Mark Cuban Says Memecoins Pulls Rug Spread

Investor Mark Cuban shared his views on the risks of memecoins, calling them “long pulls” with little real-world utility. Meanwhile, Chiliz CEO Alexandre Dreyfus outlined his vision of establishing Chiliz as the “sports blockchain,” with plans to launch a memecoin called Pepper.

Mark Cuban Warns Against Memecoins, Calling Them “Stretched Rug Pullers”

Mark, investor and entrepreneur. Cuban He recently expressed his strong skepticism about memecoins during an appearance on the Rug Radio podcast. Known for his candid opinions on various sectors, Cuban did not hold back when discussing the cryptocurrency industry, particularly memecoins, which he referred to as widespread “rug pulls” that lack any substantial real-world utility. .

“It’s like playing roulette,” Cuban explained, comparing memecoin trading to a game of “musical chairs” where all participants bet in the hope of not being left without a seat when the music stops. He argued that despite the enthusiasm and strong communities that often form around these tokens, they are ultimately unsustainable and doomed to collapse.

According to Cuban, the rapid rise and fall of memecoins is driven by what economists call the Great Fool Theory. This theory suggests that one can buy an overvalued asset, not based on its intrinsic value, but with the belief that one can sell it to someone else at an even higher price. This cycle continues until there are no more suckers left willing to pay inflated prices, causing a market crash. Cuban commented that this cycle is particularly evident in the memecoin market, where investors are often aware that they are buying into a speculative bubble but still hope to transfer the risk to someone else before it bursts.

“Every meme group is a rug in the making, right? Because there’s no real reason for it to stay aside from fun and seeing when the token increases in value because more people came in; it’s musical. chairs,” Cuban emphasized. He added that no one seriously believes these tokens are good long-term investments, even as they participate in the frenzy for short-term gains.

While he admits that he has occasionally considered dabbling in memecoins, Cuban He said he has always resisted the temptation, recognizing the inherent volatility and lack of underlying value.

Despite Cuban’s warnings, 2024 has seen a notable increase in memecoin creation and trading. In the last 30 days alone, a staggering 381,401 new memecoins have been created on the Solana network, many of which experienced rapid price increases followed by equally rapid drops. In most cases, these coins lose 99% or more of their value within days of hitting the market.

A notable example is the wave of celebrity-endorsed memecoins, which have drawn heavy criticism from traders and industry professionals alike. These tokens often follow a familiar pump-and-dump pattern, where their value is inflated through hype and then collapses as soon as early investors withdraw money, leaving newcomers with massive losses. While the memecoin mania has certainly generated short-term gains for some, it has also resulted in financial devastation for many others.

However, it would be unfair to say that every memecoin follows this downward trajectory. A few projects have managed to buck the trend and establish themselves as long-term contenders in the space, achieving what some have called “top of the line” meme status.

One such example is Pepe’s memecoin, which rose 30% in value during the week of September 27, driven by a resurgence in meme trading activity. Pepe, despite being dismissed as a joke by some, has become a symbol of memecoin culture and continues to maintain a dedicated following.

Another notable project is Dogwifhat (WIF), one of the only memecoins whose price is measured in whole dollars rather than fractions of a cent. WIF saw substantial gains in September, and its price briefly surpassed $2. However, as with most memecoins, these gains were fleeting and the market wiped out those gains in early October.

The Cuban prediction about the future of Memecoins

While some memecoins have proven their staying power, Cuban remains unconvinced of their long-term viability. He believes that the memecoin frenzy will eventually come to an end, and most tokens will disappear as quickly as they emerged. Cuban’s stance echoes that of other critics who argue that the memecoin market is a speculative bubble, sustained by hype and enthusiasm rather than any inherent value or utility.

As the cryptocurrency industry matures, Cuban hopes to see a move away from meme-based projects toward more serious applications of blockchain technology that offer tangible benefits. He believes that while speculative trading will always be part of the picture, the true future of cryptocurrencies lies in projects that solve real-world problems and create lasting value.

Cuban’s outspoken opinions are likely to add fuel to the ongoing debate over the role of memecoins in the broader cryptocurrency market. His comments may also influence investors who are undecided about whether to engage in meme trading or focus on more traditional assets within the crypto space.

For those who follow Cuban’s advice, memecoins may represent a fad, similar to the dot-com bubble of the early 2000s. However, for others, the lure of quick profits in a high-risk environment and high reward is still hard to resist.

