Memcoins and NFT: how do jokes turn into big money?
The vast majority of experts recognize the similarities between memcoins and NFT, and there are already attempts to combine these trends. Let's look closer at how jokes, memes, and images in the crypto world are turning into completely unfunny money.
Memcoins and NFT — close relatives?
Non-fungible tokens (NFTs) and memcoins have similarities that allow us to discuss their close kinship.
The first and perhaps most crucial commonality is a shared "source of value." The value of both types of digital assets depends entirely on a loyal and active community, especially at the initial stage until viral marketing mechanisms are fully operational.
However, the strengths of NFTs and memcoins concerning community development are somewhat different. Memcoins are more democratic, and easier to get large numbers of people involved, while NFTs serve as exclusive "symbols of group membership." Of course, the importance of these aspects depends on who you ask. For example, Pudgy Penguins CEO Luca Netz insists that memcoins "fail to foster a sense of community in a community." In a strange coincidence, Pudgy Penguins is releasing NFT collections.
The second common aspect is the use of similar characters. Most non-interchangeable tokens on the market are small pictures based on celebrity images or memes. Memcoins rely on the symbolism of memes. The only difference is that memcoin uses one picture as a symbol for the entire asset, while NFT uses a unique picture for each token. However, uniqueness in the latter case is highly conditional — the differences between images in the same collection are often minimal.
Finally, NFTs and memcoins are extremely simple and cheap to issue and distribute. Releasing an NFT collection or another memcoin is much easier than implementing a blockchain project with practical value. The main challenge is finding a "catchy" idea for the audience and promoting the project.
Key differences
Despite many related traits, memcoins and NFTs are still significantly different, with some of these differences playing a significant role in memcoins de facto replacing NFTs as a "hot topic" in the crypto community.
- Liquidity. The liquidity of NFTs is limited due to their minimal number. A rare collection includes more than 5-10 thousand tokens. Memcoin issuance volumes, on the other hand, typically reach hundreds of millions and billions of units. On the other hand, memcoins are more prone to sudden changes in value and available liquidity.
- Virality. NFTs are exclusive. On the one hand, this gives them added value, but on the other hand, it limits their distribution. Memcoins, on the other hand, can be distributed to a potentially unlimited audience.
- Ease of promotion. In the vast majority of cases, the negativity associated with a project or celebrity leads to a drop in the value of NFTs. Memcoins find it much easier to turn any negative news into an interest in the audience. A prime example is SLERF, for which the accidental destruction of the liquidity pool was a real springboard to an all-time high.
Somewhat separate is the issue of practical use. Most memcoin teams don't even pretend to want to find any actual use for their creations. Of course, there are exceptions like Floki Inu (FLOKI), but they are relatively rare.
In the NFT sphere, on the contrary, after the collapse of the "bubble," there is a trend towards increasing the practicality of tokens. A popular trend is NFTs used as in-game assets in various projects. But there are also examples of completely "boring" practicality, like NFT train tickets from Indian Railways.
What about merging the two worlds?
Highly respected opinion leaders in the crypto community often express ideas about the prospect of combining NFT and memcoins. For example, Real Vision CEO Raul Pal even talks about the inevitability of such a merger. However, projects that combine the two areas are still a rarity.
The first hybrid asset that gained notable popularity was the Non-Playable Coin (NPC). This is a memcoin "backed" by an NFT from a collection based on a "human-NPC" image. Each NPC holder can treat the tokens like regular digital assets or convert the tokens into NFTs.
NPC went public in September 2023 with a starting price of $0.000264; it is currently trading at $0.03 and is ranked 287 on CoinMarketCap's capitalization ranking with a value of $224 million. The historical high of $0.05917 was reached on November 18, 2024. NPC is showing impressive positive momentum in the second half of 2024.
An example of another approach to merging two markets was demonstrated by the Dogwifhat (WIF) memcoin team. In March 2024, the team held an auction of NFT, created based on the image of the project's mascot — the dog Achi. The token was eventually sold for more than $4.3 million in ETH.
More important, however, was the "tailwind" effect of the auction — the hype around it led to increased interest in WIF. If, at the end of February, the token was trading around $0.3-0.4, by the beginning of April (the auction ended on March 18), the rate soared to $4.58, and the project became the market's third most capitalized memcoin. By the end of 2024, the WIF exchange rate had fallen to $2.3, but there is no reason to return to "pre-NFT" values.
Prospects for NFTs, memcoins, and their merger
NFTs have already experienced their "boom" and are increasingly shifting towards practicality and use in the real world (or gaming virtual worlds). Due to this "change of focus," there is now a gradual recovery of the NFT segment, although it is still a long, long way from the bubble volumes of 2021.
Memcoins are now repeating the path taken by NFT a few years ago. It is impossible to predict how long the rapid growth will last, but the market collapse will happen sooner or later. After that, memcoins will be replaced by something new. The form of the memcoin market after the "shock therapy" is still unknown.
Examples of combining memcoins and non-mutualizable tokens show that this approach can bring success to a particular project, so news of such combinations is worth following.