Pranav Kanade, Portfolio Manager at VanEck, highlighted that memecoins have four key aspects that all teams building cryptocurrencies should emulate.
Kanade made the comments on social media in response to Murad Makhmudov's Token2049 panel discussion on the transition from Bitcoin Maxi to meme coins. The panel's paper revolved around the proposal for a “memecoin supercycle,” which quickly spread among the crypto community.
Kanade said memecoins have a clear fit in the retail and product markets, primarily because of their simplicity. He added:
“Many teams over-engineer their tokens and don’t realize that time + capital + attention = scarcity.”
He emphasized that more than 600,000 tokens will be issued in 2023, and competition for these vital resources is intensifying. He added that crypto projects need to adapt their strategies to simple token designs, have a clear vision for their products, and demonstrate how the execution of that vision will create wealth for token holders.
Concerns about token supply
Kanade also emphasized the importance of reducing the amount of “locked” tokens allocated to early investors, but also discouraged traders when considering long-term allocations due to the fear of fire sales when they are unlocked. This is a continuing concern among people.
Projects with a large number of locked tokens often find it difficult to grow as unlocks occur, and early adopters release their holdings for profit. Most tokens launched before 2024 use this model, called “low float,” with a high fully diluted valuation.
Meme coins take a completely opposite approach, with the entire circulating supply typically being unlocked from the start. This supply model, known as “high float” with a fully diluted low valuation, was one of the key points Makhmudov highlighted during a panel discussion in support of meme coins.
Kanade said projects considering token launches should reconsider their approach and adopt a “high-float” model, even if the number of tokens locked up for early adopters and investors is small. Suggested.
He also suggested taking a “hyper-transparent” approach, such as clarifying the cost basis for token purchases by VC funds. Such information and data is typically difficult to find and not publicly available.
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