What Does The Launch Of This Hot New Meme Coin Mean For Dogecoin?

If you believe the hype, Tamadoge is going to be the hot new meme coin of the fall. After raising $19 million in a monster pre-sale, it finally started trading yesterday. Just like popular meme coins Dogecoin (DOGE 2.02%) and Shiba Inu (SHIB 2.07%), Tamadoge will feature a Shiba Inu dog mascot.

Something feels different about this new meme coin, though. Tamadoge is much more than just a silly meme coin. Tamadoge is the token for a play-to-earn game in the metaverse that involves non-fungible tokens (NFTs). Basically, the creators have taken all the big buzzwords of the past year (play-to-earn, metaverse, NFTs), added in the cuteness factor of tamagotchi, and then combined all this with a shiba inu dog mascot to make this the meme coin of all meme coins. So what does it all mean for Dogecoin?

Meme coins with utility

The biggest takeaway here is that meme coins need to have some kind of use. If you take a quick look at the top meme coins in the crypto world right now, the list includes seemingly endless permutations of Doge-themed crypto tokens. All of them pay homage to Dogecoin in one way or another, but without really adding anything new or of value.

Here's where Tamadoge has a real advantage, and possibly why it had one of the most successful crypto pre-sales ever: Tamadoge has real-world utility. As explained in its white paper, Tamadoge will be the utility token of the entire Tamadoge ecosystem. You can use it to purchase digital Tamadoge pets, which can be traded as Tamadoge NFTs. And you can use Tamadoge to breed, cultivate, and then compete with your digital pets in a play-to-earn online gaming environment.

The new tokenomics of meme coins

Moreover, Tamadoge seems to have learned from the problems encountered by other meme coins. I'm thinking specifically of tokenomics, which refers to the economic factors affecting the supply and valuation of a cryptocurrency. In the past, the path to meme coin success was simply creating a massive supply of coins to generate a huge market valuation on Day 1. Shiba Inu, for example, launched with a total circulating supply of 1 quadrillion coins. Dogecoin has a supply of 133 billion coins currently in circulation, and this number continues to grow.

In contrast, Tamadoge is launching with a fixed lifetime supply of 2 billion coins, with 1 billion of those coins available for trading as of yesterday. Coins were priced at $0.03 at launch (although pre-sale buyers got a discount), giving Tamadoge a $30 million market cap. That's not very big (it barely ranks among the top 500 cryptos in the world), but the tokenomics are what matter here. As an investor, you won't have to worry about a huge coin supply weighing down the price, as in the case of Shiba Inu and its 1 quadrillion coins.

Dogecoin needs a new roadmap for 2023

All of which leads me to think Dogecoin really needs to reconsider its roadmap for 2023 if it hopes to remain relevant. In 2022, even Shiba Inu made a number of efforts to add utility to its ecosystem -- such as the launch of the Shiba Inu metaverse -- and I think this is part of a long-term trend. Dogecoin needs to make similar types of changes, giving developers a reason actually build on top of the Dogecoin blockchain. Otherwise, why would anyone want to buy Dogecoin when you can do more with Tamadoge?

But before you rush out to buy Tamadoge, just remember that this is obviously a highly speculative meme coin. It will trade exclusively on a relatively unknown cryptocurrency exchange. Its market cap is so tiny that it could be easily manipulated by large whale investor. And will it come with so much initial hype -- including social media influencers calling for it to increase by 10-fold or 100-fold by the end of the year -- that it could prove to be just too frothy and speculative even for the most risk-tolerant investor. But if it manages to do well and not stumble right away, it will raise the bar for what investors expect from meme coins like Dogecoin in the future.

This article originally appeared in The Motley Fool.

Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.