🟣Memecoin Zhupercycle

Every time I write the newsletter, we tend to be chopping in a seemingly unending range. Today is no different! BTC is sitting at (hopefully) the range lows of 62K, ETH is firmly sitting at 3.4K, and it seems that most of CT (including me) is bored.

Author

Boccaccio
July 02, 2024

Brought to you by:

Welcome back to 0xResearch. Here's what we’ve got for you today:

  • CT is silent and uninterested.

  • Everybody is talking about the memecoin supercycle (still).

  • BTC and ETH continue to chop.

Memecoin Supercycle!

Hello and guten morgen,

Every time I write the newsletter, we tend to be chopping in a seemingly unending range. Today is no different! BTC is sitting at (hopefully) the range lows of 62K, ETH is firmly sitting at 3.4K, and it seems that most of CT (including me) is bored.

The incessant chants of the “memecoin supercycle” continues. Now, and for the past few months, everybody, from crypto twitter to Reddit r/cryptocurrency, is convinced that the financial nihilism and gambling epidemic fueled, memecoin zhupercycle is a given, and we will keep running up Solana or Base memecoins.

It’s difficult to be bearish memes (I am not bearish memes), especially when memecoin focused protocols make 100x the revenue of non-memecoin protocols and every week there’s a new flavor of memes that goes to 1 billion United States dollar market cap. That’s why I will not be bearish memes. It’s the easiest form of token to bet on, they’ve historically done well (DOGE seems to always outperform BTC) and in general, it’s difficult to bet against an asset subclass with higher risk that exists within an asset class that seems to for a variety of reasons (pick your poison: halving, global liquidity metrics, tokenization etc.) go up.

My only gripe is that the correction (lowering FDVs, not launching random L2s, building interesting dApps and games, launching legit tokens that go up) has not yet arrived. There are a few that have done well, Tapioca’s TAP, SankoGameCorp’s DMT and many more, but by and large the markets are still relatively uninteresting. It’s easy to sell memecoins to people: if it goes up you become rich! Wow! It’s tougher to make it not fatiguing and taxing, and ensuring that people who trade memes are not mercenary. There is little hope and optimism in trading memes. You can convince people that it’s potentially the next SHIB (I hold a few that fit this category, I’m sure you do as well), but it’s not as convincing as “we’re building a new financial system from the ground up, it’s going to change everything”.

I know some people think that if someone criticizes the memecoin supercycle it means that they are sidelined, coping or not exposed. That’s not the case. I just think that the market is getting increasingly tired of it. I know that’s not a revolutionary take, but I think you can also see it in the charts. I am still interested in memes, I have exposure to them and I am NOT coping. It's potentially extremely rewarding. Memes do really well every cycle. Even throughout the bear there were plenty of memes. For the past few months memes were extremely lucrative, especially if you were tapped in. But if everybody is now talking about the memecoin supercycle, maybe it’s time to take a step back and also focus on other parts of the market, where there is value, and where it is less taxing.

Hope you all have a nice Tuesday.

– Boccaccio (X:@tripleboccaccio)

Thank you to our sponsor:

From modularity to restaking, to the intersection of AI and crypto, to the long-awaited consumer-facing apps to the most recent Bitcoin-related innovations.

We’ll be breaking down all of these and more with the help of a few of the thought leaders in crypto at Permissionless.

Solana TEV

Solana just printed a new ATH in monthly Total Economic Value (fees + MEV) at $91.3M or $1.1B annualized. The value was driven 53% by priority fees on non-vote transactions and 41% by Jito tips. For comparison, Ethereum closed June at $160.3M or $1.9B annualized. 

Last cycle this seemed impossible, but the Solana vision is unchanged – a high volume of low fee transactions. Median fee on Solana currently sites at $0.001.

The uptick in Solana activity burning question is simple: is this activity sticky or ephemeral? Only time will tell.

Stablecoins have proven their product-market fit by effectively enabling DeFi as a financial system. Ethena is highly relevant as it strives to disconnect traditional financial systems from DeFi and offer a capital efficient crypto-native synthetic dollar. USDe has reached a $3.5B TVL in only three months and is now the fourth largest “stablecoin” by market cap.

We acknowledge TON’s highly unique distribution relationship with Telegram, Telegram’s ambitions as a super app and developer platform rivaling the scale of WeChat as a TON growth driver, and the TON chain’s relatively high scale and speed versus popular EVM chains today. However, we believe the TON ecosystem is at a very early stage, its native smart contract language may be prohibitive to attracting meaningful developer activity, and that Telegram’s distribution is overstated and its viability as a developer platform and super app is far more challenged than the market appreciates.

Plus, are stablecoins still crypto’s killer app?

The SEC filed a suit against former executives and the former bank on Monday

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.