Speculation and consumption: Re-examining MEME culture

Lately I have been posting most of my articles on Zee Prime’s writing section and have not been able to meet my goal of posting here every month. Going forward, I hope to post once every two months, covering a variety of topics, not just cryptocurrencies.

During the past bull market, memecoins, especially Dogecoin, became a real category in the cryptocurrency field. However, not only memecoins, but in fact any successful token has a "memetic premium". I even think that any product tied to a brand contains a "memetic premium".

The “meme premium” is a phenomenon where people assign a higher monetary value to an idea because:

1. Seeing that others also value this idea

2. I hope more people will pay attention to this idea.

The “meme premium” is essentially a mimetic Keynesian beauty contest that never ends. It is pure speculation that existed long before humans understood what financial speculation meant. As Plato, paraphrased by Durant, said:

“People quickly tire of what they have and desire what they don’t have, and they rarely want anything that doesn’t belong to someone else.”

In a world dominated by social media, speculation has become a novel way of consumption. Serious issues have become entertainment, and entertainment has become serious issues. We have polluted entertainment with politics, and turned war or inflation into a show. Cryptocurrency caters to this cultural shift.

In the last cycle, although the "decentralized financial mania" (degening) was portrayed as the dark and fringe side of cryptocurrencies, it drove the development of the entire cycle. JPEG images, meme coins and high-yield scams (yield ponzi) became entertainment projects. Even the collapse and scapegoating events of Three Arrows Capital, Do Kwon and SBF were widely circulated and consumed, and even made people feel a kind of pleasure.

While the most “serious” crypto investors are still discussing crypto infrastructure SaaS, the “decentralized finance mania” side is growing and developing. I think we are on the verge of witnessing the most spectacular “decentralized finance mania” in the history of the crypto space. We are doubling down on the craziness, whether it is memecoins, social finance (SocialFi), game finance (GameFi) or restaking.

In the last cycle, the "meme premium" was more implicit, and in this cycle, it will become completely explicit. Cryptocurrency will be more "decentralized finance mania" than ever before. This may mean that you don't have to buy Dogecoin to participate in the "meme" game, you can buy any token you want, because the truth has been revealed-every token is essentially a meme coin.

Analysis of (3,3)

I have previously argued that Coca-Cola's stock has little fundamentals other than its brand and subsequent customer demand. I proposed that trading in cryptocurrencies is a form of consumption, just like drinking a sugary beverage. Coca-Cola's stock is just a sticky Lollapalooza (RIP Charlie Munger).

Munger is not a big fan of cryptocurrencies, calling them “crypto garbage” and “crypto scams.” While his endless wisdom will be greatly missed, his outdated views on things that can be bought and sold will be less so.

In any case, I believe that if Munger were 20 or 30 years old now, his "Charlie Munger's Ghetto Almanac" would definitely include a chapter on the "meme premium."

I'm just suggesting that we use these experimental structures, worth trillions of dollars today, to correct some outdated wisdom. They may be small, and their individual success rates uncertain, but they are growing. Rather than rejecting them outright, cynics should try to understand them better. After all, technology is the basis for society to happen, not the other way around.

Let’s work on understanding cryptocurrency as a consumer good, rather than opposing how it is consumed. Capitalism is driven by markets, and markets are driven by consumption.

Speculation is also a form of consumption. Every brand in the world relies on the “meme premium.” The “(3,3) narrative” that dominated OlympusDAO in 2021 clearly expressed the “meme premium.”

This is where we are on the crypto adoption curve right now: the transition from “memes for fun” to “memes with utility” (i.e. SocialFi). I hope by this point we can all agree that all of our tokens rely heavily on a “meme premium” and there’s nothing wrong with that.

During this cycle, memes will become directly monetizable and the need to stake memecoins will decrease. Pricing memes as a coordination tool is essentially a social game. I wouldn't be surprised to see silly memecoin values ​​shift to smaller coordination experiments with "infinite" upside.

The equivalent of our “Summer of DeFi” might be a “Summer of Memes” wrapped in a SocialFi narrative (Blast SEASON currently looks like a Schelling point). Instead of betting on a single, outdated meme (Dogecoin) and its slew of imitators, people might play a variety of mini-games that have a “purpose”.

After all, money is a coordination game and price is a signal. OlympusDAO’s “(3,3)” is a great example of a meme that combines GameFi, SocialFi, and a serious attempt at practicality. It’s more like a true meme coin than Dogecoin. Because if you treat a meme coin as a mere meme, the magic brought by the public’s “IQ offline” is doomed to be short-lived.

Learning how to price memes has always been the alchemy of finance. Memes in the age of market wizards are different. From the invention of derivatives to meme coins, finance is evolving as markets spread to the borderless digital world.

To fully harness the power of crypto means understanding reflexivity, not in the form of prices going up or down, but in the form of prices shifting fundamentals. The world can shift as the market shifts. The memetic premium is potential energy that can be converted into kinetic energy.

The late 2020s and 2030s could be a golden age for meme-driven crypto hedge funds that embrace the inherent reflexivity of digital assets. Cryptocurrency may have been in denial for a while, but only if we accept its true nature can we maximize its true value.