The following is a guest post and opinion of Shibtoshi, Founder of SquidGrow.

Memecoins have created unprecedented chaos within the crypto industry. Most analysts see the chaos as a binary — some criticize memecoins as mere speculative assets, while others defend them for challenging low-float-high FDV VC-backed tokens.

But we need a new perspective. One that breaks the binary, accepting memecoins as speculative assets and a statement against VC tokens, leading to chaotic market scenarios. Acknowledging memecoins’ potential to breed chaos, it identifies chaos as the birthstone of a new utility-driven token economy.

Memecoin chaos is good for the industry

Memecoins led investor mindshare in 2024 and emerged as the most popular market narrative. Driven by relatable humor, collective mimetic desire, and virality, the memecoin market rose to $137 billion in December 2024.

Unlike high-value token launches of VC-backed coins denying fair entry to retail investors, memecoins offer an equitable playing field. No wonder more than 42% of investors were first-time buyers when US President Donald Trump and First Lady Melania Trump launched their memecoins.

At Consensys 2024, Riva Tez of LayerZero Labs explained that memecoins help crypto win the ‘narrative war’ due to their resonance with common people. Indeed, for memecoins, speculation is a vital use-case and essential feature of its functionality. 

But empty speculation can also be a bug. That’s what happened with memecoins, as its market cap dropped by 60% to around $53 billion in March 2025. Although external factors like geopolitical tensions and global trade wars negatively affected market activity, some intrinsic issues also contributed to memecoins’ collapse.

Malicious actors duped gullible retailers and extracted capital through scams like rug pulls, fake presales, pump-and-dump schemes, and phishing attacks. The collapse of the Libra token, endorsed by Argentine President Javier Milei, was the final nail in the coffin. It wiped out $4 billion of retail money and eroded investor confidence.

Everything was good with memecoins until it wasn’t. The market descended into complete chaos. But the memecoin chaos initiated a much-needed churning within the industry. Stakeholders realized memecoins wouldn’t succeed in the long term with their speculative potential and as an alternative to VC tokens.

The memecoin chaos serves as a wake-up call, albeit a delayed one. Chaotic markets led investors and token developers to realize the necessity of a utility-driven token economy for sustainable value generation. Without altering memecoins’ core thesis, stakeholders must use the chaos as an opportunity to plug utilities into the memecoin market.

Harnessing the potential of chaos

During the Memecoin Supercycle keynote speech at Token2049 Singapore, Murad said the token is the product. In a chaotic memecoin market, the token itself is not enough to drive value for investors. Instead, token developers must leverage the product and find new avenues to monetize them.

Memecoins are still isolated in a closed circular economy, with investors rotating between different tokens on trading apps to book profits. To stabilize the memecoin chaos, they must diversify into yield farming, staking, and liquid staking options to generate fresh market liquidity.

In other words, memecoins must break free from a gambler’s epiphany of creating generational wealth to become DeFi’s key product. Investors must also stop perceiving memecoins as chips in a casino and instead deploy them in financial markets.

The memecoin chaos demonstrates the need to expand from a product to a fully operational crypto ecosystem. The product must be a foundational stone to build utility-focused dapps for solving real-world problems.

For example, a memecoin project can launch a a decentralized application or SaaS tool to cater to the broader DeFi audience. The exchange can redirect the profits into the memecoin as buybacks, maintaining a steady capital flow to prevent price crashes.

Most of the memecoin chaos has resulted from rug pulls and pump-and-dump schemes, eroding investor trust in the asset class. Memecoin projects can restore confidence by building tools that solves pain points in the market such as liquidity lockers.

On a different note, the memecoin community holds the key to chaos. Highly paid project ambassadors, celebrity content creators, and influencers often care little about the project beyond their paychecks. They’ll bulk-purchase tokens and dump them at the slightest hint of a price crash or insider tip-offs.

Thus, memecoin chaos is an important reminder to focus on building an organic and well-knit community. This community will provide unwavering support to the memecoin ecosystem, bolster its utilities, and safeguard the token from abrupt price activity.

After the chaos subsides, meme tokens shouldn’t abandon their fun quotient to imitate serious financial instruments. Instead, the chaos is a clarion call to merge utility with humor to develop an inclusive and sustainable financial ecosystem.

In the Pulitzer-nominated book, ‘Chaos: Making a New Science,’ James Gleick wrote, “Chaos is a science of process rather than state, of becoming rather than being.” The memecoin chaos is also undergoing a scientific process of becoming a utility-driven meme economy from being a purely speculative asset with no intrinsic value.

For the crypto industry, the memecoin chaos is a moment of reckoning. From here on, meme tokens will usher in a new era of on-chain finance.

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