Cardano (ADA) founder Charles Hoskinson believes memecoins are like celebrities who witness short-lived fame before flaming out.
In a new interview on the Wolf of all Streets YouTube channel, Hoskinson says memecoins need to evolve and develop use cases and user bases to avoid going through a ‘dumpening’ – the practice of launching tokens with the sole aim of enriching insiders.
“So a memecoin is just like the ascendancy of a celebrity that has 15 minutes of fame. It doesn’t necessarily mean that that celebrity is going to disappear forever, but they’re in a temporary state of popularity. They have to find a way to become sustainable quickly or otherwise the people stop paying attention and they die out. It’s why the 99% of the memecoins will fail, and the ones that succeed, they pivot into ecosystem-building…
They have to. It’s the only way they can survive. So typically, you have to build community, you have to start doing things with that community, you have to have a reason for people to be there and continue investing.
And it’s really hard because, almost always, the distributions of memecoins are built for insider dump. So the person who issues it, and the insiders who issue it, their only incentive is to pump the price to dump the price. So they have to survive the dumpening.”
Hoskinson also warns that memecoins are hurting the crypto industry, as issuers tend to drain capital from market participants instead of helping boost digital asset adoption
“What’s happening is you’re moving water from one side of the bathtub to the other side of the bathtub… [and] the drain is open, it goes into the founder’s pocket. So basically, you’re not adding water to the tub, you’re losing water over time… It’s net-net neutral or negative.”
Generated Image: Midjourney
