Decrypt’s Art, Fashion, and Entertainment Hub.
It was a sea of red in the market yesterday. But while Ether slid by almost 10% and all DeFi tokens plunged even deeper, one project astonished the crypto world accelerating the 10x increase it had seen in the last seven days:
A ticker most would pass off as a pump and dump. But is there more than meets the eye? The concept follows the road of coin pairings on DEX protocols like Uniswap, which allow traders to park funds and earn a part of the trading fees generated from volume on the pair. In this case, you would provide ETH-MEME liquidity on Uniswap.
But there's one big difference.
Along with fees, you can earn ‘points’ for staking in the Meme protocol, which are redeemable for Meme NFTs, or scarce non-fungible tokens, tied to unique, crypto-based designs. The release of these rare, exclusive items generates a frenzy similar to that seen in streetware’s hypebeast culture.
This changes the game.
The proposition of fees alone is strong but adding an arbitrary asset that has a limited supply, (there are only 10 of some cards and 100’s or 1,000’s of others), gets people fighting for it, which increases the value of these NFTs.
Increased interest in these unique tokens in the past week, with Yearn Finance founder Andre Cronje buying an NFT based on himself and the project’s collaboration with emerging digital artist Sven Eberwein, drove demand and pushed MEME past $1k on Sunday. Crypto exchange Poloniex listed the token Monday, spurring further gains, even as the broader market dumped.
It all started five weeks ago with a tweet from Jordan Lyall, product lead at ConsenSys, making fun of how quick you can copy-paste a DeFi protocol.
Suddenly the community assembled, made a Telegram group, claimed the $MEME ticker and airdropped 26,000/28,000 supply to 73 members there via a Google form. A cool 355.5 $MEME tokens each, or over $600k at the time of writing.
The rest of the 2,000 $MEME tokens were split between the contract creator and the initial liquidity pool on Uniswap to kickstart trading, with the LP tokens sent to Vitalik Buterin’s wallet, effectively burning the keys to claim those 1,000 MEME tokens back.
There are currently around 2,200 token holders of $MEME. The core community, which calls itself the “Citadel,” isn’t looking to sell.
“The citadel has strong hands,” MEME holder Gabriel Frank said. “Most believe we’re on to something great and so no one is selling.”
A scarce card, called “Legendary,” depicting Andre Cronje sold for 48 ETH, for example, while a Legendary Sergey Nazarov sold for 78 ETH on the secondary market.
How's that for a bonus within 15-20 days of staking?
Cronje said he was “amazed” by the project.
Some will say this is all due to temporary hype. In most cases, a project does extremely well, sells out its initial phase of NFTs and people move on to the next shiny thing.
The MEME Community is hoping to prevent that by collaborating with renowned artists, generating a lasting stream of high-quality, desirable digital art.
Eberwein, who has sold pieces for 6-8ETH on Superrare was the first Artist drop.
You can stake your MEME to this pool and claim these Art NFTs.
CoinArtist, one of the famous and early artists in the crypto-art scene who's also the CEO of blockade games, signaled a potential collab.
These multiple cards and collectibles encourage more locking up of $MEME effectively taking them out of circulation.
Tie this with the fact the value of some of these cards can rise due to the scarcity, you get a frenzy of people trying to buy and stake $MEME to claim these before others do.
Which is exactly what's been happening over the last week.
Will this sustain?
In my opinion, it has the potential to.
The key is to provide a strong enough ‘rewards portal’ ie, famous artist collabs, rare NFTs, or they can even partner up with projects outside of the digital art world and provide virtual land or game assets.
The possibilities are endless.
Remember these NFTs are in most cases BONUS assets being claimed along with staking fees. If you replace the $MEME ticker with something like $REWARD, then it becomes a little clearer. It’s basically a reward portal for those who provide value to the ecosystem.
What are the risks?
Traditionally we've seen new projects boom and fall flat.
Usually, it's due to a bug in the contract or a ‘rug pull', ie, the founder quickly cashes out the initial share of Community tokens, similar to what happened with Sushiswap.
But for MEME, 93% of tokens are distributed equally across the Community. The rest are locked in a liquidity pool with keys thrown away. So there is no way to rug pool. Considering all this is happening within the Uniswap protocol, there being a bug in the process is highly unlikely.
The only risk I can think of is if the supply of these NFTs becomes more than the demand and people find a better asset to put their money in, effectively moving out of the $MEME token.
There's also not much incentive currently for the smaller fish who will find it hard to earn points quickly enough to compete with larger players and thus get the spoils.
The project will probably see huge fluctuations, big green days, big red days, just like any other 0-hero project.
But as long as the team, who are highly motivated, energized, and well respected in their fields continue to build and fine-tune the project, (I believe they will), we should see continued growth.
Art + DeFi + NFTs are reaching an epic intersection.
Add some meme culture and you have a product that's almost a perfect mix of buzz and incentivization to break through the noise.
[This story was written and edited by our friends at The Defiant, and also appeared in its daily email. The content platform focuses on decentralized finance and the open economy and is sharing stories we think will interest our readers. You can subscribe to it here.]
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.