Coins & Tokens

Altcoins, Memecoins, and DeFi Tokens: A Field Guide

A practical taxonomy of the crypto asset universe beyond Bitcoin and Ethereum — what altcoins, memecoins, and DeFi tokens are, survival rates, and how to evaluate each category.

7 min read
#altcoins#memecoins#defi#tokens

Beyond Bitcoin and Ethereum, you'll encounter thousands of other crypto assets — each with its own community, narrative, and risk profile. Understanding the categories helps you navigate the noise and make informed decisions instead of chasing hype.

Altcoins: Everything That's Not Bitcoin

"Altcoin" is short for "alternative coin" — literally any cryptocurrency that isn't Bitcoin. Ethereum is technically an altcoin, though it's rarely called one anymore given its size. The term usually refers to mid-to-small cap projects.

  • Layer 1 altcoins — independent blockchains competing with or complementing Ethereum. Examples: Solana (fast/cheap), Avalanche (subnet architecture), Cardano (research-driven).
  • Infrastructure tokens — projects that provide services to other blockchains. Examples: Chainlink (oracle network), The Graph (data indexing), Filecoin (decentralized storage).
  • Layer 2 tokens — governance tokens for Ethereum scaling solutions. Examples: ARB (Arbitrum), OP (Optimism).
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Understanding the category tells you a lot about the risk. Layer 1 altcoins compete with Ethereum — a risky bet. Infrastructure tokens provide services that multiple chains need — potentially less risky if the underlying demand is real.

Memecoins: Speculation in Its Purest Form

Memecoins started as jokes (Dogecoin, created in 2013 as a parody) and evolved into a full-blown market segment. They typically have no utility, no technology moat, and no revenue — their value is driven entirely by community, hype, and cultural momentum.

  • Examples — DOGE (Dogecoin), SHIB (Shiba Inu), PEPE, BONK, WIF, and thousands of new ones launching weekly.
  • The appeal — low entry price (psychologically), massive upside potential (some have done 100x+), strong community culture.
  • The reality — for every memecoin that 100x'd, thousands went to zero. Survivorship bias is extreme. The winners are visible; the losers are forgotten.
Memecoin survival rates (approximate)
Tokens launched on Pump.fun (Solana) in 2024: ~3 million
Tokens that reached $1M market cap: ~1.4%
Tokens still above $1M 30 days later: ~0.1%
Tokens still alive after 6 months: ~0.01%

Source: Dune Analytics aggregated data, 2024
Memecoins are gambling with extra steps. If you participate, treat it as entertainment money — an amount you'd spend at a casino without regret. Never invest rent money, savings, or your RentAHuman earnings into memecoins expecting a return.

DeFi Tokens: Governance and Utility

DeFi (Decentralized Finance) tokens represent ownership or governance rights in financial protocols that replace traditional banks, exchanges, and lending companies. Unlike memecoins, DeFi tokens usually have quantifiable utility.

  • DEX tokens — UNI (Uniswap), CAKE (PancakeSwap). Governance over decentralized exchanges that generate real trading fees.
  • Lending protocol tokens — AAVE, COMP (Compound). Governance over protocols that handle billions in loans.
  • Staking tokens — LDO (Lido), RPL (Rocket Pool). Governance over liquid staking protocols.

The key difference: DeFi protocols have measurable fundamentals — total value locked (TVL), revenue, user counts. You can evaluate them more like businesses than pure speculation.

How to Tell the Difference

Quick classification guide
Question                               | Altcoin | Memecoin | DeFi Token
───────────────────────────────────────|─────────|──────────|───────────
Does it solve a technical problem?     | Usually | No       | Yes
Does the protocol generate revenue?    | Maybe   | No       | Often
Is the value driven by community hype? | Partly  | Entirely | Partly
Is there a working product?            | Usually | No       | Yes
Can you evaluate fundamentals?         | Somewhat| No       | Yes
Typical risk level                     | High    | Extreme  | Moderate-High

Practical Advice for Beginners

  1. Start with BTC and ETH — build your foundation before exploring altcoins. See our beginner coins guide.
  2. If you explore altcoins — stick to projects with real usage, active development, and transparent teams. Use our legitimacy checklist.
  3. If you want memecoin exposure — limit it to 5% or less of your portfolio. Accept that it will likely go to zero.
  4. If you're interested in DeFi — start by using the protocols (swapping on Uniswap, lending on Aave) before buying governance tokens. Understand the product first.

Understanding the technical difference between coins and tokens gives you more context for evaluating these assets. And always check the risk management fundamentals before adding anything new to your portfolio.

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