Memecoin degens excel at marketing and fail at curating. One might ascribe the characteristics of curation markets to memecoins - where coin creators and early backers profit from viral memes. We'll assess the game mechanics of memecoins, and why they fall short for content curation.

Bitcoin and many early altcoins were the first memecoins. Back then only a small list of them competed for attention, as launching each of these chains required a dedicated wallet plus buy-in from market makers, exchanges, and miners.

As ETH commoditized tokenization, Simon de la Rouviere explored the solution-space for curation markets. A wave of attempts to produce one followed, though none of the early ones attained traction.

In the years since Simon introduced the concept of bonding curves, Vitalik & Uniswap invented AMMs, and L1 competition has driven the cost of blockspace to zero. Pump.fun et al combined these technologies into a launchpad for rapid memecoin deployment. And the result is a more engaging social experience, as the market can adopt new memes in real-time. It has attracted a new base of users and developers. However, the excitement over this growing sector may distract from its flaws.

No intrinsic value

Memecoins lack intrinsic value. Of course they are still highly valued. BTC is the perfect example of this. Their price is simply what a market is willing to pay. Occasionally however, a memecoin can attain fundamentals by retroactively adding utility, like SHIB, FLOKI, and Safemoon have done. But such byproducts of token-first communities have yet to outperform those of venture-backed teams.

Lindy effects

Memecoins enjoy Lindy effects, with tremendous advantages to existing tokens vs upstarts. Because the coins lack fundamentals, participants will converge on schelling points. This biases the market toward coins with existing community mindshare, and results in a power law distribution of very few winners over time. It means BTC will always be the king memecoin. And while we get some long-term winners each cycle, the risk/reward of betting on a crowded market with an infinite supply of these coins is usually on the order of 1:1000 or more.

High turnover

Because of the extreme risk, for participants to realize gains, they must be short term active traders on a 24/7 market where turnover and volatility far exceed any other retail product. In addition to the price instability, the holders must account for broader macroeconomic conditions, trends in crypto markets, and rugpull risk of young assets -- any of which are sufficient to nuke a portfolio.

Misses long tails

Memecoins not only miss the long tail of risk/reward opportunities, they miss the long tail of content, creators, and consumers.

Historically, physical good producers acted as trendsetters, and they secured the benefits as such. But online, anyone can set a new trend. Where production costs are high, like youtube or streaming services, the platform must reward the creators with rev-share or other financial agreements. But this is just recently available on primarily text based platforms, like X. And while it has generated a regular income for those with enough following, only a select few can fully capitalize on their celebrity. In any case, these initiatives have left out the curators, reward engagement-bait, and remain walled off from experimentation.

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No creator benefit

Though centralized platforms found ways to pay creators, memecoin launchpads have not figured this out. New decentralized social graphs, and tooling like zk primitives and AI could help address it, but to-date, the market has not seemed to care too much providing token exposure to the OPs such as The Khao Kheow Zoo.

On tipping, fan tokens

In the last year we've seen a resurgence in tipping and fan tokens to monetize creators and bootstrap a community around a product. In either case, the longevity of their community is ultimately downstream of the willingness of its members to pay for the product, even indirectly -- such as from VC subsidies, token supply inflation, or just ads. I'd argue it is too early to tell if these products will keep their current systems of creator rewards for the long-term.

Conclusion

Regardless whether they meet the conditions for "curation markets", the market for memecoins is certainly big and alive. It may be possible to address the issues so memecoins can directly reward creators, and more accurately curate memes, and reach a broader, less risk-tolerant audience. But to me it is more likely we have yet to see the game that will.