Meme coins with AI, explained

How it works: With an AI large language model, a digital coin can be attached to a character or a mood, and it can seem to be alive, responding to its fans on social media or in Telegram chats — in character.

• This enables an idea to grow. Even if the idea is just: The 💨 emoji is funny.

In a way, all cryptocurrencies are memes (just like all currencies), but AI agents aren't for every coin.

• Asking bitcoin what flavor of ice cream it might like seems a bit ridiculous. But asking pepecoin? You could have that conversation, because pepecoin has a vibe.

And meme coins that had vibes were the hotness last year. While outsiders caught vapors over the silliness masked as "investing," insiders saw it differently: of course it was silly — it was a game.

• It was a massive multiplayer game of Apples to Apples (only everyone is a player and everyone is also a judge, and there are no turns, but there is money on the line.)

The inflection point for AI coins came when large language model's, or LLMs, allowed a token or coin to interact with fans. A bespoke LLM created around a particular character or vibe could keep being inventive about its core idea, keep pumping out content and interacting with its community in real time.

• And that's the heart of any meme coin: If an idea takes up more mind share, then it becomes more valuable.

State of play: AI agent coins represent a small subset of the market, with just a $16.6 billion collective market cap, according to CoinGecko.

• A few driving the hype include goatseus maximus (GOAT), aixbt (AIXBT) and ai16z (AI16Z).

What they're saying: "They are the thing because there is nothing else to do," Matti of Zee Prime Capital, an investor who specializes in investing based on what people are talking about, tells Axios.

• "But it does open a new design space and people tinker."

• (Matti described the larger meme game in detail back in ancient times: 2020.)

💭 Our thought bubble: Go search around for news on AI meme coins and the like, and you'll be barraged by coverage of what's up and what's down.

• All of that is nonsense unless you're a degen trader who measures profits in hours. Scroll past it.
• Price charts in crypto are only really informative on the scale of years if you want to assess the value of a given concept, unless you're gambling to make money today.

The big picture: Crypto traders are always trading a "meta" or "narrative." These things are often years out from their true usefulness. AI agents are the meta of the moment.

• Decentralized finance (DeFi) was the top meta of 2020. NFTs were the meta leader of 2021. Last year, it was meme coins.
• Yet we're still at the point where, globally, bitcoin and stablecoins remain the only blockchain products with stable product-market fit.

What's next: Some AI agents are actually going a step further than chatting already and making crypto trades. It's too early to say how it's going and so far valuations have exploded wildly beyond performance (surprise, surprise).

• Yes, but: "They could evolve into something truly valuable, something unexpected," Matti says.