spread and arouse strong resonance among users. If the red envelope function of WeChat is the driving force behind the iterative evolution of WeChat’s traffic, then emoticons are the carrier of viral transmission among all Internet users. Existing emoticon IPs provide Meme Coins with a certain foundation for dissemination, and the subsequent viral spread allows Meme Coins to rise with the wind.

Musk: The Biggest Market Maker for Meme Coins

Musk, as an important figure in the Meme Coin market, has had a significant impact on the market value of related projects through his comments and actions. Taking his shout-outs for projects such as DOGE, SHIB, and FLOKI as an example, these comments have sparked investors’ interest and follow-up buying behavior. In addition, some projects are even directly related to Musk, attracting investors’ attention by using his name or image.

According to CoinGecko’s top ten market value Meme Coins, at least seven projects are nominally related to Musk’s hype and eruption, and the top ten Meme Coin market values account for more than 88% of the entire Meme Coin market value. During the Meme craze of 2021, he shouted out $DOGE, $SHIB, and $FLOKI and other MEME coins on Twitter. $LADYS also entered the hype period due to Musk’s forwarding of the Milady avatar. As for $ELON, although the official did not admit to having a relationship with Musk, the token name uses Elon Mask’s name. The popular projects $PEPE and $AI DOGE during the Meme craze of 23, the former claims to let investors give up Meme Coins like $DOGE, which can be understood as a technical reverse heat-seeking, while the latter is obviously seeking heat from $DOGE.

(From CoinGecko)

But currently, Musk’s shout-outs seem to have a diminishing marginal benefit. According to research data released by Chain Catcher, Musk’s “market-making on the mouth” has gradually reduced the marginal benefit brought by the price increase of Doge.

The MemeCoin Craze is the Ultimate Expression of Herding Effect

As an industry that has been criticized since its birth, Crypto practitioners are eager to be recognized. As a complex financial product, Cryptocurrency attracts a large number of investors without sufficient financial knowledge due to the lack of thresholds, but the lack of standards makes these users victims of zero-sum games. Therefore, people usually gather in groups/DAOs, and at the same time, they are prone to blindly follow self-investors with strong subjective judgments. Therefore, this industry naturally tends to hold groups and follow opinion leaders or celebrities.

In this case, most projects will try to find a Big Name to cooperate with during promotion in order to demonstrate the quality of their products and gain acceptance from the larger community. As a project without fundamentals, Meme Coin relies even more on stirring up user emotions, so it needs to establish a strong community and gain recognition from major influencers. The premise for a Meme Coin to sustain itself in the long term is to build a consensus in the community and spread its own culture to gain recognition.

In other words, the Meme frenzy largely embodies the ultimate expression of herd behavior. Investors’ enthusiasm and follow-up buying behavior drive up the asset price of Meme Coin, rather than fundamental analysis. This phenomenon often leads to the formation of price bubbles, causing asset prices to be far higher than their intrinsic value. The synthetic consciousness and inner fear of missing out on the market further drive up asset prices.

In the field of behavioral economics, herd effect refers to the influence of other people’s behavior on individuals’ decision-making, leading to individuals mimicking or following others’ behavior rather than making independent decisions based on their own information and judgments.

In investment, this manifests as investors’ enthusiasm driving up asset prices, rather than their fundamental analysis. This usually leads to price bubbles, with asset prices soaring far above their intrinsic value, and sustained price increases and community discussions further stimulate more investment buying, pushing up asset prices even further.

To a large extent, the inner psychology of investors who follow the trend is “if I don’t buy now, it will be too late”. In this way, the synthetic consciousness of investors collectively forms the basis for the upward feedback of asset prices.

(Herd Effect)

According to data from Lookonchain in the recent Meme market, some “smart money” myths have become a stimulating factor for other investors to buy in, and these investors buy in because of the investment illusion of fearing “missing out on this market if they don’t buy now”, further driving up asset prices.

Therefore, it can be said that the Meme frenzy is to some extent the ultimate expression of herd behavior and also a practical proof of behavioral economics in Crypto Trading.

Driving Force of Capital

However, fundamentally, to obtain sustained attention and cultural identity requires a large amount of capital driving.

For example:

  • The breakout power of DOGE comes from Elon Musk’s promotion: personal influence and strong financial resources behind it
  • The breakout power of PEPE comes from the precipitation of PEPE emoticons for many years and the team’s tens of millions of dollars in market-making funds

Whether it is finding KOL to bring a single product, community cooperation, or going public, it all requires financial support, and the rise in coin prices and liquidity depth requires a large and sustained capital to back it up. For example, a simple forwarding promotion to a high-quality project introduction thread requires 100-1000u per person, and for KOLs like this to ensure information coverage, they need to find 10-20 people. For cross-scale community cooperation, at least thousands of u resources need to be provided as an exchange. And the Listing of exchanges requires payment of tens of thousands or even hundreds of thousands of u, as well as the listing and market-making fees of project tokens. A normal project needs to spend a few tens of thousands of u, let alone Meme projects that focus on publicity.

In addition to repeatedly appearing on social media, strengthening recognition for multi-target groups also requires a large and sustained capital to long-term appear in users’ life circles and establish cultural identity. If you want to root a cognition in people’s minds or establish cultural identity, you must repeatedly enter their life circle from different angles for a long time, just like a CryptoPunks that was initially given away for free and no one wanted, to being auctioned for as high as 23.7 million dollars, precisely because it built a Genesis NFT and encrypted OG image in users’ minds. Owning it not only makes you Crypto Native, but also gives you the same status as heavyweight bigwigs like Tobi Lutk, the founder of Shopify, and Mark Cuban, the owner of the Dallas Mavericks. And to achieve such cultural identity, it has an inevitable relationship with Jason Abbruzzese’s initial “This Ethereum-based project may change our perception of digital art” and continuous traditional art gallery auctions.

So from the perspective of cultural identity and community building, Meme Coin and NFT have similar functions, and looking back at the establishment of IP in the real world, it seems to be a similar path. For example, the Star Wars universe, Disney universe, Marvel universe, and Harry Potter universe are all building their own cultural identity and community consensus. Stimulate users with textual stories and visual images, and build a cultural system from multiple perspectives for a long time, and then expand peripheral business based on a stable user group.

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