Binance Founder CZ Reacts to Memecoin Surge
Binance co-founder and former CEO Changpeng Zhao (CZ) described the memecoin trend in the cryptocurrency world as "a bit strange," although he is not entirely against it.
CZ emphasized that the crypto industry should focus on real blockchain applications. This statement came as the total market value of the memecoin market fell by 7.5% in the last 24 hours, decreasing to $120 billion. This market decline has sparked new discussions within the crypto community regarding the position of memecoins in the blockchain ecosystem. CZ expressed his concerns over the rise of memecoins on social media, stating that such assets have shifted from being merely entertaining to becoming "extremely strange and desperate."
The role of memecoins in the crypto community is being debated, and CZ's remarks have received both support and criticism from the community. The platform IncomeSharks echoed CZ's concerns by criticizing this new era of memecoins. Cryptocurrency analyst Willy Woo likened the memecoin trend to the initial gambling use cases of blockchain while assessing the development of blockchain applications.
Some critics have taken aim at Binance's listing preferences, suggesting that the company prioritizes memecoins. For instance, Dark Crypto Larp pointed out that Binance focuses on meme coins instead of innovative applications and proposed that this preference could play a better role in shaping the future of the industry.
The effects of memecoin promotions are raising concerns, as memecoins promoted by influencers have caught attention. A report by Coinwire indicated that 76% of the memecoins recommended by cryptocurrency influencers eventually collapsed, with only 1% showing meaningful growth. The report also noted that promoted memecoins typically lost about 70% of their value within a week after promotion.
Interestingly, the performance of memecoins appears to be inversely related to the number of followers of the influencers. Influencers with over 200,000 followers often experience negative returns from their promotions, while smaller influencers with fewer than 50,000 followers reported more favorable outcomes.
After emphasizing that he is not against memecoins, Binance CEO Changpeng Zhao sparked a discussion on social media by calling for the development of real-world usable blockchain applications. While the memecoin craze, which began with Dogecoin, has gained popularity due to its potential for quick returns, CZ's statements have reignited concerns regarding the sustainability of this trend.