A Meme coin breakdown report for TradFi people

Meme coins are undoubtedly the most eye-catching and perplexing phenomenon in Crypto Assets. From the billion-dollar empire SHIB spawned by a Japanese Shiba Inu internet meme to the DOGE that was brought to fame by Tesla CEO Elon Musk, these Tokens, which originated from jokes and thrived in communities, continually challenge the values of the TradFi world with their wild rises and falls and immense wealth effects.

Are they truly worthless digital bubbles, or do they represent a brand new asset class? Let's place them in front of a mirror of TradFi and conduct a deep role deconstruction. We will find that meme coins are not a singular role, but a mix and amplification of multiple marginalized or suppressed roles in the traditional financial world. They are the ultimate release of speculative desire, a financial totem of community culture, and may also serve as a "demon-exposing mirror" to examine the essence of modern finance.

1. Market Level: "High-Risk Lottery" and "Zombie Stocks or Junk Bonds"

From the perspective of TradFi, Meme coins are quite different from the "value investment" tools that ordinary investors encounter in TradFi (such as blue-chip stocks and government bonds); their most accurate counterparts are lottery tickets and casino chips.

High-risk lottery or "casino chips." The essence of traditional lottery is that the purchaser pays a certain, small loss (the purchase amount) to gamble for a very low probability but high return possibility. Meme coins completely follow this logic. The vast majority of purchasers do not base their decisions on an analysis of the underlying technology, application scenarios, or cash flow discounting—because these do not exist in most Meme coins. Their investment decisions stem from a simple belief: that there will be another "more foolish" person willing to take over at a higher price. This is a perfect interpretation of the famous "greater fool theory" in the digital age.

Unlike traditional lotteries, the "drawing" of Meme coins is not a fixed point in time, but a continuous process. This process is triggered by a trending topic on social media, a shout-out from an influencer, or a sudden community celebration. Its price chart no longer reflects the fundamentals of a business, but rather serves as a real-time electrocardiogram of group sentiment. The stories of instantaneous rises of 500% and sudden "ankle cuts" alternate, forming the daily routine of this large-scale online gambling.

Highly Speculative "Penny Stocks" and "Junk Bonds". Some may compare them to "Penny Stocks" or "Junk Bonds" in the TradFi market. Indeed, they share the characteristics of "high risk, high potential return". However, the risk dimensions of Meme coins are more complex and extreme. "Penny Stocks" at least have a legal entity behind them, with assets and operations (no matter how weak), and are subject to regulation by securities authorities. Although price manipulation exists, it still operates within a certain legal framework. "Junk Bonds" may have high default risks, but their pricing is still based on the issuer's credit rating, asset collateral, and expected future cash flows, which has a relatively mature analytical system.

Meme coins are mostly created on decentralized networks, without actual controllers, and have no business income. Their smart contracts may hide vulnerabilities, and the founding team can remain anonymous. Even more terrifying is the "rug pull" where developers suddenly withdraw funds from the liquidity pool, causing the token's value to plummet to zero in an instant. The accumulation of these systemic risks elevates the risk level of Meme coins far beyond any analogs in traditional finance, pushing speculation to unprecedented heights.

2. Cultural Aspects: "Cult Stocks" and "Social Currency"

If Meme coins are merely a gamble, they might not have such strong vitality. Their deeper magic lies in successfully transforming financial instruments into cultural symbols and social tickets. In this regard, the best analogy is the GME stock from the 2021 "GameStop incident," which amplified its cultural attributes.

Community and Identity in Financial Behavior. The core of the GameStop incident was retail investors on the Reddit forum WallStreetBets, who collectively bought GME stock, which was heavily shorted by institutions, successfully "attacking" Wall Street hedge funds. In this process, GME stock became more than just a simple equity investment certificate; it transformed into a "flag," a form of "belief," serving as a "weapon" for grassroots retail investors against the financial elite system. Holding GME became a declaration of identity: "I am a part of the WSB community, and I stand against Wall Street."

Meme coins have taken this community financial behavior to a new peak. Holding DOGE means you recognize its satirical slogan of "the people's currency," understand its origins from the 2013 parody coin mocking Bitcoin, and join a global, humor-filled community movement. SHIB, on the other hand, has built a vast "SHIB Army," enhancing the sense of belonging and mission among holders through complex ecosystem narratives and burn-deflation mechanisms. Here, investment is no longer cold, hard data analysis, but a warm identity recognition and community co-construction.

