TRENDS - To Meme or Game?

Token2049, aside from the floods, led the way again in highlighting key trends in the crypto world. Investors are talking about meme coins again in the same breath as Real World Assets (RWA) and DeFi but without really understanding the irony of meme coins. Part of the increased activity in the crypto markets is coming from OG holders of eth and bitcoin. During the bear market, there was very little new money coming in, and any activity was the recycling of profits made by those OGs into meme coins.

Danny Brown Wolf, head of staff at Upland.me, loves meme coins for what they are: “Meme coins are very much at the heart of Web3. It’s a big f*off to the man, sticking it to the man, and giving the finger. OGs know that investors and hedge fund people find memes hard to understand. In fact, OGs love the fact that meme coins are based on nothing but community of degens, have no utility and yet can pump alongside Bitcoin,” says Brown Wolf. “Like PFP NFTs of the last cycle, they are cultural crypto assets”

Interest in meme coins has never been higher. On May 7th, podcaster Laura Shin released an episode (641) on why meme coins have been 2024’s most profitable trade with conjunction with meme traders Ansem and Kelxyz, and some of the views expressed on that podcast are echoed here. Ansem and Kel argue that memecoins have substance and value, largely due to their popularity and the attention they receive on the internet. Worth a listen, perhaps.

Gabby Dizon, co-founder of Yield Guild Games (YGG), sees memes as tokenized attention. In an industry full of uncertainty, they are a way for retail users to gamble on “making it” without competing for asymmetrical knowledge with VCs and sophisticated investors.

“While some meme coins offer utility, such as the ability to purchase merch, stake and access exclusive communities by holding them, they are still built around attention rather than providing practical solutions. I consider them more like the lottery or sports betting than traditional investments,” says Dizon.

Overall liquidity and attention in the cryptocurrency market are primarily driven by Bitcoin. Bitcoin is the largest and most well-known cryptocurrency, and the recent Bitcoin halving, alongside the US ETF approvals, has contributed to heightened attention and liquidity in the market. This increased interest and liquidity naturally extend to other crypto assets, including meme coins.

“It’s extremely hard to tell in the long term which memes will survive, and most people will likely lose their money trading memes. But there will be a few that will make a lot of money and invite even more retail capital to meme trading,” says Dizon.

On Yavin, the managing partner of Cointelligence, has little time for meme coins. He feels that the interest in meme coins is the same as that of most people in the crypto industry; they are looking to get rich quickly.

“Moreover, as there is no specific use case except for trading and using it as a transactional medium, it becomes obvious that the more people know about an asset, the more it is appreciated and hyped. Many meme coins are showing exceptional growth metrics measured in thousands of percentages and hundreds of thousands of percentages, and many people are misinterpreting this as easy money.

“However, it only looks that way due to the way these coins are launched. It also costs literally nothing for founders to launch them into the DEX today. So, when any of these gain momentum, you can see 100X or 10,000X happening, whereas other fine assets launched in a more traditional way are quite different, and their base prices cannot be in those ranges,” says Yavin.

He warns that all meme coins are either scams or nonsense and have no reason to exist besides pump-and-dump schemes.

“If you still want to buy any of them, watch carefully for those that have a large supply of tokens unlocked immediately after launch and those where founders hold a substantial amount of tokens for themselves; these are immediate red flags,” says Yavin.

Simon Veira, CEO of MixMob, conversely sees meme coins as a beneficial innovation. “It allows us to test blockchain networks, explore the technology's capabilities, and attract more people to crypto.”

The meme coin craze can be viewed from three perspectives according to Viera which are curiosity, innovation, and gambling for a dopamine hit.

“Certainly, there are significant red flags with many meme coins. Not all coins are created equal. Take, for example, Bonk, one of our partners. The team behind Bonk is exceptionally hard working, constantly developing new technologies, creating partnerships, and enhancing community engagement to add more utility to the project and network,” says Veira.

Memes naturally captivate through their blend of entertainment, comedy, and relatability—key aspects of human interaction. By integrating a meme with a cryptocurrency, you foster a community that resonates with the meme's underlying ethos. Adding functional utility to the meme increases this interaction, making engagement with crypto easy to understand, enjoyable, and social.

Moreover, the potential for these meme coins to increase in value attracts a diverse ecosystem of communities, speculators, innovators, and the media, all of whom contribute to the craze.

Vieira sees tokens such as Bonk surviving. He believes where creators, founders, and the community are all committed to driving innovation, value, and utility, such meme coins are likely to persist as they continue to grow their networks and functionalities.

Meme coins can be a bit like Marmite – with people loving or hating them. Vieira thinks that they might be good for mass adoption.

“I do believe they are beneficial for mass adoption because they can rapidly bring people together, much like popular culture does. As the market matures, successful projects will prevail while others fade away,” he says.

Game Coins

For the coin-less mass market, GameFi may be a much more intuitive entry point than memes. Due to the fact that gaming is an existing huge market with its own pain points, coins and tokens for blockchain-based games have a real use case, utility, and true value unlike most of the other tokens and coins. Blockchain-based games are revolutionizing the gaming industry, particularly by transforming everything related to identity and ownership within games.

