Each of the networks supporting smart contracts is carving out its own niche. For instance, Polkadot is banking on developers, creating a convenient and functional environment based on parachains. Ripple is transferring distributed ledger technology into traditional finance, offering governments a turnkey service for creating central bank digital currencies (CBDCs). Meanwhile, Avalanche has chosen a controversial path, according to CoinFactiva analysts, focusing attention on meme coins.
Meme coins have garnered mixed reactions even within the crypto space, let alone among regulators who have banned the circulation of these coins in certain countries. The issue lies in their lack of utility and high speculative interest. Moreover, the meme coin craze can overload some networks while causing a significant rise in transaction fees in others.
For example, with the introduction of ordinals (the protocol allows for minting and exchanging quasi-tokens) on the Bitcoin network, the average transaction fee skyrocketed from $2 to $31 in May and up to $37 in December. In Solana, the frenzy surrounding meme coins has led to thousands of new tokens being minted per day since December. Initially, users faced transaction processing delays, and on February 6th, the blockchain halted for 5 hours. Most networks view such surges as an inevitable evil, calling the events stress tests. However, Avalanche has chosen to embrace meme coins, incentivizing users for activity and acquiring coins for its own fund through the Culture Catalyst program.
As acknowledged by the Avalanche team, they understand that meme coins often retain significant value because of the engagement, community ethos, and cultural significance they represent, extending beyond their inherent humor and viral nature.
To incentivize users, the team allocated $1 million last week, which, according to a complex bonus scheme, will be credited for activity with the following coins: COQ, KIMBO, NOCHILL, GEC, TECH, HUSKY, MEOW, KONG, MEAT, KINGSHIT.
The ambiguity of Avalanche’s policy lies in the fact that many crypto participants (if not the majority) view such assets as nothing more than “shitcoins.” For instance, to qualify for the Culture Catalyst list, the age limit is only a week.
It’s evident that with such programs, Avalanche is attempting to catch up to Solana’s metrics. However, in terms of the number of active addresses, the network is showing a decrease compared to the previous year. And purchasing quasi-tokens at the fund’s expense in the long run poses a threat to the stability of the base AVAX token, as they largely fail. This year, AVAX has only grown by 42%, lagging behind both Solana and Ethereum in dynamics. If developers continue to focus on meme projects, there’s a high chance of exacerbating the emerging gap.
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