"The Accumulation and Monetization of Social Capital." In the age of social media, attention is the scarcest resource. The essence of meme coins is to financially package collective attention. A successful meme coin is a cultural gene that can self-replicate and spread virally. The early discovery and promotion of a meme coin can not only yield financial returns but also accumulate considerable "social capital" within the community — you are regarded as a visionary "prophet" or an interesting "meme king."

attention attracts capital inflow

3. Behavioral Aspects: "Emotional Value" and "Speculative Bubble"

Throughout financial history, meme coins are not an unprecedented monster; they are merely the latest manifestation of the cyclical speculative bubbles in human history in the digital age. By comparing them to the Dutch tulip mania, the South Sea Bubble, and the dot-com bubble, we can clearly see the astonishing similarities in history.

Narrative-driven value. At the core of all speculative bubbles is the "narrative" replacing "fundamentals" as the core of pricing. In 17th century Netherlands, the value of tulips detached from their ornamental value as flowers, driven by the narrative of being "rare, unique, and a status symbol," where a bulb of "Semper Augustus" could be exchanged for a mansion. In the early 21st century internet bubble, a company's value was no longer based on its profitability and cash flow, but on the grand narrative of "clicks," "user growth," and "new economic models."

Today's Meme coins derive their value entirely from the narrative of "community power", "cultural symbols", and "rebellious spirit". A single tweet from Elon Musk has an influence far greater than any financial report. This reveals an unchanging aspect of human nature in financial markets: people will always be attracted to a captivating story and the dream of quick wealth.

Fear of missing out. In every bubble, "fear of missing out" is the core fuel driving irrational price increases. When seeing people around them becoming wealthy overnight by purchasing a certain Meme coin, rational thinking often gives way to a strong sense of anxiety. This emotion is infinitely amplified in the cryptocurrency market where global trading occurs 24/7 and information spreads at the speed of light.

At the same time, every era finds a "this time is different" rationalization for its own bubble. During the tulip mania, people believed that the demand for beauty was infinite; during the internet bubble, people believed that traditional valuation models had completely failed; and in the Meme coin craze, believers shouted "community is value" and "decentralization changes everything." However, history has repeatedly shown that when the music stops, the narrative goes bankrupt, and the law of gravity will ultimately come into play, prices will return to their intrinsic value - for the vast majority of Meme coins, this value is infinitely close to zero.

IV. Beyond the Boundaries of TradFi

Although we found many analogies, Meme coins are not a simple replication of traditional roles. They deconstruct and surpass traditional financial models through blockchain technology, showcasing their unique characteristics.

Low threshold and no entry requirements for issuance. In the traditional world, issuing stocks or bonds requires cumbersome legal procedures, investment bank underwriting, and regulatory approval, with extremely high thresholds. In the world of Crypto Assets, anyone can create and issue their own Meme coin in just a few minutes with minimal cost and some technical knowledge. The extremely low threshold for issuance has led to an almost "wild growth" in the market, while also causing a mix of quality projects and rampant fraud.

Globalization and Instantaneity of Liquidity. A "penny stock" traded on the US OTC market may have very poor liquidity, making it difficult for ordinary investors to buy and sell. In contrast, a top Meme coin, once listed on global decentralized or centralized exchanges, can achieve 24/7 global instant trading. This deep, uninterrupted liquidity provides a breeding ground for ultra-high intensity speculative behavior, which is hard to match by any traditional speculative tools.

The vacuum of regulation and the ambiguity of ethics. Traditional financial activities are within a strict regulatory moat, aimed at protecting investors and maintaining market stability. In contrast, the world of crypto assets, especially in the Meme coin domain, remains largely a "lawless land." The lack of regulation grants significant freedom and space for innovation, but it also allows for market manipulation, insider trading, fraud, and other behaviors to go almost unpunished, pushing the principle of "buyers beware" to the extreme.

Meme coin may force us to rethink some fundamental questions in extreme ways: What is value? Besides resource allocation, what human emotions and social needs does the financial market carry? It is like a "mirror of truth," revealing the speculation, revelry, and tribal instincts that have always existed within the financial system but have been ashamed to acknowledge under a rational shell. It turns high-frequency speculation in Wall Street trading rooms into a national game that every mobile user can participate in; it transforms the social networks of elite clubs into a global, interest-based digital community.

Therefore, the fairest evaluation of Meme coins may not simply be to dismiss them as a "scam" or to praise them as a "revolution." It is more like a complex polyhedron:

For gamblers seeking quick wealth, it is a digital casino.

For young people seeking a sense of belonging, it is a cultural community.

For financial scholars, it is an excellent behavioral finance experiment.

For regulators, it is a dangerous territory that urgently needs regulation.

For the whole society, it is a modern fable about technology, humanity, and greed.

Meme coins may, like most speculative bubbles in history, experience a long silence after the frenzy, with the vast majority of projects ultimately going to zero. However, what it reveals—about the power of community, the role of cultural narratives in value creation, and the profound impact of technology on financial inclusion—may permanently change our understanding of "finance." In the future where traditional finance and crypto finance continue to collide and merge, this seemingly absurd carnival of meme coins may be that jarring yet undeniable unique melody.