Cardano founder Charles Hoskinson has criticized memecoins, comparing their short-lived success to the fleeting fame of celebrities.
In an interview on The Wolf of All Streets YouTube channel, he argued that most memecoins lack sustainability and are designed for a small group of insiders to profit. He stated that 99% of these tokens will eventually fail without a strong ecosystem to maintain long-term engagement.
Hoskinson warns of memecoin instability
Hoskinson explained that memecoins often see rapid growth before losing demand, leading to a value decline. He emphasized that these tokens will not survive long without an active community and real utility. He also criticized their distribution model, stating that insiders manipulate token prices to attract buyers before selling at a high profit. Once they cash out, little effort is made to develop or maintain the project.
He noted that this pattern harms investors who enter the market late, as they often face losses when the hype fades. While some memecoins attempt to establish engagement, most fail due to a lack of innovation or lasting appeal.
Impact on Crypto market and capital drain
Hoskinson argued that memecoins negatively affect the broader cryptocurrency market by absorbing liquidity without contributing to real-world applications. He compared this effect to shifting water in a bathtub, where funds move within the market but do not create long-term value. Instead, much of the capital benefits early investors while draining resources from the crypto ecosystem.
He warned that this issue could slow down broader cryptocurrency adoption. While memecoins may bring temporary excitement, they do not support meaningful blockchain advancements. He pointed to Bitcoin DeFi, digital assets, and algorithmic stablecoins as promising sustainable growth areas.
Cathie Wood cautions against memecoin investments
During a recent Bloomberg interview, Cathie Wood showed concern about memecoins as ARK Invest CEO. According to her assessment, the assets are primarily valueless because AI and blockchain technology enable the easy creation of numerous tokens lacking worth. As part of her latest interview with Bloomberg, Cathie Wood of ARK Invest revealed that her organization remains away from memecoins while advising market participants to be cautious.
Wood warned investors about investing in purposeless tokens since regulation provided no oversight. According to her advice, investors should understand that memecoins can lead to financial losses. According to Dune Analytics, memecoin usage significantly dropped, with daily activity declining from over 71,000 transactions in January to approximately 9,000 by April 1. On Solana, major such as Official Trump (TRUMP), Bonk (BONK), Fartcoin (FARTCOIN), Dogwifhat (WIF), and Pengu (PENGU) have lost over 85% of their market capitalization from their yearly peak of $81.83 billion.