Utility meme coins: what happens when a crypto cultural token gets a dash of utility?
Meme Coins: Evolution from Novelty to Utility
1. Executive Summary
Meme coins have evolved from their original form as novelty projects built on internet culture. No longer just speculative assets, some meme coins are developing practical use cases, integrating AI-driven functionalities, and leveraging decentralized governance to create sustainable ecosystems. In their latest iteration and, if developed in the right way, some meme coins can serve in potentially profitable ventures offering genuine utility — this white paper explains how meme coins can confer equity-like value to holders while avoiding classification as securities.
2. Introduction
2.1 Defining Meme Coins
"Meme coins" are cryptocurrency tokens that initially gain traction through internet virality, brand association with popular memes, characters or trends, and active social media communities. They are typically characterized by their volatile nature where one event can trigger significant price fluctuations.
2.2 The Emergence of Utility in Meme Tokens
There is a reason meme coins are often referred to as “shit coins”. They are often dismissed as speculative fads and associated with entertainment, rather than utility.
Yet in recent months, a fast-growing trend has emerged — utility meme coins. Some meme coin developers have designed ecosystems with genuine value propositions, incorporating real utility, including staking and reward systems, governance, analytics or AI-powered use cases. Whilst the majority of meme coins offer little utility and are based on pure hype, these “utility meme coins” blend community spirit with tangible benefits, which can attract and hold a broader investor and user base.
A token with utility is more likely to sustain its value as it is less susceptible to singular social events or reliant on hype and is instead driven by its utility and therefore much less volatile.
This trend is fueled by industry recognition that sustainable success depends on real-world applicability, not just memes and marketing. This paper focuses on utility meme coins.
3. Historical Context: From ICOs to Meme Coins
3.1 The 2017 ICO Boom
In 2017, the cryptocurrency market witnessed a surge in Initial Coin Offerings (ICOs). Many projects offered speculative tokens tied to ambitious, but unfounded, roadmaps and promises of high returns for investors. Consumer interest spread like wildfire, largely due to widespread FOMO. These projects raised billions of dollars in a matter of months.
As an industry in relative infancy and still entirely unregulated at the time, this frenzy led to a large number of project failures and scams, where consumers and investors lost significant capital sudden high-profile and large losses of capital led to general reputational damage to the meme coin industry, causing increased investor caution. Regulatory scrutiny on meme coin projects has also increased, and to overcome this there has been a market evolution towards compliance-friendly structures — developers have begun emphasizing the ‘utility’ of meme coin projects, rather than hyping them as high-return opportunities.
3.2 Regulatory Responses and Security vs. Utility Tokens
Important regulatory authorities, including the SEC, started paying attention to meme coins and debates have emerged over the classification of meme coins. Particular emphasis has been placed on determining whether meme coins are securities or not, and therefore what their associated regulatory status is.
3.3 The Howey Test and What Constitutes a Security
Determining the status of meme coins is important because classification as a security would mean meme coins fall under stricter regulatory requirements. The Howey Test guides U.S. regulators in determining whether a token sale constitutes a securities offering. It is made up of criteria that an asset must meet to qualify as an “investment contract” or security.
If the asset is an "investment of money in a common enterprise, with a reasonable expectation of profits to be derived from the efforts of others" it is considered a security, as defined under the Securities Act of 1933 and the Securities Exchange Act of 1934.
To avoid such classification, and therefore stricter regulation, some meme coin developers are beginning to position their meme coins as utility tokens by emphasizing community-based development and transparent disclaimers about the token’s purpose. This includes:
Focusing on consumptive use (e.g., governance, staking rewards)
Decentralizing decision-making through DAOs or community voting. Rather than a centralized entity that could reasonably be responsible for price action.
Avoiding promising returns or linking token value to project revenue
Over 200 utility tokens provide direct access to a platform, often sidestepping the classic hallmarks of a security by offering:
No expectation of profit based solely on the managerial efforts of others,
Immediate usability within a platform for services, governance, or other non-financial functions.
