Creating a $100m brand out of nowhere

The complete guide to Higher and a new wave of scenecoins


Higher might be the fastest brand to hit $100m valuation … ever.

From an idea -> to a group chat -> to a token -> to $100m.

All in two weeks.

Here’s the story of HIGHER and a whole new movement of “Scenecoins.”

The concept of “Higher” was started by a pseudonymonus artist known as LGHT as an optimistic state of mind and brand identity that anyone could contribute to. “Higher can be a state of mind we work from, regardless of prices," he explained on a recent Seed Club podcast.

After refining the idea with another collaborator known as Six, he spun up a community on Farcaster (a "Web3 Twitter") and invited people to contribute memes and ideas.

You can think of Farcaster channels like a subreddit — a space where anyone can join and contribute around a shared idea or topic. The Higher channel quickly gained traction, with the community spinning out their own “Higher” memes and images. Zora founder Jacob Horne suggested using the unicode ↑ as a shared symbol and it became the calling-card for Higher across the app.

Two days later, another contributor called Martin created the Higher token and distributed it to all members of the Farcaster channel. By now, the flywheel was spinning. A shared Figma file was created so anyone could make graphics using common assets. Someone built a meme generator and created a website. Another community member launched a fashion brand and started shipping custom goods with the Higher logo.

All this within two weeks.

The timing of HIGHER was apt. The token caught the tail-end of this year’s memecoin frenzy and soared to a $100 million valuation. Some early members went from a couple thousand dollars to high six-figures in days. It even attracted crypto venture funds. San Francisco-based 1Confirmation publicly bought HIGHER in several clips.

However … this is crypto. Things often come down as fast as they come up. The hype hit a ceiling and the token has since dropped 85% percent back to a $16m market cap.

But a new model has been established: the “Scenecoin.”

“Scenecoins”

The phrase “scenecoin” was coined by Josh Crnls from web3 accelerator Seed Club. You could also call them “Culture Coins,” “Social Coins” or “Community Coins.”

They’re a close cousin of memecoins as they're tied to a concept rather than a specific product or crypto app. There's no utility or governance ... and they trade on attention more than fundamental metrics.

Unlike memecoins, however, they're more deeply rooted in creative circles of crypto, often built around communities of artists, musicians and creators.

Some of the new scenecoins include:

  • HIGHER - a headless brand started on Farcaster via channels.

  • DEGEN - a community coin spun out from the "degen" trading channel on Farcaster. It pioneered a new tipping mechanism.

  • ENJOY - the unofficial scenecoin on Zora.

  • STREAMZ - a new scenecoin for the music community

  • BONSAI - the community coin and currency for Lens Protocol.

  • IMAGINE - another coin from the Zora community.

  • CRASH - a headless brand built around an airline theme.

  • PACMOON - a community memecoin for the Blast ecosystem.

Scenecoins give communities a common goal and aligned incentives (number go up). Everyone has the opportunity to contribute, get "skin in the game" and share the upside. There's often a small founding team but the brand belongs to everyone.

In one way, it’s the simplest, purest form of what DAOs tried to be. A headless organisation with no explicit leadership, built around a shared interest and common brand. Unlike DAOs, however, there’s no complicated governance, voting or hierarchy issues. You just buy $1 and start contributing.

Scenecoins are also being talked about as a better alternative to NFT memberships that dominated the 2021-22 community discourse. Scenecoins are more liquid and accessible. They're not capped at 10k members like Bored Apes and Doodles — and you can join with $1 worth of tokens rather than putting $10k+ on the line. The potential reach is also significantly larger as there's almost no limit on how many people can own a token.

Let's be realistic, however...

These things did not exist 3 months ago so it's too early to call this the "new model" for community. And it still struggles with the same fundamental problem as DAOs — you need core leadership and vision to push a brand and community forward.

These things are exciting when they launch and get early traction but we need to see sustained enthusiasm and participation after the dust settles. With many scenecoins down 85%, this is the moment where we'll see if they have staying power and enough momentum to push through a downturn and back into into escape velocity.

My biggest concern is saying "you are all the team" defers a lot of responsibility for the brand's growth (and the token price) so it's extremely easy for founding teams to walk away with little repercussion if it doesn't work out. The community has to care enough to push it through.

The new class of Scenecoins

$BONK

Market cap: $1.6bn ($2.3bn FDV)

Although Bonk looks like a classic dog memecoin, I actually think it's the earliest example of a community coin and planted the seed for the wave of scenecoins that emerged this year. Back in late 2022, the Solana community was reeling from the collapse of FTX and its perceived association with Sam Bankman Fried. The fraud had gutted the Solana ecosystem, sending Solana down 90% and leaving only a small die-hard community. BONK was airdropped to all Solana developers, artists and builders on Christmas Day, giving them a vital financial lifeline to help them keep going, and a new coin to rally around. It was the first memecoin that tried to bring a specific community together — hence why I think it's the original scenecoin.

