The memecoins, a necessary evil for crypto adoption - Arthur Hayes

Memecoins like Dogecoin or Shiba Inu continue to divide crypto experts. While Arthur Hayes, co-founder of BitMEX, sees them as a driver of adoption, Vitalik Buterin, the creator of Ethereum, warns of their risks.

Arthur Hayes defends the usefulness of memecoins for the crypto industry

For Arthur Hayes, memecoins, despite their apparent triviality, can be beneficial for the crypto ecosystem. In an interview with Raoul Pal, CEO of Real Vision, he claims they attract attention and draw new users and developers to the blockchains that host them, like Solana or Ethereum.

This media attention translates into an influx of users and engineers, beneficial for the development of the concerned blockchains. “Chains that can support this culture will be the ones that have value“, asserts Hayes. He particularly cites Solana and Ethereum as being well-positioned to benefit from it.

Facts seem to prove him right. Following a memecoin frenzy in November, the Solana network activity saw a significant increase, with the launch of numerous serious projects in the following months. A similar scenario occurred on Bitcoin, driven by the wave of BRC-20 tokens and Ordinals.

Raoul Pal, meanwhile, attributes the growing popularity of memecoins to the “playful mentality” prevalent among Generations Z and Y. “For them, it’s simply another way to play with money“, he analyzes.

Risks not to be ignored

The contributions of memecoins should not, however, overshadow their dangers. The absence of fundamental value exposes investors to brutal losses. This is underlined by Franklin Templeton, warning against the lure of easy gains.

Vitalik Buterin, co-founder of Ethereum, also expresses his skepticism. While he understands the playful appeal of memecoins, he calls on their creators to provide them with real utility or a charitable purpose. Simply pointing out their flaws is not enough according to him.

Despite these reservations, it is clear that memecoins have been the best performing asset class this month. CoinGecko reports weekly gains of 20%, far ahead of DeFi tokens (+5.4%) and Layer 1 tokens (+6%). 

The craze shows no signs of waning, as evidenced by the meteoric rise of dogwifhat (WIF). This canine memecoin even managed to surpass Ethereum’s Arbitrum (ARB) token in terms of market capitalization.

Memecoins, despite their meteoric success, divide opinion. Between being a driver of adoption and a threat to the foundations of the ecosystem, their added value remains ambiguous. A phenomenon that must be approached with nuance to make the most of it, without falling into its pitfalls.