4. Meme Coins as "Equity": Value Proposition Without Being a Security
4.1 The Equity Analogy
Holders of a meme coin can benefit from price appreciation if the project's ecosystem gains traction — much like how shareholders benefit when a company’s stock performs well. However, unlike stocks, meme coins rarely offer formal ownership, dividends, or profit-sharing. Instead, value stems from:
Increased demand for tokens enabling platform services and voting rights
Scarcity mechanisms, such as token burns
Community-driven momentum and viral marketing
5. Core Utility Features of Meme Coins
5.1 Branding and Community Engagement
The hallmark of meme coins has always been their community-first approach, where coins are created for fun or speculation. With utility meme coins, engaged holders still spread awareness on social media and drive hype campaigns, but also participate in governance forums and other community-centred rewards. Successful projects leverage these grassroots efforts to extend brand recognition and spur token adoption.
5.2 Rewards, Staking, and Ecosystem Benefits
Some of the most common utilities that meme coins now offer include:
Exclusive access to NFT collections and merchandise
Charity funds allocated from transaction fees
Staking: allowing holders to lock up tokens in exchange for rewards
Governance rights: for voting on treasury allocations or protocol upgrades
5.3 Governance Rights and Beyond
Perhaps the most significant utility relates to governance. Users in many meme coin communities influence the roadmap via Decentralized Autonomous Organizations (DAOs). Holders of a particular meme coin are entitled to vote on rule changes and on key decisions impacting the community.
This flattened structure keeps development nimble, encourages transparent decision-making, and helps ensure the project remains aligned with community interests.
6. Case Studies
6.1 a16z Crypto
a16z Crypto is a new-generation meme coin that merges playful internet culture with tangible AI-driven utilities. Despite its meme-inspired branding, the project aims to establish real-world value and long-term sustainability through multiple facets.
AI-Enhanced Trading Tools:
a16z integrates advanced analytics and natural language processing to provide real-time insights into market sentiment. These AI tools scan social media, trading forums, and news sites, alerting holders to trending keywords or sudden shifts in sentiment. As a result, investors can make more informed decisions and potentially capture market opportunities before they become mainstream news.Staking and Rewards:
The a16z ecosystem offers staking features that reward holders with additional A16z tokens for locking their coins in liquidity pools or specialized vaults. This approach not only incentivizes long-term holding but also promotes liquidity, stabilizing the token’s overall market dynamics.Governance via DAO:
Following a community-driven ethos, a16z Crypto features a Decentralized Autonomous Organization (DAO). Token holders can propose and vote on upgrades, treasury allocations, partnerships, and charitable initiatives. By distributing power among its community, a16z aims to foster greater transparency and accountability.NFT Collaboration:
a16z has partnered with emerging NFT artists to generate exclusive digital collectables. Holders of a16z tokens can mint or purchase these NFTs at a discount, tying the token’s utility to the broader NFT market. This integration caters to both collectors and traders seeking unique assets that reflect a16z’s meme-centric but forward-looking identity.Community-First Marketing:
Much of a16z’a hype and brand recognition stems from an active presence on social media platforms such as Twitter, TikTok, and Discord. Memes, viral campaigns, and user-generated content drive organic engagement. This “fun factor” resonates with younger demographics, yet the underlying utility keeps more seasoned crypto enthusiasts interested.
Key Takeaways from a16z Crypto
Balancing Meme Culture with Real Utility
a16z demonstrates that meme branding and practical features need not be mutually exclusive. The coin leverages playful imagery and viral marketing to attract attention, while simultaneously offering AI-driven insights, governance, and staking to foster long-term engagement.AI Integration as a Differentiator
By incorporating AI analytics, a16z positions itself ahead of purely hype-based meme coins. The ability to make data-driven decisions provides tangible value to investors, setting a16z apart in a saturated market.Sustainability Through DAO Governance
Relying on a DAO helps a16z remain agile and user-focused. Community members who hold and stake a16z tokens gain direct influence over the project’s direction, creating shared ownership and accountability.Enhanced Market Stability
Through staking and liquidity rewards, a16z mitigates the extreme volatility typically associated with meme coins. These features promote user retention and encourage holders to participate actively in the ecosystem, rather than simply speculate on short-term price movements.
By combining AI, DeFi functionalities and strong community governance, a16z Crypto exemplifies how meme coins can transition from mere “internet culture phenomena” to robust, utility-driven ecosystems. This blend of branding and functionality positions the project to adapt to changing market conditions while retaining a devoted, enthusiastic community base.
