Cardano’s founder, Charles Hoskinson, recently criticized memecoins as nothing more than a fad, comparing them to fleeting celebrity fame. Speaking in an interview with the Wolf of All Streets channel on YouTube, he stated that 99% of memecoins cannot be sustainable for the long term and are created solely for a select group to make money from.

He clarified that memecoins experience phenomenal growth and then experience a decline in demand if not supported by a solid ecosystem. If change is not made, the user moves on, and value is known to vanish.

“It’s why 99% of memecoins will fail,” he said. “They have to build community and real engagement. Otherwise, people move on.”

Hoskinson also lambasted the token distribution of memecoins, asserting that self-serving insiders inflate the value of tokens, promoting the project only to sell them at a hefty profit later. This insider-focused model does not provide much incentive to build and sustain the project after its implementation.

Capital drain poses risk to broader crypto adoption

Hoskinson stated that memecoins have a negative impact on the rest of the cryptocurrency market since they consume liquidity without adding value through actual application use cases. He compared it to “moving water from one side of the bathtub to the other,” stating that much of the capital goes directly into the pockets of the founders and does not aid in expanding networks.

“There’s a drain at the bottom of the tub. You’re not adding liquidity—you’re losing it over time,” he said, calling the phenomenon a net negative for the space.

While he did not write off memecoins, he noted that sustainable value creation would come from Bitcoin DeFi, real-world asset digitalization, and algorithmic stablecoins, not just from viral tokens without a clear roadmap.

Cathie Wood adds institutional perspective to memecoin risks

Cathie Wood, the head of ARK Invest, also recently stated similar things in an interview with Bloomberg, stating most memecoins will be “worthless.” She attributed the phenomenon of meme-based cryptocurrencies to blockchain integration with AI, which makes it possible for almost everyone to launch thousands of tokens without any actual value.

“Our funds are staying out of memecoins,” Wood confirmed, adding millions of these assets appear with no sight of utility. She urged investors to be careful, especially given global regulators’ refusal to categorize memecoins as securities. “If I have one message for those buying memecoins: buyer beware,” she said. 

According to Dune Analytics, memecoin use rose to a daily average of over 71,000 on January 23 and fluctuated before declining to reach roughly 9,000 as of April 1.

Solana’s top memecoins’ market capitalization has declined to more than 85% from its yearly high of more than $81.83 billion. Tokens such as Official Trump (TRUMP), Bonk (BONK), Fartcoin (FARTCOIN), Dogwifhat (WIF), and Pengu (PENGU) have been dropped significantly due to low investor confidence.

Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More