Rewritten Article:
Author: Asher Zhang
The current bull market differs significantly from previous bull markets. There have been remarkable developments and intense battles between institutions, crypto whales, cryptocurrency exchanges, retail investors, and project teams. The recent Meme frenzy has also caused divergent opinions in the market. How should we view the development of this Meme trend? And what lies ahead for the next phase of the crypto market?
Specialization in airdrops: Project teams compete with crypto whales
Airdrops emerged during the previous bull market, and over time, project airdrops have become more specialized, leading to intense battles between project teams and crypto whales (professional airdrop participants).
Recently, several well-known projects have conducted large-scale airdrops, sparking controversy in the market. Among them, ZKsync, Layerzero, and Taiko are particularly representative.
Taiko’s decision not to disclose the airdrop rules has led to widespread criticism, and the project team had to explain their stance. Taiko’s co-founder and CEO, Daniel Wang, responded on Discord, stating that the lack of transparency in the rules is due to the fact that transparency cannot resolve disagreements. The definition of “fairness” is subjective for each individual, and achieving consensus is impossible and not attempted.
ZKsync, as the leading project among the four Layer2 dragons, has received high expectations but also faced significant controversy. Some participants expressed their dissatisfaction, stating, “The overall success rate is very low, with less than 700,000 out of several million addresses receiving allocations. The success rate for individual addresses is around 15%, and they are all low-value allocations. Considering the low price of ZK, it is not meaningful.”
Layerzero has faced even more criticism and chaos surrounding its airdrop. LayerZero CEO, Bryan Pellegrino, revealed that within a few hours of the start of the bounty program, they received over 3,000 reports of fake accounts and 30,000 appeals. Misconduct has also emerged under the whistleblowing system, with studio employees resigning to report internal accounts, airdrop whale addresses being reported, and users forming witch-hunting groups targeting large holders and airdrop KOLs. There were even reports of a security agency submitting 470,000 suspected witch addresses to Layerzero at once.
Meme season replaces altcoin season: Crypto exchanges face challenges
While the direct confrontation in airdrops is between project teams and crypto whales, institutions, retail investors, and crypto exchanges are also deeply involved in this extraordinary battle.
Generally, well-known projects attract large institutional investments in the early stages. For example, ZKsync, Layerzero, and Taiko have numerous renowned investors. Layerzero’s investors include Animoca Brands, SoftBank CEO Rene Marcelo Claure, Avalanche Ecosystem Fund, Polygon Ecosystem Fund, Fantom Ecosystem Fund, Dapper Labs, Kronos Research, Ethernity, ImToken Ventures, Matrixport, Gemini, as well as angel investors such as American football player Tom Brady, singer Justin Timberlake, and Nike Foundation Chair Maria Eitel, among others.
In general, institutional early investors have a lock-up period for their tokens. In most cases, investing in well-known projects used to be a guaranteed profit. However, the situation has changed significantly. Many crypto whales, including airdrop studios, have accumulated large quantities of tokens through airdrops, and their selling pressure severely inhibits long-term price increases. Before the airdrop of project tokens, airdrop studios created a large number of fake transactions, which likely led to misjudgments of project valuations by institutional investors. When the lock-up period ends, the opportunity for these investors to make money is significantly reduced. According to reports from “比推,” the latest data shows that once the airdrop event ended, the weekly income of the ZkSync Era dropped by 93.88% from $1.37 million at the beginning of the year to only $83,000.
For crypto exchanges, many well-known projects attract a large number of institutional investments, have impressive on-chain data, and attract a significant number of token holders. Due to these factors, exchanges are compelled to list high-valued projects. However, since many airdrop projects have low circulating supplies, their valuations remain high. As the lock-up periods for institutions end and on-chain activity drops sharply after the airdrop, exchanges find it challenging to generate profits from these projects for retail investors.
