Pranav Kanade, a portfolio manager at VanEck, recently shared insights on the essential characteristics of memecoins that crypto projects should consider emulating.
His statements came in response to a panel discussion at Token2049 led by Murad Mahmudov, who discussed a shift from Bitcoin-centric views to the memecoin phenomenon. The panel gained significant attention by suggesting the emergence of a “memecoin supercycle,” which resonated within the crypto community.
Key Attributes of Memecoins
Kanade identified four principal traits of memecoins that contribute to their appeal, the first being their effortless integration into retail markets. He elaborated:
“Many teams over-engineer their token, failing to realize: Time + capital + attention = scarce.”
Market Saturation and Simplified Design
In 2023 alone, over 600,000 tokens entered the market, intensifying the competition for essential resources. Kanade stressed the importance of adopting a straightforward token design. Projects need to clarify their vision and explicitly outline how their strategy rewards token holders.
Concerns Over Token Supply
Another critical point Kanade raised was the need for projects to reconsider the allocation of “locked” tokens, which has become a major point of contention among traders. The apprehension about token dumps when these locked tokens are released can affect long-term investments.
Many projects that utilize a substantial amount of locked tokens often face challenges, particularly as early supporters sell their holdings to cash in profits after unlocks. Most tokens launched before 2024 typically follow a “low float” model alongside a high fully diluted valuation.
Conversely, memecoins generally practice a “high float” model with an entirely unlocked circulating supply available from the outset. This strategy, which corresponds to a low fully diluted valuation, was a prominent discussion point on Mahmudov’s panel.
To enhance their launch strategies, Kanade advised projects to adopt a “high float” model, allowing for a limited number of locked tokens specifically for early investors.
The Importance of Transparency
Furthermore, he advocated for a “hyper-transparency” model in which the acquisition cost of tokens by venture capital funds is disclosed. Currently, such data is often inaccessible and not publicly shared, which could foster greater trust within the community.