The Breakdown - Are Memecoins Silly Fun or an Existential Grift?

Episode Date: June 19, 2023

On Long Reads Sunday, NLW reads The Memecoin Grift and How It Threatens Ethereum Culture by Dr. Paul J. Dylan-Ennis Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribeto the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, June 18th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Hello friends, welcome back to The Breakdown. Earlier this week, I tweeted something that a lot of people are feeling, but not a lot of people are necessarily saying.

That tweet read, behind the scenes, the crypto industry is a bleeping catastrophe right now. Layoffs everywhere, budget reductions, delayed plans everywhere. We will overcome it, but the sheer magnitude of the damage done by bad actors and the subsequent overcompensatory regulators is unreal. Now, what prompted this was seeing yet another private telegram chat, or I think this one was a Twitter group chat, where some really talented person had been laid off by their crypto company, quietly, of course, because they didn't want to make a big set of news about more layoffs, hoping to find some new opportunities for that person. I see this non-stop, absolutely non-stop.

And there is so much blame to go around, so much to be reasonably frustrated about. Today's Long Read Sunday is about one of those things to be frustrated about. It's by Dr. Paul Dylan Enis and is called the meme coin grift and how it threatens Ethereum culture. Paul writes, if Ethereum is to grow, it'll have to mature beyond the antics of those shilling the token of the moment. The ceaseless and cynical pumping of tokens devoid of value is an existential threat to Ethereum's reputation.

This meme coin culture is populated by the most chronically clout-addled people. in the crypto industry, who exist in the influencer pit of despair. This is a deep, dark hole where grifter influencers clamber over one another to rob the nearest retail tourist. You can locate the influencer pit in the form of a Twitter space. But not any Twitter space, more like Twitter space is experienced as a debilitating K-hole in a Prague dive bar. And you've lost your wallet. It's a fundamental paradox that since anyone can use the Ethereum blockchain, anyone can use the Ethereum blockchain. If Ethereum were a local park, the meme coiners would be an unruly gang of teenagers listening to music on some godforsaken Bluetooth speakers.

Imagine you're working on agent layer or zero-knowledge proofs or you're an arbitram delegate. And while you're valiantly working away on something useful, you can't help but grit your teeth to hear some brain-dead dolt just made a cool million by tweeting. Meme coins will always be a part of an open-source network like Ethereum. But for cryptocurrency to be widely adopted, the industry needs to find a way to collectively addressed its worst forms of valueless profit-seeking. There is something hopeless about how little is offered by the meme coin grift. When Pepe was created, the team outright admitted that the project was pure memeology, propelled along by our favorite rehabilitated frog. There is, at this stage in the

industry cycle, something quite empty about returning to the meme well, eking out a living as bottom feeders on some-on-team's LARP. It's mindless algorithmic churn, like we invented the wheel but only used it to go in circles. And those spaces, my word, meme coin spaces seem to be required by law to have the most obnoxiously loud host for no apparent reason. At least three of the speakers sporting equally terrible NFT investments as their PFPs will admit to several misdemeanors over the course of an hour. At least 75% of the audience has bought something from Supreme and made a loss on it. Before you feel bad, let's remember what the influencer pit does. It sucks in retail investors selling them on the concept that financial nihilism is the truth. It can

contributes to the idea that blockchain or crypto or Web3 is merely about speculation. It stipulates your only option in life is to hustle fast enough and hope you don't end up as fodder for a coffee zilla video. The latest trend is painfully banal. It's such a lowbrow grift I'm embarrassed to even write about it. Influencer grifters, often double-dipping from prior shilling of meme coins, will simply post an Ethereum address and ask people to send ETH to it. One can only hope the IRS does not ENS. The wink and nod in this scam is the explicit promise of no return. turn. You would, and I mean this quite literally, be just as well setting fire to your physical wallet

than sending a transaction like this. I'm not sure what the appropriate punishment should be for these crimes against humanity. First time offenders might have to attend Bitcoin Miami wearing an Ethereum t-shirt. Serial offenders will need harsher punishments, perhaps trapped in a dark room with a Richard Hart monologue on repeat for up to two years. We might instead decide to capture all the Gryftier influencers on an island somewhere. Perhaps we could create a fake conference and then create a Dow whose only purpose is to ensure no flight ever leaves, spending treasury funds on bribing the islanders to distract the influencers with shiny objects. There is a real problem here. Influencer grifters tell us up front, you will get nothing and you will be happy. But underlying