As a result of the above factors, many well-known projects reach new highs upon listing, and the market increasingly lacks retail investors willing to buy in. However, due to the low circulating supplies of these projects, their valuations remain high, resulting in a lack of interest from retail investors. Retail investors start turning to the Meme market, as fair launches and the potential for overnight wealth are highly appealing. However, Meme coins are often disregarded by institutional investors. Eddy Lazzarin, the CTO of venture capital firm A16Z, tweeted, “Memecoin has changed the perception of cryptocurrencies among the general public, regulators, and entrepreneurs. At best, it looks like a risky casino or a series of false promises hiding a casino.”
The real reasons behind the Meme economy’s prosperity
Since 2023, Bitcoin has led the way in the Meme frenzy, with ORDI, based on the BRC20 standard, experiencing a massive surge. Subsequently, a series of derivative innovation standards such as ARC20 and SRC20 gained significant market attention. Apart from the Bitcoin ecosystem, Solana has also seen the emergence of numerous leading Meme tokens in this bull market, such as WIF, BONK, BOME, GUMMY, and MANEKI. Additionally, the recent NOT in the Ton ecosystem and the previous DEGEN in the Base ecosystem have also gained market attention.
Undeniably, retail investors’ reluctance to buy in from institutions is one of the main reasons they turn to the Meme market. However, why do the truly explosive and profitable Meme tokens primarily concentrate on Bitcoin and Solana, with some presence in Base and Ton? What are the underlying reasons behind this? The real driving force behind this Meme frenzy in the current bull market lies in the financial prosperity brought about by technological advancements. When numerous public chains faced stagnation in their development, Bitcoin and Solana brought new hope to the blockchain industry through technological advancements.
Bitcoin has a robust security consensus. If powerful applications are built on top of it, it could rival traditional finance. This has been a desire of some members in the Bitcoin community, leading to the creation of forks like BCH. After the SegWit upgrade and years later, Bitcoin underwent the Taproot upgrade, further enhancing its scalability. It was this technological “unlocking” that made the emergence of the Ordinals protocol possible, which in turn sparked the Meme frenzy. Since DeFi and other applications have already matured on the Ethereum network, the migration to the Bitcoin network is relatively easy. Unisat quickly gained attention in the crypto market. Subsequent new protocols on the Bitcoin network have all featured some technological breakthroughs. While BRC20 appeared early and had strong consensus, it caused UTXO congestion and could pose a threat to the BTC network in the long run. ARC20, with its simple colored coin transfer model and Bitwork’s POW mining paradigm, gained favor from the technical community. However, it still relies on SegWit for data storage, which is not perfect, and subsequent token splits have encountered some difficulties. SRC20, although it can operate without an indexer, has not resolved the problem of dust created by data storage on the BTC network. Runes is currently working to address these issues. Each technological breakthrough is accompanied by a leading token, just as Bitcoin had no utility value at its inception, and the same applies to these new protocols. They often struggle to sustain their value in the face of imitations and copies.
Since 2023, Solana has faced challenges due to the FTX crash. However, its technological capabilities should not be underestimated, as it has the potential to drive the widespread adoption of Web3 applications. The DePIN track on Solana is particularly promising, with projects such as Helium, Render Network, IO Net, and Nosana, among others. The latest hype on Solana has also spilled over to these well-known projects, resulting in a capital overflow effect. Base relies on Coinbase, while Ton is heavily reliant on Telegram. Due to their large user bases, some Meme tokens have gained market attention.
Applications are key: Embracing the new era of Web3
After the upgrade from DenCun, Layer2 gas fees have significantly decreased, and performance has improved. At the same time, ZKsync, one of the most highly anticipated projects among the four Layer2 dragons, launched its token, signifying the practical application stage of blockchain technology. The prosperity created through false hype generated by airdrops is meaningless. The fundamental solution to breaking the current market’s “no buying in” phenomenon lies in creating value to support token prices. Only by creating real value can project teams, retail investors, institutions, and exchanges come together to create a truly enormous blockchain revolution dividend.