$DEGEN

Market cap: $213m ($631m fully diluted valuation [FDV])

DEGEN was the first big scenecoin to break out this year and provided the blue-print for others. Like HIGHER, it started out as a Farcaster channel where traders were discussing “degen” opportunities and sharing their wins. In January, a token was created and distributed to everyone in the channel.

The unique feature of DEGEN is a tipping mechanism — if you hold 10,000 DEGEN, you get a tipping allowance which you can give out to users on Farcaster. Simply reply "50 $DEGEN" under a Farcaster post and the user can claim their tips at the end of each season. This tipping mechanism helped spread the coin far beyond the community and grow social mindshare.

DEGEN became so popular that apps like Drakula (a web3 TikTok) integrated it as the native currency. Later on, DEGEN launched a “Layer 3” which briefly sent the coin above a $1 billion market cap.

$ENJOY

Market cap: $17m

ENJOY is the unofficial scenecoin on Zora — a platform for minting art, music and culture. ENJOY was airdropped to the most active creators and collectors across Zora and also uses a tipping mechanism.

Once you own 500k ENJOY, your tipping allowance is calculated based on how much ENJOY you own, as well as your collecting and creating activity. ENJOY is not an official Zora coin, it was created permissionlessly by the team at Seed Club.

$STREAMZ

Market cap: $500k

STREAMZ is a scenecoin for the music community, created by artist Reo Cragun and his music collective LNRZ. It was airdropped to anyone who’s collected music on Sound.xyz and includes a points system to unlock future airdrops. You earn points by collecting songs with STREAMZ on the split or creating songs and adding STREAMZ to the split.

$BONSAI

Market cap: $5.7m ($21m FDV)

Bonsai is the culture currency of Lens Protocol — another web3 social media project. Bonsai was airdropped to active members of Lens in March and now acts as the main payment method for collecting art or music in the Lens ecosystem. Creators have recently sold music video NFTs for $8k+ via Bonsai.

$CRASH

Market cap: $810k

CRASH is probably the closest cousin of HIGHER. It’s a headless brand where the community creates memes, visuals and content around the concept of a Boeing 747 airline. Following the airline theme, you can accrue airline loyalty points by completing quests like creating memes. 

$IMAGINE 

Market cap: $1.9m

IMAGINE is another unofficial scenecoin for Zora with a similar tipping and rewards system across the Zora platform.

$PACMOON

Market cap: $80m ($173m FDV)

PACMOON is the community coin for Blast — an Ethereum L2 created by the founder of Blur. PACMOON has a much more explicit incentive system. You earn PACMOON airdrops by making viral content on Twitter to generate points and move up the leaderboard. It created a viral incentive loop with most of the big NFT influencers getting involved.

More to explore: FARTHER, GLOOM, BORED, ONCHAIN

Tipping

Tipping has become a key feature of some scenecoins. It's an innovative way to distribute coins and bring more people into a community. New holders no longer have to actively buy the coin, they can receive it via tips through social activity.

How does it work? Coins like DEGEN and ENJOY work by keeping a portion of supply aside after the original airdrop to allocate for future tips. Tips are tracked and calculated manually during the season, and ranked on a leaderboard as points. At the end of a season, users can turn those points into DEGEN tokens by claiming. Now, the portion set aside for tips is distributed to those users.

DEGEN Ultimate Guide (Ryan's Notes)

Analysing scenecoins: the fundamentals?

Note: Scenecoins are extremely volatile. Buying anything below $500m market cap is inherently risky and extremely speculative. If you are buying or participating, it should only constitute a small percentage of your portfolio that you don’t mind losing. In my opinion, the best way to approach this is to buy coins for the community you like to be a part of, with money you can afford to lose. Many of these coins will lose value and fade out in attention.

With that said … there are some ways to measure fundamental value and make measured decisions.

Researcher Andrew Hong created a dashboard to track some of the most popular memecoins. He gives each coin a score based on financial health (volume and liquidity) and social attention (such as number of mentions across web3 socials).

$DEGEN, with 200,000 casts on Farcaster and $8 million liquidity has a very healthy score. $HIGHER is lower on the scale with only 2,000 casts and $500k in liquidity. 

Hong also maps out five stages of a memecoin’s growth and places each coin in a category. It’s a good indicator of where a coin is in its cycle.

  • Extreme risk - newly launched, low liquidity, high risk of rugging, lots of bot activity.

  • Volatile growth - a coin has captured attention and broken out. Swings of 100% - 500% are common.

  • Well established - the coin has established its place in the social conscience and achieved some level of price stability and consistent community.

  • Sleeping giant - attention has died down a little but the community is established. They may start shipping products or forming a DAO.


