Tracksbit

Memecoins are unquestionably over. (Obviously, they won’t fully disappear, but the trade is gone). Reason being, the entire premise of memecoins was that they were “fair launch” opportunities where John Q Retail had just as good a shot at making money as the funds and VCs. This was the entire substance of the claim made by the memecoin boosters. The coins had no purpose beyond their launch mechanic. They weren’t sold as a product in their own right but rather as an alternative to high FDV VC-backed coins. Those have their own problems of course but their issues did not make memecoins any more worthwhile. And the memecoin trade was entirely based on a claim that was ultimately exposed as a lie - that the casino was at least fair. It was evident that this wouldn’t last and once memecoins became a big sector, semi-professional entities would emerge to cut prelaunch deals, trade on insider info, snipe launches, etc. The quoted tweet dives into these details. For all of Hayden's sins, he's done more to expose the corrupt memecoin sector than anyone else, and he should be commended for that at least. The Milei coin was the most obvious example of this - opening at a billion and wicking to $4b in minutes - clear proof that people were playing a rigged game. But it’s just the latest in a series of unfair and botted launches. The casino didn’t take a slight edge - it was more like 90/10 in favor of the house. So where to now? - Memecoins are cooked. There will still be launches and probably some winners, but the meta is done. Retail will still be farmed here as many are not extremely online and unaware of how extractive the sector is, but the endless coterie of scandals in memecoin land will turn off the smarter investors and eventually the mass market. Contrary to popular belief, just because memecoins probably aren't securities, doesn't mean there's no liability associated with trading on inside information and so on. Criminal exposure for insider trading is well-established in legal precedent. Expect a spate of enforcement and actions around this. Insiders have left an indelible paper trail on chain and can expect calls from law enforcement over the coming months and years. Insider trading is still illegal, no matter the underlying substrate. - Conventional L1/L2/defi token launches will continue, but I'm noticing funds and founders shying away from high pre-launch valuations, mindful that end buyers are wary of the high FDV low float game. The market is adapting, and we will see a number of high quality launches this year at more modest valuations. The solution to expensive token launches wasn't memecoins, it was simply issuers internalizing the feedback the market was giving them. But this will entail some pain for the VC funds that paid up for expensive prelaunch rounds. They will be see tokens trade below last round price while they are still locked and vesting. This will be a test of conviction for these funds – if they believe in the project they can buy the tokens on the open market post launch and average down. - Crowdfunding platforms like Echo will thrive. Echo enforces accreditation and KYC, which appeals to founders. Prelaunch community rounds to build excitement and give retail (which can pass accreditation) access to token launches prior to public listing are getting more and more popular and are almost the norm now. This doesn't solve for global distribution since it's limited to a smaller subset, but it does mean that tokens can achieve some meaningful initial distribution to the high-end portion of the mass market without worrying too much about securities enforcement. - Flight to quality. Part of the reason memecoins were attractive was because they promised nothing and were thus considered exempt from securities laws. But we have a progressive SEC that is already crafting rules to allow for compliant issuance of tokens and, presumably, an equity-lite disclosure regime for issuers. This means that we don't have to bother with fake decentralization, DAOs, governance theater, veiled cashflows, etc. The fee switch can be set to ON. Tokens will soon be able to return capital to users and embrace their fate as a kind of flexible pseudo-equity. The trade of the next few years is simply assessing the fundamentals of these tokens and buying those that trade at reasonable valuations relative to their real or implied cashflows. I'll end with this. There is no reason to be upset. A sense of gloom and cynicism pervades crypto, because memecoins in a sense were considered the last 'fair' terrain where anyone could make money. This illusion has been shattered. But there are still profitable trades to be made. New launches have adapted and are opting for lower initial valuations. High quality DeFi projects will be able to turn on the fee switch. And the "real utility" of crypto continues to explode, with the stablecoin fintech sector in particular exploding. These concepts are maybe not that exciting to some, but this is just what maturation looks like. The pain of disillusionment is real, but ridding ourselves of the cancerous memecoin sector which was in hindsight tremendously unfair is a good development overall and something to be celebrated.