A sudden outburst of laughter, usually used in a sarcastic way or texting in place of "lol" or "lawlz"
literal meaning-
Bonnie: I just laughed so hard I threw up a little bit!
Cara: Bahahahaha, oh my god LOLCANO!
sarcastic meaning-
status update: b0r3d, texxxt meee!!
reply: lolcano..
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