Memecoins are ded — However Solana ‘100x higher’ regardless of income plunge

5 years after the primary Solana block was generated, the community is coming into a brand new interval of concern and uncertainty because the once-lucrative memecoin-casino begins to wind down.

To be honest, the layer 1 blockchain has overcome greater obstacles earlier than, staging an unbelievable comeback from simply $8 within the aftermath of the 2022 FTX collapse to a brand new all-time excessive above $294 in January this yr.

However the sudden evaporation of the memecoin market may pose an enormous problem over the approaching months — the place are the exercise and charges going to return from subsequent?

After peaking in January, memecoin exercise has nose-dived after a string of scandals and movie star rug pulls, together with the dawning realization that memes will be each bit as extractive as any VC coin.  

Greater than a decade on from the launch of Dogecoin, it could take a courageous soul to foretell the tip of memecoins. However have memecoins peaked? And in that case, what are the implications for Solana?

Solana’s memecoin market crash: Income and quantity

The most recent statistics look grim. Solana community income has plunged by 93% for the reason that January peak, with transaction charges down 83% up to now month alone. Decentralized change volumes fell from a each day peak of $35.9 billion on Jan. 21 to simply $979.5 million on March 15, in response to Artemis — the bottom figures recorded since October final yr. Pump.enjoyable’s each day quantity is down by 70%.

Actively each day addresses have greater than halved from 6.4 million in November to 2.8 million in March, in response to Token Terminal.

And following the failure of inflation-busting proposal SIM-228 final week, the community continues to be being backed to the tune of $228 million every month, whereas taking simply $39.25M in charges up to now 30 days. Figures compiled by Helius final yr counsel that greater than half of all validators can be unprofitable with out subsidies.

Including to the gloom, 11.2 million Solana (SOL) was unlocked on March 1, hitting the worth of SOL, which is now down 58% from the height.

“At this time, it’s not unfair to say Solana is a ‘memecoin economic system,’” Messari analyst Sunny Shi stated in a Feb. 26 thread highlighting the problem. “And meaning a deep contraction in memecoin volumes may trigger a cascade of income declines.”

We’ve handed ‘peak memecoin’ this cycle

Former Ethereum-maxi turned Solana-memecoin enjoyer Kain Warwick from Infinex believes we in all probability have handed peak memecoin, at the very least for this stage of the cycle.

“I’m not able to declare memecoins lifeless but,” he says however provides: “They’re loads deader than they was once. So I’m keen to say that the probability of us returning to an surroundings the place 90% of the eye is on memecoins within the quick time period feels unlikely to me.”

Helius founder and Solana maximalist Mert Mumtaz additionally thinks we might have seen the zenith of memecoin recognition however factors out the present lull is linked to macro situations which have hammered danger belongings extra usually.

“Memecoin decline, in is considerably non permanent in that each one danger ‘belongings’ (I perceive calling memecoins an asset is a stretch) are declining globally, but in addition BTC, ETH, SOL are all down massively,” he says.

“I feel they’ll come again although I doubt it will likely be to the identical extent. One key theme throughout all crypto cycles is that they’ve all had large speculative components (ICOs, NFTs, memes) — so it’d be a really sturdy declare to imagine they by no means come again.”

Memecoins have performed an enormous half in Solana’s success to this point, accounting for as much as 70% of Solana DEX volumes in February. Memecoin-dependent Telegram bots, launchpads and buying and selling apps generated roughly 60% of Solana’s $3.3 billion app income per yr.

Interdependent income for memecoin buying and selling apps

Amplifying the results is the truth that a lot of massive memecoin buying and selling apps depend on one another for income. A single memecoin commerce can create income for 5 distinct apps, as Messari exhibits under.

Matthew Nay, a Messari analysis analyst who collates Solana’s quarterly report, explains that this inter-dependency is as a result of Pump.enjoyable takes the charges initially from a memecoin’s launch, however after a token graduates and launches on Raydium, the automated market maker then will get the charges. 

However as many customers favor buying and selling on Jupiter, that aggregator will get a minimize of these charges, as does Raydium. Telegram bot BonkBot, in the meantime, takes its personal buying and selling charges whereas additionally offering charges for Jupiter and Raydium downstream, and the Photon buying and selling bot sends charges down the river to everybody.

“One memecoin transaction on Photon undoubtedly trickles down, and a few of that income can also be included to the Jitos, the Raydiums, the Jupiters,” Nay says.

