Original Author: LucaNetz, CEO of Pudgy Penguins NFT

Original Compilation: Rhythm Little Deep

Editor's Note: The article focuses on the rise of meme coins and their potential and limitations. The author believes that while meme coins are a unique vehicle for cryptocurrency speculation, their development is hindered by a lack of innovation, stagnation, and a pure reliance on hype. The article suggests that meme coins should evolve into "social currencies" to drive the development of the crypto industry. Social currencies are an evolved form of meme coins, and their success relies on execution rather than luck, potentially leading to a new transformation in the crypto space.

Below is the original content (reorganized for better readability):

The cryptocurrency market over the past 18 months has been like a roller coaster, and amidst this chaos, we have witnessed the rise of meme coins. Although meme coins are not a new phenomenon—in fact, they are one of the oldest forms of cryptocurrency—they have once again proven themselves to be the preferred vehicle for participating in the unique mechanism of cryptocurrency (speculation).

Despite being inherently pure and almost artistic, meme coins also have a dark side. No, the problem does not lie with insiders or small groups—this is a common issue that plagues the entire cryptocurrency field. In my view, the real problem is the lack of effort, failure to seize opportunities, and people's complacency in building meme coins. Perhaps I am too naive, but I refuse to accept that meme coins should stop here—at least I hope not.

I firmly believe that the Trojan horse for the popularization of cryptocurrency is intellectual property (IP), as it can establish credibility in a realm lacking trust. Like NFTs, meme coins are a form of IP. Meme coins have a tremendous opportunity to drive the development of the crypto industry by deeply resonating with ordinary people's minds. However, they have not broken through the potential boundaries of their crypto-native roles; instead, they have stagnated on the path to transcendence, lacking originality and being mundane. I worry that if the status quo is maintained, the drawbacks will outweigh the benefits. For this category to thrive, meme coins must evolve, and I firmly believe that the direction of evolution is to become social currencies—tokens that transcend lazy pump-and-dump schemes and transform into scalable, memorable, and beloved IP.

My argument is not to replace meme coins with social currencies but to add a final stage to their growth roadmap. Meme coins must graduate from meaningless on-chain images and evolve into social currencies that can drive the development of the crypto industry, possessing productivity and perception. I believe there are already tokens that belong to this category. This article will explore the current state of meme coins, why successful projects should evolve into social currencies, and the impact of social currencies on the crypto space.

First, what is social currency?

Social currency is a tokenized asset that represents value within a specific community, typically used to incentivize participation, reward contributions, and enhance brand or community loyalty. It operates similarly to traditional currency, but its value derives from social interactions, reputation, and influence.

In simple terms, social currency is a meme coin with fundamentals—it is progressive, perceptive, and focused on nurturing communities that can continuously create viral effects, rather than extracting value from fleeting hype.

Meme Coins vs. Social Currencies

Meme coins do not create viral effects—they monetize viral effects, draining the heat until it dissipates. In contrast, social currencies possess perception and can actively promote their IP through various media, collaborations, and integrations, continuously generating viral effects.

Typical lifecycle of meme coins:

Idea → Token Issuance → Community Cultivation → Community Endorsement of Narrative → Narrative Fades → Community Fades

Lifecycle of social currencies:

Idea → Token Issuance → Community Cultivation → Community Endorsement of Narrative → Brand Creation → Brand Expansion → Ecosystem Building → Global Adoption and Recognition as Currency

In my view, all social currencies initially start as meme coins, but as momentum accumulates, they must evolve into social currencies. The following diagram accurately illustrates this process.

I love this image because it shows that social currencies are not meant to replace meme coins but are their evolved form. To me, social currency is a meme coin backed by real value. Anyone can issue a meme coin, but only the best can inject real value into it.

If you believe that liquid crypto assets will primarily belong to the retail asset category, then you believe in meme coins and their success. If you think institutional capital will eventually flow into altcoins, then you must expect fundamentals to dominate. Social currencies combine the advantages of both—retail appeal from meme coins and the engaging qualities that attract institutional participation. In my view, social currencies encapsulate the essence of both meme coins and utility tokens.

When analyzing the flaws of meme coins, it is clear that they could have more potential, but we allow social consensus to convince ourselves that "meme coins should be ineffective, as they always have been." I personally refuse to accept this as the future norm of the field. To understand my frustration, one must first dismantle the current factors limiting meme coins and how social currencies can resolve these issues.

Flaws of Meme Coins

• Stagnation: Losing momentum as trends fade

• Stigmatization: 99% of speculators lose money, not long-term holdings

• PvP Model: Designed for short-term velocity, devolving into a game of musical chairs for existing users

• Lack of infrastructure to attract new users

• No real belief system supporting it beyond illusory narratives—no fundamentals

• Success often relies on fantasy and luck

Advantages of Social Currencies

• Perception: Able to create and capture trends, maintaining ongoing relevance

• New Narrative: Combines the durability of meme coins with real fundamentals that support growth, suitable for long-term holding

• PvE Model: Aims to drive the development of the crypto industry and attract new users

• Continuously creates demand through content planning, brand collaborations, and IP growth

• Builds real things that transcend the industry, enhancing holders' identity and belief—there is a real belief foundation

• Success does not rely on luck or narrative but is supported by real fundamentals

Perception vs. Lack of Perception

For traders and investors, the core difference between meme coins and social currencies lies in perception—the ability to maintain ongoing relevance. Social currencies possess perception, while meme coins do not, which is the key that traders should focus on. Perception = Relevance = Attention = Momentum. Unless you are a crypto legend (like DOGE), anything lacking perception will eventually fade away.

At this point, some may think: "I don't want meme coins to bear any execution risk."

This psychological battle began with NFT art collectors in 2020, and I am surprised that we have continued this narrative. My rebuttal is simple: things without execution risk rely entirely on luck. Execution risk is the only risk worth taking; if your holdings do not depend on execution, I can say with utmost certainty that in 999,999 out of 1,000,000 cases, your performance will be inferior to those betting on execution (though I still wish you good luck).

The Future of Social Currencies

To realize their true potential, meme coins need to evolve into social currencies in their final chapter. Tokens that create culture, nurture deep community bonds, and integrate into real-world applications will define a new era of cryptocurrency. Transitioning from stagnant speculative assets to a dynamic participatory ecosystem is not only necessary but inevitable.

Now the question you need to think about is: Who will lead this transformation?

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