Let's start with a jump back in time and go back to 2013, when the first memecoin was born.
DOGE COIN
Born almost as a joke as a parody of the famous meme where the subject was precisely DOGE, a Shiba Inu dog.
It has no maximum supply; in fact, over 100 billion tokens are already in circulation and there is not even a form of coin-burning to handle a form of inflation.
Let's be honest, it's no accident they are called shitcoin!
This type of "coin" is subject to tremendous volatility that basically depends on the community and FOMO (Fear of Missing Out).
Source:https://www.verywellmind.com/how-to-cope-with-fomo-4174664
Not having a solid foundation behind it, it follows that sudden and huge price drops can occur all simply because traders turn their attention to something else; in this case another panic-sell factor is triggered.
At this point the game is up and the price plummets.
It all took shape with the shares of GameStop (GME) and AMC Entertainment (AMC) in late 2020: the Reddit community managed to drive the price up to 100 times its value; this in just a few months.
Source: https://www.nytimes.com/2021/02/02/business/gamestop-investors-plunging-shares.html
In 2021, another Reddit group, taking a cue from what had happened with GameStop, tried with DOGE. The feat succeeded also thanks to some tweets by Elon Musk that made the price jump to $0.73 in numerical terms we are talking about a 2000% growth in only 5 days!!!
In May 2021, Elon Musk himself speaking in a DOGE TV interview joked about the token. Most likely the loss in value was because of what Musk said.
Given the speculative potential of this meme coin, another one, SHIB, dubbed the "Dogecoin Killer," was immediately born.
Investors thinking they would hit the jackpot overnight, bought them thinking in another show; which unfortunately wasn't there.
The factor that makes these coins attractive, is their very low purchase price; this way you own millions of a (worthless) coin and it seems to be more important than having a fraction of a BTC or ETH (absurd!)
However, the potential profits are contingent on the sentiment of the respective communities so, underneath, they have no substance and are a great way to throw hundreds of dollars away.
Different discussion, however, was GameStop's, which was a form of community rebellion to an eventual closure of the company.
Risks
These fun "inventions," hide, at their core, some pretty serious issues: except for DOGE which has its own blockchain (fork of LTC) and SIHB (token on the ETH blockchain) the others not having a whitepaper (if you find it write it in the comments!) do not have a defined and clear tokenomics. They are completely at the mercy of the community that created themand so the volatility is too much.
Suddenly you can have a pump and after a few hours an impressive dump; the causes can be the most varied, from a shilling of an influencer or because of FOMO, as I said at the beginning.
Last but not least is the possibility that exists of a rug-pull, the most famous example we had with the SQUID token: in one week it did +86000%, but all the token holders couldn't sell them... and here the developers practiced a rug-pull and disappeared with the value.
That's because the smartcontract wasn't placed under audit by the agencies in charge, Certik, for example.
To recap, my advice to you is not to follow too spasmodically these fool coins to become millionaires overnight: you become a millionaire with time and perseverance!