jimmysong on Nostr: https://m.primal.net/IEcg.jpg # On Memecoins The VC token industry is not what it was ...

# On Memecoins

The VC token industry is not what it was in 2017 or even 2021. Back then the newbies to the "crypto" space trusted them to give recommendations on what to buy and what to not buy. Fortunes were made by crypto VCs as almost anything they promoted would be bought by the gullible public and subsequently pump. They made money on all kinds of tokens, from EOS, to IOTA, WAX and STEEM. Those were the golden days when they had influence in the market.

The crypto VC influence has significantly waned the last few years and the days of making 30x on an ICO are long over. Their reputation since has been sinking faster than Bill Cosby's, as the market that they built their funds on got away from them. In a sense, though, they deserved it, as pretty much everything they pumped did horribly, and the promises of these tokens about as likely to be fulfilled as a Kardashian wedding vow. The run they had was unbelievable, fueled by a ZIRP environment and insane FOMO, but when the altcoin market started going south, their prospects crashed along with them.

## The Demise of VC Tokens

Despite their struggles, Venture Capital benefit from the fact that it's a lagging industry. They typically raise the next fund while the iron is hot, and can raise crazy amounts during these bull cycles. They can survive a long time on their 2% yearly management fee, even as their 20% of profit looks increasingly unlikely. Crypto funds have all done terrible the last few years and most of them are deeply underwater.

The few coin pumps that they've tried have more or less died before they had any chance to pump, BitClout and WorldCoin being two notable examples. VCs poured a lot of money into these things, hoping to bring back the good old days, only to find that the market no longer trusted them. And who could blame the market? The coins they pumped previously were down significantly in USD terms, and in BTC terms, they looked like the Venezuelan Bolivar.

## The Rise of Memecoins

But that doesn't mean altcoins went away. Memecoins obsoleted the VCs and ultimately brought some more honesty to the Neitzchean will-to-power games that were always being played. The original memecoin, of course, was Dogecoin, and Elon Musk pumped that thing like a hot air balloon, and surprisingly, the market followed. What Dogecoin did was to lay bare what was actually going on in the altcoin markets. The narrative didn't matter and it was all a power game, a Keynesian Beauty Contest, and mob rule. These "blockchain" use-cases were about as realistic as a Milli Vanilli comeback, so in a sense, the altcoin market reduced to its essence.

Dogecoin was also notable because it cut out VCs. It was a retail phenomenon and VCs for the most part, didn't get into it. How could they? These are people that supposedly figure out what the future is going to look like and invest accordingly. There's no expertise, no due diligence and no market research needed in a memecoin pump. VCs don't have any special access or insight in the memecoin market and they didn't provide anything of value to the pumpers. They got cut out as middlemen.

Doge was followed by Shibu Inu and its success rapidly rendered VCs completely unnecessary. The game that was being played didn't require large injections of capital, just the appropriate buzz and enough marketing to achieve escape velocity. Shibu pumped purely as a meme, copying Dogecoin and it similarly required no VC pumping to succeed. And with that, VCs became the cable news of the altcoin industrial complex, where the only attention they garnered was from their deluded peers.

## A New Cycle

We're now in an environment where memecoins have become the altcoin pump and dump of choice. Indeed, just about the only coins this cycle that are pumping are either memecoins or platforms for memecoins.

For what it's worth, memecoins seem to have a similar dynamic as other altcoins, in that a few mainstays seem to hold significant mind share while everything else dies a quick death. What's different is that because these memecoins don't have large marketing budgets, they get to their dump phase much quicker.

All this is good. The altcoiners are in a sense a lot more honest this time around. There's no grand promises of crazy applications using blockchain, or disrupting some industry. The people that are getting into memecoins know that it's a gambling vehicle and that they're playing a greater fool game. There's little deception in PepeCoin or DogWifHat because they're not claiming any utility or even a future.

And don't feel sorry for the VCs. They are reaping the rotten fruit of hype and fraud that they've sowed. Many have destroyed their reputations pumping useless stuff and the fact that no one is listening to them is the market functioning properly.

There's also a lot less waste of developer time. Instead of altcoin platforms wasting developer time on barely working, insecure projects, they're eschewing utility altogether for "fun." The entire altcoin industry has been about gambling and now, everyone knows.

In the end, memecoins make Bitcoin look better and better.