As Solana’s memecoin market faces a steep decline in trading volumes, criticism of these speculative assets has intensified, drawing attention to their impact on the broader cryptocurrency ecosystem. Recent data suggests that most traders on Solana-based memecoin platforms, such as pump.fun, are incurring significant losses, sparking a debate over the value and consequences of memecoins in the crypto sphere.

Memecoins Under Fire: In an August 19th newsletter, Messari data engineer Mike Kremer voiced concerns about the burgeoning memecoin phenomenon, labeling it the most extractive trend in the crypto world since the 2017 Initial Coin Offering (ICO) craze. Kremer argued that while speculative bubbles have always been a part of the crypto landscape, previous surges—such as the DeFi Summer—left behind tangible value, with protocols like Uniswap Labs providing lasting utility to the ecosystem.

However, Kremer contended that memecoins operate on a far more destructive premise. He described how insiders or organized groups create tokens with catchy, often absurd names like “supercumrocket69,” hype them up, and entice retail investors to buy into these so-called revolutionary assets. Once the prices skyrocket, these insiders dump their holdings, leaving investors with tokens that hold no real value or utility. “The entire process,” Kremer stated, “is a zero-sum game where not only is value redistributed, but it is also annihilated.”

Also, read – Surging Solana-Based Memecoins Amid SOL’s Remarkable Rebound

The Case Against Pump.fun: The spotlight has also been cast on Solana’s memecoin deployer, pump.fun, which has drawn criticism for exacerbating the risks associated with memecoins. Since its launch in January, the platform has seen the creation of a staggering 1.7 million new tokens. However, less than 1.5% of these tokens have achieved a total market value exceeding $63,000. Additionally, data indicates that 60% of pump.fun traders have lost money, with only 3% of all participants recording profits of over $1,000. While some question the accuracy of this data, claiming it overlooks realized gains, the figures have fueled skepticism about the platform’s impact.

Declining Volumes and Investor Exodus: This skepticism comes amid a sharp decline in Solana-based memecoin trading volumes, which have plummeted by as much as 80% in the past two weeks. Further compounding the issue, a CoinShares report revealed that Solana exchange-traded products experienced a record $39 million in outflows last week, signaling waning investor confidence.

Is There a Silver Lining? Despite the growing backlash, some in the crypto community continue to defend memecoins, arguing they serve a valuable role in the industry. Alon, the pseudonymous developer of pump.fun, asserted that the platform’s popularity indicates that the market values the lower barriers to entry for memecoin deployment. In an August 7th post on X, Alon claimed that before pump.fun, the memecoin sector was rife with scams like rug pulls and honeypots, but each iteration of new memecoin technology has made the market more accessible for outsiders.

Others argue that memecoins offer a simple entry point for newcomers to the crypto world, even with the inherent risks. In April, Avalanche founder Emin Gün Sirer told Cointelegraph that while memecoins might be inherently worthless, they play a crucial role in “social signaling” and fostering strong crypto communities. “They’re great for the space because they bring people in, they keep them excited, occupied, and concentrated on what the technology can do,” Sirer said.