VanEck portfolio manager Pranav Kanade highlighted that memecoins have four key aspects that all teams building in crypto should mimic.
Kanade made the comments on social media in response to the Token2049 panel by Murad Mahmudov on his pivot to memecoins from being a Bitcoin maxi. The panel's thesis revolved around proposing a “memecoin supercycle” which made it go viral among the crypto community.
Kanade said that memecoins have a clear product-market fit with retail, and the first reason behind it is their simplicity. He added:
“Many teams over-engineer their token, failing to realize: Time + capital + attention = scarce”
He highlighted that over 600,000 tokens were launched in 2023, which has increased the competition for these cardinal resources. He added that crypto projects must adapt their strategy to a simple token design, have a clear vision of their product, and show how executing said vision brings wealth to token holders.
Token supply concerns
Kanade also emphasized the importance of reducing the amount of “locked” tokens allocated to early investors, which has become a going concern among traders when considering long-term allocations due to fears of dumps when they are unlocked.
Projects with a large number of locked tokens often struggle with growth as unlocks occur, and early adopters offload their holdings to realize profits. Most of the tokens launched before 2024 use this model, which is called “low float” with a high fully diluted valuation.
Memecoins take a completely opposite approach and usually have their entire circulating supply unlocked from the get-go. This supply model is known as “high float” with a low, fully diluted valuation and was one of the key points Mahmudov highlighted during his panel in support of memecoins.
Kanade suggested that projects looking to launch tokens should rethink their approach and adopt the “high float” model, albeit with a small number of tokens locked for early adopters and investors.
Additionally, he suggested taking a “hyper-transparency” approach, which involves revealing the cost basis of token purchases by VC funds. Such information and data are usually hard to find and not made public.