Memecoins on Solana: From Bonk to $40 billion each day quantity

Nay traces the beginnings of Solana’s memecoin frenzy to the 900% value enhance within the Bonk memecoin in November 2023.

This, in flip, noticed customers scrambling to pay nearly any value to get their palms on the unloved Solana Saga cellphone in December 2023, which got here with a 30 million Bonk airdrop. Shortly after, Dogwifhat surged 5,000% and the memecoin on line casino was open for enterprise in earnest.

Solana was a pure house for decrease worth hypothesis, due to its sub-cent to five-cent charges and excessive TPS in contrast to some {dollars} to many {dollars} for Ethereum transactions.

“I feel this is able to have occurred wherever, it simply occurred on the most cost effective, quickest chain,” Nay says. “It was simply so costly to launch a token again on Ethereum mainnet again in these days and that’s why everybody sort of went over to Solana.”

“You possibly can go launch a token on Pump.enjoyable for pennies now. And in order that’s why we’ve seen the memecoin explosion occur.”

The memecoin frenzy was spurred on by the actual fact you may launch a coin on Pump.enjoyable with a humorous identify for $2 and watch its market cap soar to $74.9 million market cap like Fwog (FWOG) did.

By the ultimate quarter of 2024, Jito’s charges had grown 12,405% in comparison with This autumn a yr earlier, whereas Jupiter and Raydium’s charges surged by greater than 2,000% every.

Nearly 80,000 new tokens have been being created per day by the tip of January, and Solana’s DEX market share briefly overtook that of your complete Ethereum ecosystem.

Then the wheels fell off.

Memecoin downturn: Superstar rug pulls and the Libra fiasco

Since January, memecoins have declined in recognition nearly as quick as they grew, as customers began to internalize the actual fact the deck actually was stacked in opposition to them. 

The possibility of constructing $10,000 on Pump.enjoyable (one in 243) is roughly as seemingly as giving delivery to twins or being born with an additional finger.

Sentiment first started to bitter in November amid Pump.enjoyable’s livestream scandal, the place racial slurs, sexual abuse, threats of violence and self-harm have been common options in wicked stunts broadcast in a determined try for consideration to assist pump tokens. 

January’s launch of the pre-inauguration TRUMP memecoin, with 80% of the provision locked for insiders, was initially seen as bullish — in any case, the incoming president had simply launched a cryptocurrency! However the extractive launch of MELANIA to money in on the hype two days later robbed TRUMP of liquidity and the temper darkened. 

Ethereum co-founder Joe Lubin has seen comparable cycles play out with ICOs, DeFi Summer season and the NFT growth.

“Every innovation begins as a genuinely useful new assemble,” he tells Journal. “Then weaker copycats observe. Then programmatic high-scale exploitation follows, which finally causes injury and ache to the later comers.”

The ultimate nail within the coffin was Argentine President Javier Milei’s ill-advised promotion of the Libra memecoin. Insiders made a small fortune from its explosion to $4.5 billion in worth earlier than the worth crashed by 98%.

“I don’t assume it was very totally different from a HawkTuah coin or a Trump coin launch,” says Nay. “However I feel it was similar to lastly everybody determined that ‘OK, we as a market, we’re going to cease rewarding these dangerous actors.’”

“When memecoins began turning into similar to the low float, excessive FDV (Absolutely Diluted Worth), VC cash … this was sort of like the ultimate straw. We turned the factor we have been making an attempt to cease.”

Analysts from funding analysis agency Bernstein labeled the Libra launch a “fiasco” and predicted in late February that market liquidity will transfer away from “ineffective memecoins” and again to DeFi, gaming and NFTs.

It’s not utterly lifeless, although. 

Hopefuls are nonetheless churning out greater than 21,000 new cash on Pump.enjoyable every day, however solely 187 are managing to graduate, with the typical market cap of all cash graduating a paltry $37,316, in response to Dune.

Solana is ‘100 instances higher’ due to memecoins

Whereas memecoin exercise could be on the wane, the massive volumes they delivered to the chain have battle-hardened Solana’s infrastructure, says Warwick.

“One of many cool issues concerning the memecoin hypothesis is it drove an enormous funding in infrastructure on Solana,” says Warwick. “Solana as a sequence is 100 instances higher than it was pre-memecoin.”

Nay says the Trump launch is an effective instance, as Solana was capable of deal with nearly $40 billion in quantity in a day with out happening (regardless of some wobbles).

