Cardano (ADA) founder Charles Hoskinson has shared his candid views on memecoins, warning that they are similar to fleeting celebrities, experiencing short bursts of popularity before eventually burning out.
In a recent interview on the “Wolf of All Streets” YouTube channel, Hoskinson explained the inherent issues with memecoins and why he believes most of them will fail.
The Rise and Fall of Temporary Popularity
Hoskinson compares memecoins to celebrities who enjoy 15 minutes of fame but struggle to maintain long-term relevance. He emphasized that the key to survival for this coins lies in their ability to evolve and develop sustainable ecosystems. According to Hoskinson, without proper use cases, communities, and user bases, meme coins are bound for failure.
“So a memecoin is just like the ascendancy of a celebrity that has 15 minutes of fame” he stated. “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.”
Building a Community and Ecosystem
For memecoins to survive, they must pivot from speculative hype to long-term value creation. According to Hoskinson, success in this space will depend on the ability to build a dedicated community and provide real-world use cases. Memecoins need to establish a reason for people to engage and invest beyond just the price movements.
As the crypto market continues to mature, Hoskinson warns that the excessive focus on quick profits through memecoins could undermine the potential for widespread adoption and long-term growth in the industry. Only the memecoins that evolve into well-rounded ecosystems will stand a chance of surviving the volatility and “dumpening” that typically plagues the space.
Insider Profit at the Expense of the Community
Hoskinson further discussed the issue of “dumpening,” where tokens are launched primarily for the benefit of insiders. In this model, insiders pump the price to attract attention and then dump the tokens for profit, leaving retail investors with little to no value. This practice is detrimental to both the market and the community, according to the Cardano founder.
“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,” Hoskinson explained. “And it’s really hard because, almost always, the distributions of memecoins are built for insider dump.”
The Detrimental Effect on the Crypto Industry
Hoskinson believes that this coins are not contributing to the growth of the cryptocurrency ecosystem but are instead taking away value from participants. By concentrating wealth in the hands of a few insiders, memecoins are failing to add any lasting value to the broader market.
“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” he said. “So basically, you’re not adding water to the tub, you’re losing water over time… It’s net-net neutral or negative.”
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/charles-hoskinson-on-memecoins-short-lived-fame-and-the-need-for-evolution/