On this scale, DEGEN is considered “well established,” while HIGHER and ENJOY are still in the “volatile growth” stage. Larger memes like PEPE are in the “sleeping giant” phase.

The attention cycle

The reason I'm so interested in scenecoins (and even memecoins) right now is because this crypto cycle is very different to previous. The typical crypto cycle follows a risk-curve pattern with money flowing from the "safest" asset (Bitcoin) at the start of the cycle to the riskiest assets (memecoins) at the end of the cycle. It usually looks something like:

Bitcoin -> Ethereum -> Layer 1s -> Speculative altcoins -> memecoins.

This cycle so far is very different. Bitcoin has led the way as usual, but we've skipped the middle assets and gone straight to memecoins. Almost everything else has underperformed (including Ethereum, L2s, alt L1s and NFTs).

In some ways, this cycle is a pure "attention-based" cycle. There's little narrative around the promise of "Web3" or "blockchain fixes this." There's fatigue around this narrative and more acceptance of what's really happening — attention.

This is how a brand like HIGHER can reach $100 million without a single major product.

This will infuriate traditional investors who measure things based on fundamental metrics, but in some ways this is even more pure and honest. This is also played out in the tokenomics of memecoins and scenecoins compared to other cryptocurrencies.

Scenecoin tokenomics

As they're built around existing communities, scenecoins tend to have a fair launch. Generally speaking, they allocate significantly more to the community than traditional cryptocurrenies, while the core teaming takes a relatively smaller allocation. Almost everyone has the opportunity to participate from launch and there's liquidity from day one so it can be immediately traded. You can argue that many memecoin launches are more fair and democratic than traditional crypto launches (to be clear, this isn't always the case as insiders can still own an extremely large amount before anyone else and co-ordinate pumps and selling).

Let's compare some different distribution strategies to explain.

Bonk Tokenomics: BONK airdropped 55% percent of its supply directly to the community (artists, developers and teams in the ecosystem). 20% is reserved for the founding team on a 3-year vesting schedule (meaning they can't sell until after a 3 year-lock-up period). A liquidity pool was seeded immediately so anyone else could buy in and start trading from day one.

HIGHER Tokenomics: HIGHER allocated just 1% to each of the founding team. The rest was distributed equally between the community and a liquidity pool so it could be instantly traded.

In contrast let's look at the hyped recent hyped launch of EigenLayer — a restaking protocol built on top of Ethereum.

EigenLayer Tokenomics: 55% of token supply is allocated to the team and early investors, with a 2 year vesting period (yes, shorter than BONK). 15% was airdropped to the community (and only if they locked up their ETH in the protocol for several months). Not only that, but early-stage investing was only available to insiders and accredited investors and VC firms. The token is expected to launch at a $10bn valuation so all the early gains are gone. Early investors can slowly unload their coins as their vesting period ends, creating continuous sell-pressure for several years.

I'll caveat that neither is better or worse. EigenLayer is a serious project with a large team and several years of development. It required external VC funding to get off the ground and had to abide by security regulations. Scenecoins can be created very quickly with low liquidity and rely heavily on the power of its community so a different token structure makes sense.

However, I do expect that more coins will launch with this fair community-based model and develop products over time, rather than the other way around. The average crypto participant has figured out the overhang model of "VC coins" can be extractive and will opt to support community coins with fairer launches.

What's next for scenecoins?

After an initial explosion of growth, we've entered a lull of attention and activity. Many of the scenecoins mentioned in this report are down 60-90% from their highs and only a few will reclaim those high points. It's incredibly difficult to recapture momentum and attention after it's lost.

However ... some will persist. Right now, I'm looking for communities that are still active and participating, with little regard for daily price action. Look for core teams that are actively shipping products and innovating with new distribution methods. On the flips side, take note when the most passionate members stop contributing and move on to other projects.

The current crypto cycle is not over, in my opinion, and I'm largely convinced that "attention" and memecoins / community coins will continue to drive this next wave.

On top of this, look for new community coin launches. I firmly believe that more and more groups will use scenecoins as a tool for capital formation — a new way to kickstart a product and bootstrap attention, liquidity and mindshare while aligning incentives for teams and community members. I don't know if this is the "new DAO" model yet, but I think it's close.

This crypto cycle has proven that "attention" is the most important valuation metric. Memecoins and scenecoins are a pure expression of internet attention, allowing anyone to participate and deriving value from how big and desirable the community grows.

Thanks for reading!

Hope you enjoyed this deep-dive format. I'll be publishing one deep dive every two weeks in addition to our usual news roundup.

Disclosures: we own small amounts of DEGEN, ENJOY and STREAMZ. We may own NFTs mentioned in this article, have previous or current contracts with companies mentioned and may earn referral income from links to music NFTs. This newsletter is purely informational and should not be considered financial advice. Nothing in this content should be considered a recommendation to make a particular investment, only an expression of our opinion.

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