Critics have raised concerns this week as trading volumes for Solana-based memecoins have declined and new data reveals that many traders on pump.fun are losing money.
In an August 19 newsletter, Messari data engineer Mike Kremer joined the debate, labeling memecoins as the “most extractive crypto phenomenon” since the 2017 ICO boom. He suggested that while speculative bubbles and assets are common in the crypto space, the recent surge in memecoins lacks the residual value seen in previous trends.
Kremer pointed out that during the DeFi Summer, projects like Uniswap Labs introduced protocols with real utility. Even after the speculative hype faded, these tokens retained value due to their connection to valuable services. In contrast, he argues that memecoins have a “far more destructive dynamic”. According to Kremer, insiders or cartels create tokens, generate hype, and then sell off their holdings once the price inflates, leaving tokens with no inherent value or utility. He described this process as a zero-sum game where value is destroyed rather than redistributed.
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Recent criticisms have targeted Solana memecoin deployer pump.fun, which has been accused of making memecoins more hazardous and dilutive. Since its launch in January, pump.fun has introduced 1.7 million new tokens, but less than 1.5% have reached a total value exceeding $63,000. Data also indicates that 60% of pump.fun traders have lost money, while only 3% have earned more than $1,000. However, the accuracy of this data is debated, with some arguing that it does not account for realized gains.
The decline in Solana-based memecoin trading volumes, which have dropped by up to 80% in the past two weeks, is also notable. Additionally, a CoinShares report revealed record outflows of $39 million from Solana exchange-traded products last week.
Despite these concerns, some argue that memecoins may benefit the crypto ecosystem. Alon, the pseudonymous developer behind pump.fun, believes that lower deployment costs for memecoins are advantageous, citing increased activity on the platform. He argued that before pump.fun, the memecoin sector was plagued by scams such as rug pulls and honeypots. Each new memecoin technology iteration makes it “far more accessible for outsiders to join” the crypto market.
Supporters of memecoins, including Avalanche founder Emin Gün Sirer, view them as a positive force for the crypto industry. Sirer stated in April that while memecoins may be worthless, they serve as effective “social signaling” tools and help build strong crypto communities. Avalanche even planned to use its $100 million community fund to buy memecoins, originally launched to support NFT artists.
Cre: cointelegraph
I’m Jessi Lee, currently living in Singapore. I am currently working as a trader for AZCoin company, with 5 years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
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