Memecoins are the hottest sector in crypto—but 97% of them are already dead

A report released yesterday offers a sobering reminder of the dangers of investing and trading in the currency of internet humor. So-called memecoins like Dogecoin, Pepe and Shiba Inu have become the fastest-growing niche of the cryptocurrency sector’s revival this year. The number of meme-related projects has increased by more than 440% in the past two years, making it the fourth-most valuable sector in crypto, ranking higher than decentralized finance and blockchain-related services, according to BDC Consulting.

But a new Chainplay report offers a sobering look at just how little there is behind many memecoin projects. The report, titled The State of Memecoin 2024 , notes that the average lifespan of one of these coins is just one year—a third of the lifespan of the average crypto project. In line with this high turnover rate, around 60% of memecoin investors view these assets as short-term investments, and 97% of memecoins have already disappeared.

On average, more than 2,000 memecoins are lost every month. The so-called “mortality rate,” which is classified by various metrics such as a deleted website, inactive Twitter, or a market cap below $1,000, varies between blockchains. Base leads with a 67% mortality rate, followed by Solana at 54% and Ethereum at 37%. In other words, two-thirds of the memecoins ever created on Base have already gone bankrupt. In terms of the prevalence of scams, the report reported that more than half of all memecoins are considered malicious, with a third of investors losing money due to scam tokens.

Memecoins are dividing crypto

Love them or hate them, the report found that one in six new investors (those who have been in the market for less than six months) describe memecoins as a “must-have” part of their portfolio. But why?

Advocates see memecoins as the purest iterations of crypto’s ultimate promise: democratizing finance. Anyone can start a memecoin for anything. Among the top 300 coins: “Smoking Catfish,” “Kamala Horris” and “I love puppies.” Combining finance, internet trends and gambling, investors are flocking to speculative assets in viral moments. Even celebrities like Caitlyn Jenner, Iggy Azalea and Andrew Tate have tried to cash in on the craze.

“I’ve been someone who’s naturally produced a lot of memes throughout my career, and things go viral, whether intentionally or unintentionally, so I thought this was an area I could really get into,” Azalea told Fortune following the launch of her coin, called Mother.

But critics argue that both cryptocurrencies are keeping the pump-and-dump stigma alive. In June, Ethereum founder Vitalik Buterin published a post on X slamming the notorious memecoin culture. He added that memecoins should be “some kind of public good goal” rather than “financialized as a means to an end.” He added that the tokens should last a decade or longer “rather than hanging around for a few months and then forgotten.”

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Omid Malekan, an assistant professor at Columbia Business School, sees the tokens as a symptom of the “economic nihilism” that typifies the era. “With the growth of meme stocks and traditional forms of gambling, memecoins are another indication that people feel they need to do risky things with their money to get ahead,” he told Fortune.

This story was first published on Fortune.com