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Low market value new meme coins attracted considerable attention over the past month, with some seeing massive gains. However, a significant portion of these meme coins, which were raced to be acquired early from DeFi platforms, also plummeted to zero. Now, meme coins in the Avalanche ecosystem are causing new debates.
Avalanche and Meme Coins
The Avalanche Foundation announced the “Culture Catalyst” initiative to finance the purchase of memecoins. In the Solana network, BONK achieved great success last year and aimed to compensate for some of the investors’ losses, also boosting SOL Coin growth and creating excitement in the community. Now, the Avalanche team is envisioning a similar scenario for themselves.
A $100 million investment fund was initially focused on NFTs. The announcement on December 29 indicated that a portion of this would be shifted to meme coins. The Avalanche community and some market analysts reacted positively to this move, but memecoins still cause controversy in the crypto industry.
Ethereum’s co-founder Vitalik Buterin specifically described those who snatch up low market value meme coins as “gamblers.” Indeed, the price of these tokens, which have no inherent value, is determined only by the demand of later investors, with early entrants profiting by emptying their wallets. Those who come later are left with worthless tokens.
Are Meme Coins a Form of Gambling?
Considering the absurd excitement over low market value meme coins, it wouldn’t be wrong to see it as a form of gambling. This trading method, where the last holder is left with a burst bubble and the price goes to zero when demand does not increase, is quite risky.
Carlos Mercado, a data scientist at analysis firm Flipside Crypto, says the following about this;
“Memes give people a chance to be part of an ‘in-group.’ Whether it’s being early for a memecoin or being an active member of the WallStreetBets subreddit (the Reddit group that fueled the GameStop frenzy), memes create a sense of belonging. While this intersects with people’s personal financial situations and creates risk, we shouldn’t be surprised to see people moving further along the risk curve due to post-2008, post-COVID, the gig economy, and widespread inflation.”
Mercado believes that despite potential risk factors, memecoins could provide long-term additional benefits. Buterin wrote the following;
“Degenerate gamblers in moderate doses can be good, and I’ve spoken with many people who were motivated to join crypto for money at events but stayed for the ideals. However, when they become the largest group using the network on a large scale, it changes public perception and the internal culture of the crypto space, leading to most of the other negatives we’ve seen over the past few years.”
Bitcoin maximalist Samson Mow says all this is contrary to the spirit of Bitcoin.
Following the Avalanche announcement, Coq Inu (COQ), Shibavax (SHIBX), and Husky Avax (HUSKY) experienced significant movements, but as the debate over meme coins continues, investors need to be aware of the risks involved.
