The “Culture Catalyst” program of the Avalanche Foundation is expanding to include funding for memecoin purchases.Prioritizing nonfungible tokens (NFTs) at first, the $100 million investment fund said on December 29 that at least a portion of its allocation would go toward financing memecoin acquisitions.Although the move has been well received by the Avalanche community and some market analysts, memecoiners are still stigmatized in the cryptocurrency space. Ethereum co-founder Vitalik Buterin called memecoiners “degen gamblers” in a recent blog post.
However, that hasn’t really lessened the fervor of individuals who are already heavily involved in the memecoin area.One analyst who is enthusiastic about the move is Emperor Osmo, a crypto expert and supporter of Avalanche.Osmo gave Cointelegraph an explanation of why investing in memecoins is a wise move that will eventually support Avalanche’s expansion.
“I equate memecoins to the power of social movements, and you cannot have a blockchain reach massive scale without a powerful social movement behind it,” said Osmo.
The most successful blockchain ecosystems, according to Osmo, who goes by the moniker “Lead Llama” at Osmosis Labs—after all, this is crypto—have engaging stories and “communities with a common purpose.”Osmo cites the blockchains of Bitcoin, Ethereum, and XRP as instances of “tight-knit communities” that have also discovered the “simplest product market fit.”According to Osmo, Avalanche’s cultural catalyst can provide the same effects by strengthening the culture.
Data scientist Carlos Mercado of the analysis company Flipside Crypto makes a similar argument to Osmo, but he emphasizes that memecoins are intrinsically dangerous investments.
“Memes provide people a chance to be in an ‘in-group,’” Mercado told Cointelegraph. “Whether it be early to a memecoin or an active member of the WallStreetBets subreddit [the Reddit group that fueled GameStop mania], memes create a sense of belonging. While intersecting this with people’s personal finances creates risk, we shouldn’t be surprised that post-2008, post COVID, gig economy and widespread inflation, people are going further out on the risk curve.”
Mercado sees more long-term advantages to memecoins despite the possible danger issues.Mercado believes that trading memes is the ideal starting point for beginners, giving them access to the larger cryptocurrency market.
“The positive case for memes is that, at least in crypto, memes can be educational. Instead of relying on only price action, providing liquidity can earn swap fees, lending on markets like Aave can earn borrowing fees. There’s more optionality in crypto for using these coins compared to stocks, where payment for order flows and insider trading is rampant,” said Mercado.
Mercado continued, saying, “The memes may go, but the knowledge doesn’t,” despite the fact that meme culture is a fickle mistress with inherent risk.Not every cryptocurrency enthusiast is as enthusiastic about memecoin culture as some are.Buterin recently bemoaned in a blog article that growing Ethereum transaction prices had driven off the majority of users, leaving behind “degens” and other groups he considers to be mainly undesirable.