Developers on established layer-one blockchains Dogecoin and Litecoin have launched their own semi-fungible token standards – the DRC-20 and LRC-20 token standards.
These standards, derivatives of Ethereum’s ERC-20 and Bitcoin’s BRC-20 token standards, have led to the introduction of new memecoins and NFT collections. These include Dogewow, Cheems, Litecoin Punks, and Degen.
The use of the Ordinals protocol has enabled the creation of inscriptions embedded in Bitcoin transactions. It takes the form of non-fungible and semi-fungible tokens.
Consequently, numerous tokens have been launched, triggering a speculative frenzy among crypto traders.
Dogecoin and Litecoin increase transactions by 6,900%, 485% respectively
Originally designed as ultra-cheap cryptocurrency payment networks, Dogecoin and Litecoin have experienced a significant surge in transactions since the launch of memecoins.
Dogecoin’s daily transactions have increased by 6,900%, rising from 20,000 to 1.4 million. Meanwhile Litecoin’s daily transactions have risen by 485%, from 100,000 to 585,000, in the last 30 days.
Despite this surge, transaction fees for Dogecoin and Litecoin have remained low. It has stayed under one cent per transaction.
In contrast, Bitcoin and Ethereum have seen their average fees rise considerably.
Memecoins Experience Price Decline Despite Interest and Speculation
Although the launch of DRC-20 and LRC-20 memecoins has not positively impacted the prices of Dogecoin and Litecoin, both experienced a decline in value. Despite this, these memecoins have attracted substantial interest and speculative activity.
Notably, Dogecoin has surpassed both Bitcoin and Ethereum in terms of daily transactions for the first time this month. Current memecoins lack utility and rely on speculative trading, but future development and infrastructure could enhance their functionality potential.
Furthermore, inscriptions facilitated by the Ordinals protocol could offer a mechanism to preserve timeless images, documents, and files on resilient blockchains.
Challenges of Market Infrastructure and Liquidity for DRC-20 and LRC-20 Tokens
Looking ahead, Bitcoin’s dominant position in terms of market capitalisation and usage may lead to increased fees on its base layer. It might potentially prompt lower-value inscriptions to migrate to networks like Litecoin, Dogecoin, or Bitcoin-based layer-two solutions.
Litecoin’s upcoming third halving event is anticipated to be a bullish catalyst, marking a significant milestone for the cryptocurrency.
It is important to note that while DRC-20 and LRC-20 tokens are relatively easy to mint, they currently face challenges related to market infrastructure and liquidity.
Evolving Beyond Memecoins: Long-Term Success of Litecoin and Dogecoin
As memecoins on smaller networks, they exhibit higher volatility and limited liquidity, making trading positions more challenging to manage.
Investors interested in memecoins should consider factors such as community size, network effects, and the user base of the underlying blockchain.
Additionally, the long-term success of Litecoin and Dogecoin depends on their ability to evolve beyond memecoins and gain broader adoption, as they currently remain on the periphery of mainstream acceptance.
It is crucial to conduct thorough research and evaluate the value proposition of each network before making investment decisions, considering factors beyond the realm of memecoins.