Can Degen's launch of L3 break the Meme Chain ecosystem's single dilemma?

Author: hamster Source: substack

Degen emerged from the Farcaster community. In January 2024, the Degen token was first launched on the Base chain, and with its unique incentive mechanism and meme culture, it quickly became one of the most popular memecoins in the Base ecosystem. Subsequently, DAO infrastructure service provider Syndicate announced that it would use the technology of Arbitrum Orbit and AnyTrust to use Degen as the system's native token and launch a Base-based Layer3, namely Degen Chain. As soon as the news was announced, the price of DEGEN soared, with an increase of 1,400 times in the past three months.

The Rise of Memecoin

Memecoins, cryptocurrencies inspired by internet memes, jokes, or viral trends, gained popularity with the creation of Dogecoin in 2013. Dogecoin, based on the dog meme "Doge", attracted widespread attention and love. Although initially used as a symbol of humor and entertainment, Dogecoin gradually demonstrated deeper value and uses, such as applications in online transactions, rewards, and charitable donations. Dogecoin's popularity and diverse uses highlight that Memecoin has transcended its simple entertainment attributes and become a force to be reckoned with in the world of cryptocurrency.

The rise of Memecoins is mainly due to their community-based nature, interesting content, and friendly entry barriers for beginner investors.After the success of Dogecoin, many other Memecoins emerged in the market, which borrowed from various internet trends and jokes. These include currencies based on different animal memes, pop culture references, and more abstract concepts. These memecoins are often listed at very low starting prices and have the potential to quickly appreciate due to social media discussion and community participation. Their popularity is also driven by cryptocurrency trends, such as the rise of DeFi and NFTs, which have opened up new avenues for innovative uses of memecoins.

However, the very nature of memecoins also brings considerable risks. Because their value can fluctuate wildly, many times price changes are based more on social media trends than intrinsic value. Many memecoins lack solid technical support or clear application scenarios, turning them into highly speculative assets. In addition, some "pump and dump" scams have also emerged in this field, where collective action is used to artificially increase the value of a memecoin, and then early holders sell at the high price, causing losses to later holders. The anonymous nature of the memecoin project further increases the difficulty of assessing its legitimacy and continued viability.

To sum up, while Memecoins offer unique opportunities for community building and participation in the crypto space, they also come with high risks. Investors should be cautious when entering the Memecoins market, do adequate research, and recognize the inherent speculative nature of these assets.

The origin and development of Degen and its L3

The emergence and development of Degen needs to start with Farcaster. As a decentralized social application, Farcaster has attracted attention in the cryptocurrency community for its unique social interaction method and emphasis on privacy protection. On Farcaster, users can share, discuss and interact, while using blockchain technology to ensure the authenticity and immutability of content.

In the Farcaster community, the /degen channel, as one of the earliest channels, was launched by the Warpcast team and quickly became a popular place to discuss cryptocurrency prices and share investment experiences. In January 2024, with the launch of Degen on the Base chain and through airdrops to community members in the /degen channel, Degen took the opportunity to showcase its unique incentive mechanism and meme culture, promoting a new way of social interaction within the community. These include innovative reward and airdrop mechanisms that encourage community members to obtain Degen by participating and providing high-quality content, which not only stimulates the creation of high-quality content within the community, but also lays a solid foundation for the initial circulation and value growth of Degen.

DEGEN token economics are designed to support network operations and encourage community participation through a carefully planned economic model. The total supply is approximately 37 billion DEGEN tokens, of which 70% are allocated to the community to promote broad participation, 15% are allocated to liquidity pools to enhance trading fluency and market value stability, and another 15% are used for development teams, early investors, and continuous improvements to the ecosystem.

Subsequently, Degen significantly expanded its application scenarios and ecosystem by completing an angel round of financing of 490.5 ETH and collaborating with multiple projects on the Base chain. These cooperative projects not only adopted Degen as a medium of exchange, but also further affirmed its feasibility and value as a native token.

Most importantly, Degen's development team worked with Syndicate to launch the Base chain-based L3 - Degen Chain. This move provides strong technical support and scalability for Degen, while pushing its market valuation to a new high, realizing the transformation from a community memecoin to a crypto asset with practical application value and market competitiveness. Degen Chain was established by the Degen community, built with Arbitrum Orbit, using the Base chain as the settlement layer, and using AnyTrust to support data availability. Its native gas token is DEGEN, becoming one of the first community tokens with its own L3.

The launch of Degen Chain not only supports new experiments in payment, gaming, and more, but also provides free gas to developers on Degen Chain through developer tools provided by Syndicate, such as Transaction Cloud APIs, thereby promoting the development of innovative experiences and application mechanisms between community tokens and L3 technologies. On this platform, developers quickly launched multiple applications including DegenSwap, a major decentralized trading platform on Degen Chain that attracted many memecoin launches. In just four days since the launch of the platform, it has achieved nearly $100 million in trading volume, completed more than 272,000 unique transactions, and hosted more than 7,500 contracts and 2,300 tokens. All this shows the great potential of Degen Chain in promoting blockchain innovation and accelerating the application of community tokens.

Meme chain representatives: Dogecoin and Shiba Inu on-chain development

Other memecoins that have their own public chains include Doge and Shib.

Unlike Degen, Dogecoin was officially launched on December 6, 2013, as a lighthearted and humorous version of existing cryptocurrency technology.Dogecoin's protocol is based on Luckycoin and Litecoin, both of which use Scrypt as part of their PoW algorithm. This means that since its launch, Dogecoin has had its own blockchain, allowing it to operate independently of other major cryptocurrencies.

Shiba Inu was created in August 2020 by an anonymous person or team "Ryoshi". It is inspired by the Japanese Shiba Inu, which is also the mascot of Dogecoin, another cryptocurrency based on memes. Shiba Inu was initially positioned as a potential "Dogecoin competitor". In May 2021, Vitalik Buterin donated more than 50 trillion SHIB worth more than $1 billion to the Indian COVID-19 Relief Fund.

Shibarium is the long-awaited Layer2 solution of the Shiba Inu community, which aims to transform Shiba Inu from a simple memecoin to a complete blockchain ecosystem. By adopting a new consensus mechanism "Proof-of-Participation" and supporting EVM compatibility, it enables efficient and cost-effective transactions. This innovative framework facilitates the seamless migration of Shib tokens and the development of decentralized applications, providing a stage for the expansion of applications within the Shiba Inu ecosystem.

Looking back at the development history of the public chains of the two, compared with Degen, although other meme coins such as Dogecoin and Shiba Inu have achieved remarkable success in the market, their technical development and ecological construction are relatively conservative, and the ecology has no outstanding performance. The value and popularity of these two Meme Chains rely more on community support and cultural phenomena than on technological innovation or ecosystem expansion.

Conclusion

The Degen case marks the transformation of memecoin from a simple cultural phenomenon to an irresistible force in the cryptocurrency ecosystem, demonstrating the long-term value and market potential of the new generation of memecoin. It and traditional memecoins such as Dogecoin and Shiba Inu have enriched the diversity of the crypto market. However, whether Degen can break the single ecological situation of the meme chain and open up a rich application ecology still needs time to verify.