05 April 2024

Precarious times in the crypto world. Bitcoin has been fighting to hold above $65,000 while Ethereum has broken below 0.05 against Bitcoin (ETH/BTC pair) in a sign that altcoins may have a tough time in the short-term. We are just couple of weeks away from the widely anticipated Bitcoin halving. Are we going to see a post-halving correction? Or will the market consolidate and provide the platform for the next leg up? We will wait and see…

Today, in our Hot Take, we look at two blockchains – Base, a layer 2 on Ethereum, and Solana – to see how they are performing. Especially as the memecoin frenzy hit the markets in 2024. Before that, lets dive into the top-3 stories and macros of the week.

Top-3 stories of the week:

1

2

3

The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $2.53 trillion - UP 0.8%

• Bitcoin price - $67,990 - UP 2.8%

• The dollar index (DXY) - 104.32 - UP 0.1%

• Bitcoin Dominance - 54.61% -  UP 2.4%

• Crypto Fear and Greed Index - 79 - the market is in greed

THE HOT TAKE

Base and Solana benefit from meme narrative

Every bull market is driven by some strong narratives. Memecoins were by far the most profitable crypto narrative in Q1 2024, having recorded returns of 1313% on average across its top tokens.

For a long time, the central hub for memecoins has been Ethereum with little competition. Off late, there has been a shift in activity to Solana and Base. Solana's memecoin market cap is now at $7.6 billion and Base's $1.4 billion. Today, we compare the two chains to see the latest trends in this space.

Solana

Solana (SOL) has been on a tear in the past few months. SOL crossed $200 a token last month even as network activity continued to grow rapidly on the back of the memecoin frenzy.

The daily active users in the ecosystem more than doubled from January to March this year.

Top Performers

Performers like Dogwifhat (WIF) and Bonk (BONK), alongside newer entrants such as Book of Meme (BOME) and Slerf (SLERF) have made significant strides lately.

On 28^th March, following the sentencing of FTX co-founder Sam Bankman-Fried, multiple memecoins spun up to piggyback on the news, surging over 30,000% in value before plummeting.

There has been a surge in presales for memecoin launches on Solana, with 33 presales conducted since 12^th March, raising over 796K SOL. These presales, driven by FOMO, have led to significant price gains, as seen with the example of the Book of Meme presale, which saw a coin surge of over 2700% in less than two days.

Network congestion

The heightened activity has led to a network congestion on Solana, resulting in delayed or failed transactions across the chain. While this does not look ideal for a chain that sits 5^th on the crypto market cap list, it reflects on the bullish stance of the ecosystem and the faith the community has on the network.

Despite these hurdles, the Solana ecosystem continues to exude a sense of excitement and attract substantial user engagement and liquidity, even in the face of the recent market correction.

Base

Memecoin mania has migrated onto Base, with the network’s memecoin sector surpassing a $1 billion market cap after its explosive growth over the past month. Base does not have its token yet on the blockchain similar to SOL for Solana. This means that memecoins have been a proxy for network activity and growth of Base.

Network activity on the Coinbase-backed Layer-2 network Base continues to thrive, with daily transactions and trading volume hitting unprecedented highs. On April 3, the layer-2 network hosted over 2.7 million transactions– an all-time high, according to a Dune analytics dashboard.

TVL is on the rise

After a large run in Q3 last year, Base’s TVL stayed mostly flat until the end of February. Since 25^th February, TVL on Base is up almost 310%.

On 28^th March, crypto infrastructure provider Syndicate launched Degen Chain, a L3 network, which serves as a specialized ultra-low-cost network to perform transactions using the DEGEN token.

It rapidly gained popularity, attracting over 130,000 addresses, and more than $50 million in total value locked (TVL), within a few days post-launch. This L3 network is flooded with memecoins, which saw over $40 million in daily trading volume.

DEGEN is also among the top gainers as the project finds new utility within dapps building on Base. Trailing second is Brett (BRETT), the largest meme coin on Base by market cap.

Key takeaway

Memecoins are usually risky and are better avoided for a risk-averse portfolio. However, they also make blockchains more relevant and appealing for users. Solana, and now Base, have triggered their adoption metrics, thanks to immense growth in memecoin trading on their networks. They have been aided by low network fees on the networks – something that Ethereum is fighting to solve for.

Both Solana and Base have great potential. SOL, as a native token of Solana, has outperformed BTC and ETH in the last year and will likely be a winner in the upcoming 12 months. Base may launch its own token in upcoming months – if they do, there may be a case for investing in it. Else, memecoins on Base act as proxy for network growth – do consider a small part of your portfolio on them.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.