In the world of cryptocurrencies, where innovation and creativity are rewarded, it is not surprising to see unusual and seemingly ridiculous projects. This is the case of memecoins, cryptocurrencies based on internet memes that are often promoted by influential figures in the space like Elon Musk. Although memecoins have been widely criticized for their lack of seriousness, the potential for investors to score big with these tokens is real. In this article, we take a closer look at Pepe, one of the most talked-about memecoins, and explore what makes memecoins unique.
Pepe Launch and Surge in Interest
Pepe is a memecoin based on the Pepe the Frog meme, originally created by Matt Furie in 2005. Pepe has been associated with the alt-right political movement, among other trends. The circulating supply of Pepe tokens is 420 million, a reference to cannabis culture’s “4/20”. Pepe launched on April 17, 2023, with little fanfare.
However, Pepe quickly rose to prominence because of a high-profile purchase that captivated the cryptocurrency community on Twitter. A memecoin investor swapped 0.125 ETH, worth about $250, for a whopping 5.9 trillion Pepe tokens. As interest in the memecoin grew, the value of those tokens surged to about $1.8 million by April 19, 2023, yielding a potential return of roughly 4,500 times the initial investment. The prospect of a quick payday drew in tens of thousands of other investors hoping to stock up on Pepe tokens before the price reached an upper limit.
Pepe’s Future
So early after its launch, the future of Pepe remains unclear. Some experts, including crypto fund DFG founder James Wo, say that “memecoins are huge parts of the crypto trading landscape, whether we like it or not,” and that it is likely that memecoins like Pepe will continue to pop up. But Pepe itself may succumb to the fate of many flash-in-the-pan memecoins that have preceded it, only to fade from public view in a short time. In that case, the question for investors including the person holding close to 6 trillion Pepe will be whether they can squeeze a payday out of the token before the cryptocurrency community’s attention is drawn elsewhere.
Liquidity Concerns
While Pepe’s meteoric rise in value has made some investors millionaires overnight, realizing those profits won’t be easy. Due to the meme culture, investors are flocking to the digital asset hoping to repeat the success of other cryptocurrencies, such as Dogecoin (DOGE) and Shiba Inu (SHIB). However, there are concerns about the token’s liquidity. It is not only the lack of buyers but also the existence of sufficient liquidity, which is typically concentrated in automated market maker pools.
A market analyst, Grzegorz Drozdz, explained that it would take 46,200 years to liquidate the investor’s Pepe tokens, assuming a non-declining demand. An attempt to exit the position could have a drastically negative impact on the price of the crypto-asset. This would mean that Pepe’s price could plunge below the purchase level. However, the token’s liquidity is expected to improve with more listings by the crypto exchanges.
Centralization
Despite being just recently launched, many in the crypto community are concerned about the centralization of Pepe. The majority of Pepe’s tokens are held by a small group of investors, which could lead to centralization of control and influence. This is not a unique issue to Pepe, as many cryptocurrencies are centralized in this way. However
