The memecoin 'casino' undermines crypto's long-term prospects: a16z

The Chief Technical Officer at one of the biggest and most influential venture capital firms active in the crypto and blockchain space wasn't pulling any punches when he decided to publicly criticize memecoins.

"Memecoins alter how the public, regulators, and entrepreneurs see crypto. At best, it looks like a risky casino. Or a series of false promises masking a casino," Eddy Lazzarin, CTO of Andreeson Horowitz VC fund a16z Crypto, said in one post to the social media platform X. "This deeply affects adoption, regulation/laws, and builder behavior. I see the damage every day. You should too."

It appears Lazzarin initially criticized memecoins in response to another post that suggested memecoins have been a source of intense frustration among builders in the crypto space.

"Seeing memecoins leading to disillusionment/churn of crypto builders to a degree more extreme than even the bear market the past few years," said Michael Dempsey, managing partner of the investment firm Compound, which has invested in blockchain projects like Arbitrum.

While memecoin popularity may be aggravating for some, it doesn't appear they are going anywhere anytime soon, with the top memecoins cumulatively accounting for tens of billions of dollars in market capitalization, according to CoinGecko . Dogecoin DOGE -3.67% , which is often championed by Elon Musk, owner of X and CEO of Tesla, is the most popular by market cap, worth more than $20 billion, also according to CoinGecko.

Earlier this week, Shiba Inu SHIB -3.23% , the team behind the second-most popular memecoin by market cap, said it raised $12 million by selling an unreleased token to non-U.S. venture capital investors.

Memecoins "undermining" crypto

Lazzarin seemed to agree with Dempsey's concerns over the damage memecoins may be doing, saying: "Besides undermining the long-term vision of crypto that has kept so many of us in the space, memecoins aren't very technically interesting. It shouldn't be a surprise that they're not attractive to builders."

A healthy debate ensued with some people coming to the defense of memecoins, including whether or not they offer technical value. "It's simply one thing people do on-chain," posted 6th Man Ventures co-founder Mike Dudas. "Someone partaking in memecoins doesn't prevent them or others from partaking in other blockchain use cases" such as DePin, DeFi, gaming, social and payments.

Mike Dudas is the co-founder and former CEO of The Block. He no longer has a financial interest in The Block.