“That’s 10% of what the Nasdaq does in a 24-hour common buying and selling interval. So that you sort of see that the chain and the infrastructure benefited from the insane quantity that these memecoins generated,” he says. 

With the deliberate Firedancer improve (in improvement since 2022) on account of carry even increased TPS, Nay says the community’s long-term objective is coming to fruition.

“That objective of making a decentralized Nasdaq is in view, and that thesis and that narrative is loads simpler to elucidate now after we say, ‘yeah, we’ve dealt with $40 billion in quantity and are a 10x away from what the Nasdaq does.”

He stated Solana can also be nicely positioned to learn from the regulatory modifications popping out of the SEC and CFTC, and the brand new pro-crypto laws that’s wending its approach by Congress and the Senate.

“The memecoin mania sort of pushed the infrastructure and made it stronger, and now there’s sufficient block house for actual, related initiatives to return out of this,” he says.

“The regulation is seeking to reward good actors which are offering worth to the ecosystem.”

Way forward for Solana: DeFi, DePIN and gaming

On the subject of which sector may change memecoin hypothesis on Solana, opinion is split, however a number of key themes emerge.

“It might be DePIN. It might be DeFi. It might be AI once more. It might be any variety of issues. It’s very arduous to choose that from the surface,” says Warwick.

However in case you pressure Warwick to decide on, the Synthetix founder cites the one closest to his coronary heart.

“DeFi is simply an apparent one. Like DeFi is the factor that’s going to interrupt out and cross the chasm.”

Warwick provides that whereas memecoins have been by no means going to go mainstream, one thing like Aave — a decentralized lending and borrowing protocol — may get extensive adoption.

Mumtaz largely agrees.

“I feel DeFi goes to be a lot greater going ahead with the community getting rather more environment friendly, quicker, and doubling blockspace,” Mumtaz says.

“I imagine funds, DePIN, and SocialFi may even be sturdy going ahead.”

That stated, DeFi on Solana is at the moment hampered by the excessive inflation price and would have been extra enticing if inflation-busting proposal 228 had handed. Multicoin Capital’s Tushar Jain appeared on Unchained this week and defined that the yield from staking SOL “units a excessive hurdle price for individuals to take part in DeFi.”

He stated that it’s not rational to make an funding that “returns you lower than the risk-free price … And in an ecosystem like Solana, the return to staking is the risk-free price.”

Jain used the hypothetical instance of an AMM providing liquidity suppliers a 5% return. There’s no incentive to tackle that danger if customers can get the identical return risk-free by staking.

Ever puzzled why charges on Solana DeFi are often low? ⬇️ The ecosystem could be combating an uphill battle… ⚔️

With staking rewards setting a excessive bar for returns, @TusharJain_ argues a decrease inflation price would’ve made DeFi extra enticing on SOL. pic.twitter.com/dqPUOAlccA

— Laura Shin (@laurashin) March 17, 2025

Decentralized Bodily Infrastructure on Solana

Nay predicts massive issues for DePIN on Solana and highlights the decentralized wi-fi mission Helium, which he says is “a unbelievable chief in that house,” together with the mapping mission HiveMapper.

“These are nice initiatives which are being constructed onchain and are a fantastic use case of crypto. I feel we additionally see it with initiatives like Parcl, the place I can go and speculate on the greenback worth of 1 sq. foot in Atlanta, Georgia, my hometown, or rental costs in New York Metropolis the place I’m at the moment,” says Nay.

He says the mission is an effective instance of economic inclusion, enabling people to “get publicity to actual property, although I don’t come up with the money for to go purchase an precise property.”

One other increase for the community may come when the 140,000 preorders of the brand new Solana Seeker cellphone are delivered mid-year, and he additionally believes gaming may actually take off this cycle on Solana. 

“We’re seeing innovation and the infrastructure behind gaming to make onchain video games really viable and make sense from a tokenomics worth in driving income to those platforms. And so I feel we may see these actually exploding.”

And Nay additionally believes it’s attainable {that a} new and improved model of memecoins may acquire recognition, for instance, a creator coin supporting a brand new Mr. Beast-style influencer, giving buyers a share of their future YouTube earnings. So whereas we might have handed peak memecoin, he says, it’s not the tip of the street.

“I can’t consider a single individual extra well-known than President Trump launching a coin that, for one single token, will ever get that quantity of hype and craziness across the launch,” he says.

“However from an combination strategy, we would see a much bigger combination in the event that they take this subsequent evolution, and never simply be a random image of an animal, and have some utility.”