Game tokens are designed with a virtual economy in mind, so they often have a more specific tokenomic utility inside Web3 games. They enable players to have a stake in and participate more meaningfully in the games they contribute to. Game tokens can be used in exchange for resources within the game, to participate in community decisions and governance, or to acquire unique NFTs.

Sometimes, meme coins can be integrated and have the same utility in games, but that tends to happen after building a community around the coin. Game tokens tend to hold a deeper significance for their holders because these games genuinely matter to most players. In web3, gamers often derive enjoyment not just from the games themselves but also from the communities built around those games and the contributions they get to share in the evolution of those games.

Game tokens give players a stronger sense of ownership and belonging in their community.

Dizon explains the mechanics of game coins in Axie Infinities. In Axie Origins, the Smooth Love Potion (SLP) gained from battles was a requirement for “breeding” new Axies, which created a simple supply-demand for the token. In Axie Classic, SLP is used as an entrance fee and reward in the Premium Cursed Coliseum.

Meanwhile, Axie Infinity Shards (AXS) are used for governance and payments in the game’s marketplace. In Pixels, the PIXEL token can be used to purchase guild shards to join a guild inside the game, as well as to get additional in-game perks through VIP access. In Parallel, the PRIME token is used to buy new characters.

Recently, play-to-airdrop (P2A) has also been a method of rewarding early contributors helping to bootstrap a new web3 game. Pixels ran a very successful P2A campaign leading up to their token generation event for PIXEL.

“The YGG token is being used to reward members for completing quests from the Guild Advancement Program (GAP). It has also been used to access exclusive Superquests that offer greater in-game rewards. Together with the soulbound NFTs players get from completing these quests, tokens incentivize activity and learning. This aggregates in-game activity that is important to web3 ecosystems,” says Dizon.

A lot of the value around tokens in web3 gaming has to do with sharing ownership of an ecosystem by holding its token and being rewarded for your participation and contributions. This is true for ecosystems like Ronin and YGG, where token ownership grants users a stake in the ecosystem while rewarding active engagement.

YGG works like an index that catalogs and curates the best games in web3 and provides these games exposure to gamers and guilds that are actively seeking new web3 games to play. We bring players closer to these games by designing engaging quests, organizing large tournaments, and offering a wide variety of prizes and rewards for the best players.

Vieira is also very bullish on game coins. “Game coins are tailored for use within virtual worlds, offering more than just membership to a group—they provide a means to interact with specific game ecosystems and have real utility inside the games.

“They provide emotional, digital, and governance utility. Communities can use these tokens to belong to a group, trade for digital goods or participate in decisions that shape the game's development,” says Vieira.

Many crypto games use coins to enable players to own part of the game and participate in its governance. For example, at MixMob, players can stake their coins within the game to receive rewards and own the MixMob League, enhancing both their engagement and support in the game.

Unlike meme coins, the future of game coins is linked to the development of compelling character brands, enjoyable game loops, and engaging virtual worlds with well-balanced economies.

As the market becomes increasingly crowded, only those games that establish strong brands, create memorable characters, foster vibrant communities, and offer appealing environments alongside fun game loops will stand out. These elements are critical for driving significant crypto adoption and ensuring the longevity and success of game coins.

Amar Bedi, COO of Tashi Gaming believes that gaming tokens also open up the DePIN (Decentralized Physical Infrastructure) economy for gaming.

“DePIN will be a $3.5 Tn market size by 2030 and one of the key industries to participate will be gaming. Gamers are already running a significant part of the compute on their hardware. With the switch to decentralized gaming, game studios can share their economy by paying players for this compute power rather than giving it to large cloud providers. And gaming tokens are the most efficient way to make this happen.”

With the web3 gaming layer on top of traditional web2 games, players are finally able to save their progress and redirect the flow of cash from only paying for games and in-game assets that they never literally owned to getting paid for playing games and monetizing their progress!

Web3 gaming is also bringing accountability to another market that always existed but was in the shadows—the market of gamers' peer-to-peer transactions of in-game items—an industry with a total lack of transparency and security that is now being partially solved with the help of the web3 ecosystem.

“Similar to any other cryptocurrency project out there, use cases vary greatly. In most cases, coins in games are used as rewards for playing, fuel for in-game activities, give you some premium, or are literally used as in-game currencies. In many cases, they are used for fundraising, and this is entirely organic. They will survive if the founders plan and execute the tokenomics and game development properly. Create an appropriate balanced economy in and outside the game, and ensure you create a great game itself,” says Yavin.

Dizon adds: “Nobody can tell the future of any game, but YGG is well-positioned to facilitate dialogue between gamer communities and the publishers of the games they are passionate about to further drive value and growth to the web3 gaming space. The YGG token then becomes a representation of the web3 ecosystem.”

Brown Wolf is looking to game coins as the compelling market narrative to follow the meme coin craze. “If we want mass adoption, then it’s not going to be memes, those are too much of an insider joke. The next trend that is going to impact mass adoption are game tokens. I predict a gamefi summer and believe this is the most important trend for 2024.”

Photo by EVG Kowalievska