Degen Chain Emerges as New Hub for Meme Coin Trading

Degen Chain, a Layer 3 network built for memecoin trading, has seen over 10.5 million transactions and 500,000 new wallets in the last several days. Its native token, DEGEN, has surged 13x in the last two weeks, and currently boasts a market cap of over $500 million.

Alexander Mardar

Apr 02, 2024 - 2 min read

While some seasoned crypto enthusiasts debate whether we are entering a bull market and wonder why their “solid” cryptocurrencies are not performing well, another group is diving headfirst into meme coins. This sector of the crypto market has seen significant growth in recent months and shows no signs of slowing down.

The latest development in the sector is the emergence of a new Degen Chain, representing a whole new level of "degeneracy". It has been built entirely to support meme coin trading.

💡

The term “degen” stems from “degenerate,” a nod to the high-risk, high-reward trading strategy embraced by meme coin traders. Preferring the thrill of rapid gains, degens specialize in short-term trades, often of obscure and highly volatile meme coins, rather than committing to long-term investments.

On a technical level, Degen Chain employs Arbitrum’s Orbit architecture and is a Layer 3 network, built upon the Base Layer 2, with its native token DEGEN, which is used as the native gas, or fee payment token.

💡

A Layer 3 blockchain, a relatively recent innovation, is a customizable, application-specific network built upon Layer 2 protocols, which in turn are developed on a primary blockchain like Ethereum. These networks facilitate faster, more cost-efficient transactions than the base layer.

Before the advent of Degen Chain, the DEGEN token had gained popularity within the Farcaster community as a novel tipping currency. Launched as an ERC-20 token in January 2024, DEGEN has revitalized the Farcaster platform by allowing users to reward quality content with tokens.

Since its launch, Degen Chain has quickly grown, with over 10.5 million transactions and 500,000 wallets. Despite the proliferation of scams, some tokens on the chain, like DSWAP, the first DEX, and the meme coin project WAKE, have achieved fairly notable market capitalizations.

Not everyone is thrilled with the new Layer 3’s rise, however. Polygon CEO, Marc Boiron, has expressed concerns about the potential risks to Ethereum’s security with these new layers. He argues that Ethereum’s value and security could be jeopardized if all Layer 3 networks only interact with a single Layer 2.

“If all L3s settled to one L2, then Ethereum would capture basically no value and, thus, Ethereum security would be at risk.”

Despite these concerns, Degen Chain’s momentum in meme coin trading seems unstoppable. The DEGEN token has grown more than 13 times in the last two weeks and currently boasts a market cap of over $500 million.

It is essential, however, for traders to approach the meme coin market with eyes wide open. Meme coin trading is speculative by nature, akin to gambling, and carries substantial risk.