Not all meme coins are created equal. If they’re to get bought up by the Avalanche Foundation, their creators will have to follow some rules.
The organization that supports the Avalanche blockchain released an “eligibility framework” Tuesday that puts some guardrails around its eyebrow-raising plan to start purchasing meme coins: those jokey, highly volatile cryptocurrencies that are often paired with dogs.
These tokens have become a big business with sometimes maddening returns in spite of their lack of value. But many of them are also outright scams meant to enrich their founders, who can create them quickly and cheaply atop permissionless blockchains where anyone can trade them.
No matter one’s philosophical perspective on meme coins, the Avalanche Foundation has “already started” buying some using money from its $100 million “Culture Catalyst” fund for cultural initiatives, it said in a statement Tuesday.
The Foundation did not respond to questions regarding which tokens it had bought, how much capital it is earmarking for meme coins or whether it would actively manage its positions.
“The Foundation embraces the full spectrum of creativity, culture, and camaraderie in the blockchain space, and broadly views meme coins, NFTs, and similar tokens created by the community for culture and engagement as ‘community coins,'” the statement shared with CoinDesk read.
Meme coins have to be independent from their creators and native to the Avalanche blockchain to be considered, according to the three-page rule set shared with CoinDesk. That means no tokens with allocations earmarked for their team or clones on other blockchains, and a creator team that renounced ownership of the mint contract.
Additionally, the Foundation won’t look kindly upon tokens hoarded by whales, those that have not been scrutinized by security companies or those that launched without whitelists.
The rules are malleable, the foundation said, and simply meeting them will not guarantee they will be bought up. But there are some miminums they must meet as of January 2024:
- At least 2,000 holders, of whom the top 100 own less than 60% of supply
- More than $200,000 in liquidity supplied by at least 50 providers
- At least a $1 million market cap
- See at least $100,000 in daily average trading volume over two weeks
Finally, the meme coin needs to have existed for at least a month “in order to give the community time to get to know and understand the coin,” the framework said.