Key risks and conditions for Dogecoin’s survival

Could anyone have imagined that Dogecoin (DOGE), created as a joke, would reach a market capitalization comparable to the GDP of Jamaica or Iceland?

Dogecoin is an example that digital assets are valued not only from a technological standpoint but also in terms of cultural resonance. This meme coin has become a true phenomenon of the crypto market, yet the question of its stability remains open.

In what cases might Dogecoin face "death"?

According to analysts, one of the key factors that could lead to Dogecoin's disappearance is the lack of technological updates. Economists from the Swiss Federal Institute of Technology in Zurich note that Dogecoin's sustainability depends on social momentum rather than fundamental metrics.

It is this social momentum that supports most of DOGE's liquidity. Based on analysis from Glassnode and similar platforms, one can conclude that Dogecoin is more of a "social currency" than a traditional investment crypto asset.

According to Cardano founder Charles Hoskinson, Dogecoin is technically outdated, and without modernization, it is doomed to become a collectible asset rather than a tool of the future.

However, Dogecoin has long moved beyond being just a memecoin. It is actively used by enthusiasts for everyday payments — for example, paying for goods and services, as well as sending donations on social platforms such as Twitter (X) and Reddit.

For instance, DOGE is accepted for certain goods in Tesla and SpaceX stores. According to Cryptowerk, about 26% of all cryptocurrency payments for goods and services are made in DOGE. At the same time, the total volume of Dogecoin transactions in 2024 reached $20 billion, which is several times higher than similar figures for technologically advanced protocols like Chainlink and Polkadot.

Another negative factor for Dogecoin is its unlimited issuance, making it an inflationary asset. This means that to maintain and grow DOGE's price, demand must be constantly stimulated.

As of August 2025, there are already 150 billion DOGE in circulation, with total supply increasing by about 5.2 billion annually. At this rate, in just 10 years, the amount of DOGE will grow by another third, surpassing 200 billion.

Experts also note DOGE's strong dependence on mentions — especially those from celebrities who actively support it. A prime example is the numerous tweets from Elon Musk, for whom Dogecoin is one of his favorite cryptocurrencies.

According to Bloomberg Intelligence analysts, Musk has turned Dogecoin into a media event. It is not an investment, but a cultural trend. He uses DOGE as a tool to demonstrate the influence of social media on markets. This means that if the level of support declines, in the long term, it could negatively impact DOGE.

Dogecoin's sustainability is only possible with "decentralization of influence" and the emergence of real infrastructure. Otherwise, as analysts predict, DOGE will remain a volatile asset susceptible to news. If crypto investors lose interest in memecoins, Dogecoin will be the first to suffer.

Can DOGE become a functional asset?

This is only possible if the ecosystem develops. For example, Bitcoin originally was just a blockchain protocol for simple transactions (BTC transfers).

However, as the crypto market evolved, the Bitcoin ecosystem expanded significantly: second-layer solutions (Lightning Network and SatoshiVM), sidechains (Stacks and Rootstock), and restaking protocols like Babylon appeared. This allowed not only for scaling Bitcoin's network but also significantly increasing BTC's use cases.

At present, Dogecoin does not stand out with any particular technological features:

• The protocol is based on the Litecoin blockchain, uses mining, and does not support simple smart contracts;
• The Dogecoin network has limited scalability, with an average transaction confirmation time of about one minute;
• Updates are infrequent — the last major one, related to security improvements, was released back in 2021.

According to Alex Thomas, head of research at Delphi Digital, for DOGE to become functional, it would need to transition to a Proof-of-Stake (PoS) consensus mechanism — similar to Ethereum — or create a sidechain with smart contract support. Otherwise, Dogecoin will remain in the shadow of more advanced blockchains.

A sidechain would enable the launch of DeFi applications and the introduction of new features expanding Dogecoin's use cases, such as NFTs or staking. Other possible development scenarios for Dogecoin, according to experts, include:

• Integration with protocols like Lightning Network (LN) and second-layer (L2) solutions. This approach is already being tested — it would allow for instant and nearly free transactions;
• Transition to a hybrid model using PoS or similar consensus mechanisms, though shortly this is unlikely due to the lack of developer activity;
• Integration of trending technologies such as artificial intelligence (AI) and TradFi (e.g., asset tokenization);
• Creation of new and integration into existing infrastructure solutions. For example, the popular payment system PayPal already supports Dogecoin transactions.

Notably, there are already memecoins with their own developed DeFi ecosystems, including decentralized exchanges, NFT marketplaces, and even metaverses — for example, Shiba Inu (SHIB) and FLOKI (FLOKI).

Integration of DOGE into social platforms like X, Twitch, and others could also play a significant role. This way, Dogecoin could secure its status as the digital currency of social platforms, ensuring cultural appeal does not outweigh investment potential.