Love them or hate them, memecoins are all the rage in 2024. Despite the inherent risks of aping a new coin, Avalanche founder Emin Gün Sirer believes they are bringing value and new users into the cryptocurrency ecosystem.
Speaking exclusively to Cointelegraph report Ezra Reguerra at Token2049 in Dubai, Gün Sirer weighed up the benefits and drawbacks of the rise of memecoins across several blockchain protocols. From Bitcoin, Ethereum, Solana to Avalanche, memecoins have made fortunes and ruined portfolios in recent months.
“They’re great for the space because they bring people in, they keep them excited, occupied and concentrated on what the technology can do,” Gün Sirer said.
The CEO of Ava Labs conceded that many critics argue that memecoins bring no value to the ecosystem, just as the rise of nonfungible tokens had detractors. Gün Sirer said their value is not tied to the prospect of making fortunes but to attracting newcomers to the space.
“As someone who is very conservative financially and has been in this space for a very long time, I spent a fair bit of time criticizing Dogecoin and Shiba Inu. But you realize after a while that memecoins serve a purpose, and that purpose will not be obvious to boomers,” Gün Sirer said.
The former Cornell University professor sees memecoins as an opportunity for younger, risk-taking crypto enthusiasts to signal their aptitude for betting on the right projects.
“What is that purpose? That purpose is social signaling. In the same way that some people use a Bored Ape Yacht Club NFT as a profile picture, they’re saying I made so much money off trading that I can afford this,” Gün Sirer explained.
The Ava Labs CEO said that most memecoin traders are not holding tokens long-term and that the nature of the emergent trend relies on the ability to constantly adjust to the movement of value between different memecoins.
“They don’t see it as an investment in that fashion. They see it as a transitory phase. It’s like riding a bike. It’s a dynamic equilibrium. you have to constantly make corrections.”
Gün Sirer conceded that luck also plays its part as traders jump from coin to coin. “You have to be at the forefront of that community movement. You have to guess right. It’s not easy to do, and not everyone can do it,” he said.
This is also why memecoins have “such a premium associated” with people who understand these memes and act early on projects. Gün Sirer said Avalanche has attracted a thriving memecoin culture on its protocol.
The founder said the Avalanche Foundation was one of the first cryptocurrency ecosystem players to endorse memecoins and wants to see the community grow publicly. He cited an influx of users to Avalanche as a direct result of memecoins.
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