Chiliz CEO Alexandre Dreyfus aims to make Chiliz “the sports blockchain” and launches Pepper Memecoin

Alexandre Dreyfus, CEO of the Chiliz blockchain, has doubled down on his ambition to establish Chili as the ultimate blockchain for sports, touting it as the “sports blockchain” in a recent interview. Known for powering the world’s largest fan token platform, Socios.com, Chiliz is making waves not only with fan tokens, but now with the upcoming launch of a memecoin called Pepper, scheduled for October 10. According to Dreyfus, the inspiration behind Pepper is simple: “Well, Chili Pepper.”

Chiliz’s native token, CHZ, is already a well-established force in the sports blockchain landscape, making it easy to create and manage fan tokens on Socios.com. With Pepper, blockchain is now venturing into the world of memecoins, a domain traditionally dominated by tokens like Dogecoin and Shiba Inu. The memecoin will be airdropped to CHZ holders, although US citizens will be excluded from the distribution and can also be farmed. The first exchange to announce Pepper’s listing is Upbit, a major South Korean cryptocurrency platform.

This new development comes amid fluctuating market conditions for the CHZ token itself. In March 2024, in the run-up to the UEFA European Football Championship, CHZ saw a significant rally, rising 25% in seven days to hit a two-month high of over $0.15. However, CHZ has retreated to around $0.068. Despite this decline, CHZ remains the world’s leading sports token by market cap.

“The chain is becoming what we intended it to be, which is the sports blockchain,” Dreyfus said in the interview. “It’s unique. We are the only ones who do what we do. And we don’t want to do anything else.”

A key part of Chiliz’s mission is to differentiate fan tokens from the much-hyped non-fungible tokens (NFTs). Dreyfus believes that fan tokens represent a much larger and more active market than NFTs, a sentiment he expressed during the interview. He noted that while NFTs attracted significant attention, especially during the bull market, fan tokens continue to show solid growth and tangible utility.

“No offense to the NFT community, but people don’t realize [is that] “Fan tokens are a much bigger market than NFTs,” Dreyfus explained, comparing the current 24-hour volume of fan tokens ($134 million) to the much lower $6.8 million of NFTs, according to data from CoinGecko.

Dreyfus pointed out the fundamental difference between the two assets: NFTs are non-fungible, meaning each one is unique, while fan tokens are fungible, allowing for easier liquidity and trading. He further highlighted that fan tokens allow for more practical applications, such as weekly voting on team-related decisions in sports stadiums. By contrast, NFTs, despite their peak popularity in digital art, music, and other fields, have yet to establish consistently high trading volume outside of specific use cases.

Fan tokens represent more than just speculative digital assets; They offer fans a tangible way to interact with their favorite sports teams. These tokens act as a membership pass to a global sports community, giving their holders perks like game tickets, VIP experiences, and even a say in certain team decisions. For example, fan tokens have allowed fans to vote on various items, such as jersey designs and in-stadium music options.

Dreyfus highlighted an incident involving Cristiano Ronaldo during his time at Juventus. After Ronaldo scored a hat-trick in a game, token holders chose the song that played in the stadium, a small but significant moment that demonstrates how blockchain technology can bridge the gap between digital assets and the world’s experiences. real.

“This is the perfect example of how something on-chain changed something in real life,” Dreyfus said. “Only token holders could choose the music. And before they couldn’t do it. So, soft or not soft, it doesn’t matter.”

Expanding global reach and regulatory compliance

Since its inception, Chiliz has made significant strides in the world of sports, signing over 80 sports properties around the world, from football clubs to cricket teams. Major partnerships include deals with Paris Saint-Germain FC and a host of NBA and NFL teams, although tokens for the latter have yet to be released. In India, Socios has also partnered with several Indian Premier League (IPL) cricket teams.

Dreyfus mentioned that Chiliz has established regulatory licenses in several countries, including Italy, Spain, Portugal and Lithuania. This strict regulatory framework has allowed Socios.com to become one of the most regulated crypto entities globally, second only to major exchanges.

“We had to do the same job as an exchange, except we don’t do bitcoin or Ethereum, we just do fan tokens,” Dreyfus noted, emphasizing the unique niche his company occupies in the crypto landscape.

Chiliz’s user base has expanded rapidly, particularly in Türkiye and Brazil, where it has attracted one million and 500,000 users, respectively. These countries represent two of Chiliz’s largest markets.