is a much darker message. We can do nothing. This is the paradox of permissionlessness intrinsic to blockchain communities. Permissionlessness is a red line, non-negotiable topic in Ethereum culture. Without wishing to get all esoteric, if you lost the property of permission you wouldn't have Ethereum at all. With technical solutions verboten, this leaves us with only social options. Imagine Ethereum as a cosmopolitan city. It has its Municipal Hall of Developers, organizers, and researchers. It has its finance district with Defi. It has its bohemian quarter of NFTs. It has its average Joes living on Main Street. But it also has its shady downtown where the grifters live. Downtown is not as bad as Skid Row, where you'll probably find people

plotting to social engineer board ape owners. Like any city, you can silo yourself in safe area. and hope the police might deal with it. Except in Ethereum, there are no police. In a decentralized, permissionless culture, there is nobody who can sanction you like the law might in real life. Of course, governments can outside Ethereum. This means that you have to create an atmosphere, a cultural context where the message of long-term regent culture overshadows short-term de-gen culture, relegating it to an immature phase. The regens are those within Ethereum culture dedicated to ensuring the technology does not generate negative externalities, but instead positively impact society over the long term? How do we, in the words of Gitcoin founder Kevin Awaki,

funnel more Ethereum into regent than Dgen? Here I advocate for something a little unorthodox. I believe Ethereum should introduce a citizens' assembly. In my home country of Ireland, citizens are randomly selected to convene and discuss important issues relating to the Irish Constitution. In Ethereum, we don't have a constitution, but there could be value in an annual forum where various stakeholders in Ethereum meet to discuss important concerns. Similar to the open-source concept that many eyes can fix a problem quicker than a single pair can, the Ethereum Assembly could consider pressing issues, e.g. What to do about Lido, a decentralized service that is said to be dominating Ethereum staking, but also how to encourage people away from

D-Gen into regent with active efforts. Citizens from each stakeholder group, from validators to developers, to application builders, to average shows, could come together and hash it out. And the most important effect, I believe it would encourage a sense of responsibility over the protocol across the community spectrum, introducing social matters as important. as technical ones. Or we could just keep sending the Grifters' Eith. All right, guys, back to NLW here. Now, obviously, Paul is a great writer, which is why it's fun to read that. But I think that there's something interesting in here beyond that as well. Now, I don't particularly have a strong sense of what the right approach for the Ethereum community is on these particular

issues. I am certainly firmly in the camp, as it sounds Paul is, that permissionlessness is a very core feature of these systems, be it Ethereum, Bitcoin, or any other crypto that's worth its salt. Inevitably, in that context, you are going to have things that you just fundamentally find abhorrent. It's why there's phrases in Bitcoin like Bitcoin is for enemies. But at the same time, I do think that Paul is right to identify that in the absence of dictating some sort of rules that are enforceable in a way that undermines the very things that make these decentralized, permissionless networks decentralized and permissionless, social pressure and how these types of things are rewarded is really the only solution.

Now, some Ethereums will hate to hear it, but perhaps in this particular case, they could take a page from Bitcoiners, who have, if anything, perhaps an overactive sense of the importance of using the community defense mechanism and the social defense mechanism to try to ward off behaviors that it finds intolerable. I don't know. Like I said, I don't have the right answer for Ethereum when it comes to this particular issue. What I do know, more broadly, is that each cycle, around this time, in the bottom, we find ourselves presented with, the choice. That choice is to internalize hard lessons from the last time around, to try to think and act differently, to try to not reward and incentivize the worst excesses or bad behaviors from before, or to ignore all of that and just look forward to brighter days. The concern that I think many people are feeling right now is that while we've washed out the worst offenders, the biggest

fraudsters, some of whom are going on trial later this year for their deceptions and malfeasance, we haven't necessarily changed the underlying incentives that created the context for them to arise in the first place. And that, of course, is much bigger than meme coins. I don't care, frankly, and I never have if people want to play silly financial games with the live ammo that is crypto assets. I do worry a little bit about the marketing that can go around those things to try attract new people into them, but I also tend to feel fairly confident that people have the ability to see through things that are patently and on the face of them absurd. So again, to re-infirm, force, this isn't really about meme coins per se. The broader question to ask, I think, is what type of

space we want this to be when the money starts flowing back, because you know it will. I don't even have the answer to that question, but I kind of think that just the fact of asking it means we're likely to do at least a little bit better than the last time around. Anyways, guys, some fun food for thought on your Sunday. I hope you are having a great weekend, and I appreciate you listening, as always. Until next time, be safe and take care of each other. Peace.