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BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
10/14/2024

A Balanced Take on Memecoins and VC Coins: No Sides Taken

I haven't done deep research on VC coins and Memecoins, so I'll share a neutral perspective based on my own observations. Set aside whatever misconceptions you have about these two token types and don't blindly trust what some KOLs tell you. VC Coins: Solid Foundation, Promising Future First, let's define a VC coin: a token where more than 51% of the supply is allocated to the development team and investors. Sounds fair enough, right? Take a closer look at the tokenomics of most infrastructure projects — like EIGEN, SUI, APT, Avail, ZK, and SEI. You'll notice that a large portion of their token supply is

A Balanced Take on Memecoins and VC Coins: No Sides Taken

I haven't done deep research on VC coins and Memecoins, so I'll share a neutral perspective based on my own observations. Set aside whatever misconceptions you have about these two token types and don't blindly trust what some KOLs tell you.

VC Coins: Solid Foundation, Promising Future

First, let's define a VC coin: a token where more than 51% of the supply is allocated to the development team and investors. Sounds fair enough, right?

Take a closer look at the tokenomics of most infrastructure projects — like EIGEN, SUI, APT, Avail, ZK, and SEI. You'll notice that a large portion of their token supply is allocated toward community and ecosystem development.

This matters. For infrastructure projects, ecosystem health is what drives everything. When the incentives are attractive, decentralized applications (DApps) migrate to the new chain. Right now, certain DApps (Aave, Uniswap, Curve) dominate the market. The first challenge for any new ecosystem is attracting these key players while also nurturing innovation and incentivizing developers. Incentives are what make that happen.

We see projects like Sui and Aptos smartly deploying token supply to drive ecosystem growth. There's been notable development within their ecosystems, and that growth inevitably fuels the hype — because the funds used to incentivize ecosystem development also power marketing and content creators who expand awareness of the project. It's a feedback loop: top-down incentives fuel the marketing funnel, and retail investors chase the hype.

Investor unlocks will happen on schedule, but don't misread how venture capitalists operate. They're playing the long game. VCs are targeting massive returns, just like retail investors are. When 30% of the supply is being deployed to drive long-term project growth, they're not looking for an easy exit.

They know how to shift the narrative and create positive feedback loops. Take Sui as an example. Retail investors were frustrated just a few months ago, but after treasury allocations and announcements, the token price started climbing and the Sui community is now celebrating.

Retail investors want safety, security, and lower risk. VC-backed tokens — especially those committed to ecosystem development and consistently improving on-chain metrics — can deliver on those fronts.

Memecoins: Short-Term Hype Driven by Snipers and Liquidity Traps

Memecoins launch with a fair distribution, fully circulating at the token generation event (TGE). But in the middle of a Memecoin frenzy, is everyone really playing fair?

Not quite. Memecoin hype is driven by snipers who scoop up cheap tokens early, and you end up being their exit liquidity.

Then a community forms and influential KOLs buy up large amounts of tokens from the open market. The game is the same for everyone, but conviction levels differ. You might exit at 2x, while the KOL is still holding at 10x, building a narrative to support their position the whole time.

Their goal is to get retail investors so bought into the story that they stop thinking about taking profit. By then, liquidity quietly drains from the DEX, the big players cash out, and retail is none the wiser. That's when you realize Memecoins aren't really that different from VC coins.

The Strategy: Play Both Sides, Don't Write Off Either

Retail investors love trends, and Memes are a trend. If you want to trade them, do it your own way — don't follow KOLs. Don't completely write off VC coins either; narratives can shift fast. Unfortunately, when VC coins pump, your capital might already be stuck in Memecoins.

The key is staying alert. Play both sides, but don't get attached to any single token. Most tokens will eventually go to zero, so make sure you exit at the right time.