The Defiant

PEPE Rallies 500x As Investors Pile Into New Wave Of Memecoins

Single MEV Bot Accounts For 7% Of Daily Ethereum Gas Usage

By: Owen Fernau Loading...

PEPE Rallies 500x As Investors Pile Into New Wave Of Memecoins

Memecoins are pumping like it’s 2021.

PEPE, a new Ethereum-based token named after the cartoon character turned memetic icon Pepe the Frog, has ascended to a market capitalization of $86M in less than five days, making it the sixth-most valuable memecoin, going by a list from CoinGecko.

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Pepe the Frog

The PEPE rally has spurred enterprising developers to spin up tangential projects — WOJAK, named after another popular memetic character, launched on April 17 and has already jumped to a $10M market capitalization in just over a day.

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Wojak, also known as Feels Guy

Speculators who caught these tokens early are sitting on astronomical profits reminiscent of 2021’s dog coin mania, when DOGE and SHIB rallied to their all-time highs.

‘Double-edged Sword’

Ryan Watkins, the co-founder at Syncracy Capital, a crypto-focused hedge fund, thinks memecoins’ success has a mixed effect on the digital asset space. “It’s a double-edged sword,” he told The Defiant over Telegram. “On one hand, memecoins make crypto more fun and accessible. On the other, they reaffirm many skeptics’ criticisms that the industry’s only use case is gambling.”

Indeed, many in the crypto community find memecoins fun, all the more so when they are making money. The Pepe and Wojak characters pop up daily in crypto Discord and Telegram channels, imbuing tokens associated with them with added allure to the blockchain-savvy.

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Conversely, to crypto-outsiders, it’s difficult to discern any real difference between DOGE and PEPE. They’re both tokens with questionable utility — it’s easy to write off investing time and effort into hot potato games as the most wasteful aspects of the crypto industry.

Regardless of whether the new memecoins’ success is good for crypto as a whole, they’ve certainly caught investors’ attention, with a new token dropping seemingly every few hours.

Z, a well-known pseudonymous trader who has been posting seemingly non-stop about PEPE over the past three days, told The Defiant they first bought the token when it had a $30,000 market capitalization. At the token’s current market capitalization of over $80M — the trader’s PEPE is worth over 2000 times what they paid for it.

“The PEPE pump is ringing the bell and waking everyone up to speculate,” Z said. “Seeing the memes that have always been around us and that we see daily become the top memecoins feels healing, cleansing.” The trader said they first heard about PEPE through a private Twitter group.

‘Dogs Have Had Their Day’

The creators of the website for PEPE, who didn’t immediately respond to a request for comment from The Defiant, are looking to take on canine-themed tokens like DOGE and SHIB, which have dominated the memecoin space. “The dogs have had their day,” the PEPE site reads. “It’s time for Pepe to take reign.”

Some entrepreneurs haven’t gotten the notice that dog coins are done for — AIDOGE, which launched on April 10 on Layer 2 network Arbitrum as a free claim for ARB airdrop recipients, has already hit a $35M market capitalization as of April 18.

Ethereum Gas Spikes

The action around memecoins is starting to affect other users of the Ethereum blockchain. Gas fees, the amount of ETH it costs to make a transaction, spiked to their second-highest level in the last six months, according to a dashboard by pseudonymous analyst Hildobby.

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Ethereum Median Gas Price

This means Ethereum users are paying over $30 to trade a token on a decentralized exchange like Uniswap or Balancer.

MEV Bot Dominates Ethereum Gas Usage

According to information provider SeaLaunch, one entity using the Ethereum domain jaredfromsubway.eth, is running an MEV bot responsible for using 7% of the gas on Ethereum at one point. MEV bots profit by inserting orders ahead and behind unsuspecting traders, resulting in worse execution prices for users

Jaredfromsubway.eth was still the top gas consumer as of 10pm ET on April 18.

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Top Gas Consumers. Source: Etherscan

To be sure, it’s not only general Ethereum users who bear the cost of memecoin season. The hype-laden world of memecoins comes with its ups and downs. BONK, a token on the Solana blockchain, was red hot in January but is now down nearly 80% from its peak.

Unproven Meme Value

And the idea of a token’s value actually being tied to a meme’s usage is unproven.

Punk6529, a pseudonymous influencer, developed an NFT project geared around owning memes. After peaking in mid-January with a 59,000 ETH market capitalization, The Memes, as the project is called, have dropped nearly 75% to roughly 15,000 ETH, according to data provider NFTGo.

Still, for some avid traders, memecoins provide the spark to get them through the bear market. Or maybe it provides some hope that the bear market may truly be ending.

In the long run, Syncracy’s Watkins doesn’t think the memecoin phenomenon does too much harm. “It does get tiring after a while, but speculation attracts capital to the industry necessary to fund new and interesting projects,” he said. “I don’t think memecoins are meaningfully stealing energy from ‘real’ projects.”

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