6.2 Bonk Token
Bonk Token emerged on the Solana blockchain as one of the first meme-inspired projects in that ecosystem, quickly capturing the attention of both Solana enthusiasts and meme coin investors. While its branding centers on playful, dog-themed marketing, Bonk has layered on community and ecosystem incentives that differentiate it from earlier meme coins. It offers utility for its holders in the following ways:
Community-Centric Airdrops:
Bonk gained rapid traction by distributing a significant portion of its token supply through community airdrops. This initiative not only attracted a large user base but also aligned token distribution with grassroots supporters rather than large institutional buyers.Integration with Solana DeFi:
Building on Solana’s high-speed, low-cost infrastructure, Bonk partnered with various DeFi platforms to enable yield farming and liquidity mining. Holders of Bonk Token can stake or provide liquidity on decentralized exchanges for additional rewards, helping stabilize the token’s price and reduce speculation-driven volatility.Collaborative NFT Initiatives:
Bonk actively collaborates with independent NFT projects on Solana, creating themed collections and special-edition collectables. These NFTs often grant holders exclusive perks or governance privileges in the Bonk ecosystem, merging meme-based fun with tangible utility.Philanthropic and Community Proposals:
In keeping with many meme coin traditions, Bonk allocates a portion of its transaction fees or treasury to community-led initiatives. Whether it’s funding a small developer grant or donating to animal shelters, these proposals are vetted through a governance process that encourages token-holder engagement.Active Social Media Presence:
Bonk’s marketing relies heavily on memetic virality, with Twitter campaigns, Discord contests, and humorous branding that resonates with a broad audience. Its success highlights the power of combining low-friction blockchain technology (like Solana) with influencer-driven marketing and grassroots momentum.
Key Takeaways from Bonk Token
Rapid Community Onboarding
By leveraging large-scale airdrops, Bonk distributed ownership to a wide base of supporters, fostering a highly engaged and vested community from the outset. Bonk Token now has 750k holders.Solana Ecosystem Advantage
Bonk benefits from Solana’s speedy transactions and low fees, making yield farming and NFT minting more accessible to everyday users. This scalability is crucial for meme coins aiming for mainstream adoption.Meme Branding Meets Real Utility
Despite its playful branding, Bonk is building utility through DeFi integrations, NFT collaborations, and community governance—an approach that can yield more sustainable growth than hype alone. It now has 131 integrations over 11 chains.Inclusivity and Decentralization
Bonk’s open governance and philanthropic focus align with the broader crypto ethos of community empowerment. This inclusivity helps sustain interest even after the initial hype subsides.
Overall Insights
Both a16z Crypto and Bonk Token illustrate how meme coin projects can offer meaningful utility. By incorporating features like AI analytics, NFT collaborations, and community-centric governance, these tokens move beyond temporary hype and speculation to establish more resilient ecosystems. As the market evolves, projects that strike the right balance between viral marketing and functional utility will likely emerge as long-term leaders in the meme coin space, able to withstand general volatility and emerge.
7. Future Outlook
7.1 Market Potential
The resilience of meme coins suggests a bright future, especially for those integrating genuine utility and strong community governance. We are in the early stages of blockchain and meme coin development, in the coming years, as developers harness meme coin potential, we will see meme coin use cases broaden.
7.2 Regulatory Evolution
While meme coins can avoid classification as securities, ongoing regulatory vigilance is necessary to cut through the hype, and speculative bubbles and limit fraudsters taking advantage of consumer interest. Regulation is also necessary to create clarity for businesses to harbour meme coin innovation and the development of sustainable utility projects.
8. Conclusion
The evolution of meme coins from simple, hype-driven assets to utility-focused tokens, underpinned by committed communities underscores their potential for long-term sustainability. Success depends on balancing community engagement, utility development, and regulatory compliance.
Glossary
DAO (Decentralized Autonomous Organization): An organization represented by rules encoded as computer programs, transparent and controlled by network participants.
DeFi (Decentralized Finance): Financial services and products built on blockchain technology without traditional intermediaries.
Howey Test: Legal test used by the SEC to determine whether a transaction qualifies as an investment contract.
ICO (Initial Coin Offering): A fundraising method where new cryptocurrency projects sell tokens to investors.
NFT (Non-Fungible Token): Unique digital assets verified using blockchain technology.
Smart Contract: Self-executing contracts with terms directly written into code.
Staking: Locking up cryptocurrency holdings to support network operations in exchange for rewards.
Tokenomics: The economic and incentive systems governing a cryptocurrency's supply and distribution.
References
CoinDesk Research. (2018). 2017 ICO Tracker
SEC v. W.J. Howey Co., 328 U.S. 293 (1946)
