On December 29, 2023, the Avalanche Foundation, a non-profit behind the Avalanche (AVAX) Layer 1 ecosystem, announced the inclusion of certain meme coins into its portfolio. This decision drew skepticism, prompting Emin Gün Sirer, co-founder of Ava Labs, to address the concerns and criticisms publicly.
Sirer, who has been a vocal figure in the past, took to social media to liken critics of meme coins to those who disparaged pop music in the 60s, street art by Banksy in the 80s, and rap music in the 90s. He applauded the Avalanche Foundation’s decision to invest in meme coins and highlighted that the AVAX ecosystem, with its extensive institutional activities, could afford to allocate some funds to meme coins.
Acknowledging his own initial skepticism, Sirer admitted that it took him time to understand the value of meme coins. He was critical of Elon Musk’s semi-ironic promotion of Dogecoin (DOGE) in early 2021 but has since come to appreciate the cultural significance and market impact of meme coins. He suggested that people’s favorite coins no longer necessarily need ambitious roadmaps or scalability promises.
Sirer drew a parallel between owning meme coins and luxury fashion, arguing that neither needs to offer practical superiority to have value, much like Balenciaga clothing doesn’t necessarily keep one warmer but serves its niche market well. Following the announcement, AVAX’s price initially rose from $39 to over $42 but then fell back to $39.5 amid a general market downturn.
Sirer also reiterated the risks involved in investing in meme coins, noting that their prices are influenced by rumors rather than fundamentals. He warned that when the narrative of a meme coin loses its “fun” element, it becomes insignificant, urging traders and investors to be cautious. Some meme coins on the Avalanche blockchain, like Coq Inu (COQ) and Shibavax (SHIBX), saw significant price increases following the Foundation’s decision.
The move by the Avalanche Foundation to embrace meme coins has sparked discussions about their legitimacy and value in the cryptocurrency ecosystem. As the market reacts to this shift, the role and impact of meme coins continue to evolve, with the AVAX ecosystem at the forefront of this cultural and financial trend.