Fantastic Mr Frog: Pepe Coin's 7000% Jump Brings Memecoins Back Into The Spotlight

Look out, Dogecoin (DOGE) and Shiba Inu (SHIB)! It looks like the next memecoin top dog is, in fact…a frog? Pepe (PEPE) is a new digital asset based on the anthropomorphised frog character that appears sporting various guises in innumerable internet memes. The jokey token launched on 16 April and hopped up by almost 7000% during the following weeks, reaching a market value of $1.8 billion by 5 May and bestowing riches on its early investors.

A stunt like that predictably sparked a new wave of interest in the memecoin economy, even boosting the Shiba Inu-themed tokens that had previously dominated the scene. This comes at a time when Bitcoin (BTC), Ethereum (ETH) and other top cryptos appear to have stagnated. The original cryptocurrency has slumped by 6% over the last four weeks and currently trades at just over $27,000. With the upper end of the market dead in the water, it seems that traders are willing to risk more on novelties like Pepe. But is there anything backing up the frog's value?

'Completely useless' coin still courts controversy

Pepemania has subsided somewhat over the last two weeks, with the new memecoin now down 60% from its 5 May peak. Each individual Pepe trades for only a few fractions of a cent, but its market cap stands at over $630 million, making it the third-largest memecoin behind Dogecoin ($10 billion) and Shina Inu ($5 billion).

Like other memecoins, PEPE has attracted criticism for its apparent pointlessness — it has no underlying use case or business proposition for the project, whether as a payment system, development platform, or otherwise. In fact, Pepe's creators, who are still unknown, address this head-on on their website, proudly claiming that Pepe is "completely useless and for entertainment purposes only", has "no value support mechanism", and "will not be responsible for your trading losses".

In essence, Pepe is upfront about being a vehicle for pure speculation and should be treated as a gamble. Certainly, anyone who backed the frog and cashed in during the recent surge can count themselves as a winner. As for the over 100,000 crypto users that currently hold Pepe, they will have to bet that the frog will hop again.

Aside from its use case (or lack thereof), Pepe Coin has also had to deal with the frog cartoon's unfortunate legacy of being appropriated to spread alt-right and racist memes, something that Matt Furie (creator of the character) has had to speak out against in the past. While the anonymity and heterogeneity of meme culture make it impossible to guess at the intentions of the minds behind Pepe Coin, one intriguing aspect of the Pepe meme is the phenomenon of 'rare Pepes' in which internet users jokingly valued variations on the image in a parody of trading cards or fine art trading. This humorous valuation of rare internet images later became a reality in the form of NFTs, and some NFT collections are indeed themed around Pepe, bringing the joke full circle.

Congestion on big blockchains

Pepe Coin is based on Ethereum, and its sudden popularity had the knock-on effect of pushing up the gas fees paid to validators on the blockchain to deal with the high level of transactions on the network. The new wave of memecoins that it inspired also resulted in more congestion on the Bitcoin network using the BRC-20 token standard, which allows the creation and exchange of fungible tokens through the Ordinals protocol. Even if Pepe remains a relatively small token in comparison to BTC and other market leaders, this tiny frog has caused a big splash.

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