Arthur Hayes: The Future of Political Memecoins

Original Title: Zero Knowledge Proof

Author: Arthur Hayes, founder of BitMEX; compiled by 0xjs@Golden Finance

Over the past century, with advancements in communication technology, the essential skills politicians use to engage the public have also changed. To illustrate my point, I would like to quickly review the history of U.S. presidents, focusing on key advancements in communication technology.

Radio:

The most popular tech stock of the 1920s was RCA, the dominant consumer radio manufacturer at the time. RCA's price-to-earnings ratio reached an all-time high of 73 before the crash and subsequently fell into decline. This is something to remember about tech stocks... and this time is no different. During World War I, radio emerged as a military technology, and after the war, it was commercialized, led by the United States. By 1940, nearly 80% of American households owned a radio. Wartime President Franklin Roosevelt became famous for his fireside chats, where he communicated with the American public, instilling the necessary war propaganda to unite society in sacrificing blood and wealth to fight against the Germans and Japanese. For later politicians to succeed, they had to carve out a space in the radio waves.

TV:

Television became a major consumer product in the United States in the 1960s, with 90% of households owning a TV. This was the first time that the entire nation could watch the propaganda of the ruling class together. The political watershed moment of television as a powerful political advertising tool was the presidential debate between John F. Kennedy and Richard Nixon in September 1960.

Nixon was the favorite to win because he was the more experienced politician. People were familiar with his voice but not his face. Kennedy, on the other hand, was a suave, inexperienced young man. However, the televised debates showed the American people an aging, frail-looking Nixon and a young, vibrant Kennedy. Nixon's poor television performance turned the tide, and Kennedy won the election. Since then, a calm and confident television presence has become a prerequisite for winning high office.

Internet/Social Media:

Politicians took some time to truly leverage social media, which originated from the personal computer and internet revolution. However, by 2016, this political power had emerged. To understand the amount spent on political television and radio ads during presidential election years, let's look at this statistic: in the 2012 U.S. presidential election, Barack Obama and Mitt Romney spent about $2.6 billion on television and radio ads.

Donald Trump's rise almost began as a joke. He entered the race for the Republican presidential nomination in 2016. No one thought he could succeed, and Trump had no intention of spending a large amount of money on TV and radio advertisements only to take political hits. He was seen as a nuisance within the party and thus would not receive significant donations. However, while Trump lacked the substantial campaign funds to splurge on TV and radio ads, he did understand how new technology was changing the media landscape.

Pew Media estimated that in 2016, 68% of adults had Facebook accounts. At that time, it was not common to micro-target groups for political gain based on social network activity. The Trump team seized this gold mine, cheaply targeting potential supporters and delivering political ads to them at a cost much lower than through TV or radio. In addition, Trump used Twitter (now known as X) to communicate directly with people in real time. It was raw, unfiltered, and chaotic. But it was humanizing, and it drew the attention of both supporters and opponents. Attention has always been a commodity that works, and Trump used social media to attract more attention at a far lower cost than any other politician, ultimately winning the presidency.

Podcast:

Global political figures have recognized the success of social media in shaping public opinion and have adjusted their communication strategies. During the COVID-19 pandemic, the comprehensive effects of social media in disseminating political propaganda were fully demonstrated. Governments around the world have demanded that major tech social media platforms spread lies about COVID and vaccines to the world, while suppressing any opinions that differ from official narratives. Canceled and removed content has shifted towards private podcasts that survive and thrive on the internet.

By 2024, many people are getting news and forming their political views by listening to their favorite podcast hosts. Joe Rogan is by far the most successful podcaster in America. He recently signed a multi-year contract worth $250 million with Spotify. Rogan influenced public opinion in the recent U.S. presidential election, especially among undecided voters. Trump appeared on Rogan's show, but Harris did not. Trump has appeared on numerous podcasts that attract his supporters. Harris continues to rely on traditional television and radio shows, supplemented by outdated ads on social media platforms. Trump defeated Harris by once again leveraging advances in communication technology to connect with voters more directly.

What did we learn?

With the development of technology, information can be disseminated to a larger audience more quickly and cheaply, and the connection between politicians and the people they govern has become more direct. As rulers become more humanized, they must adapt the way they communicate their political agendas to the public. Humanization is not always advantageous for politicians, as the public quickly realizes that they are as foolish as a fool.

TRUMP

Trump is the first politician to officially launch his own memecoin, and he can be considered one of the three most influential politicians in the world (alongside the leaders of China and Russia, who are on par or close to him). Trump has pioneered a new era of political memecoins.

I believe that Political Meme Coin will achieve the following points:

• Provide real-time global public opinion polls on politicians
• Almost no cost is required to increase the participation and influence of political movements
• Bring billions of people to Web3

Let's delve deeper.

Trivia Game

The popularity of politics is a common sense game. Everyone believes that what others believe has more influence on our views of politicians than what we believe ourselves. This leads to information asymmetry because in public we believe one thing, while privately we believe another. As a result, we provide pollsters with garbage information about our true views. This puts politicians in a bind because they want to understand our real private opinions in real time. However, if publicly supporting an unpopular politician is socially acceptable, it also allows unpopular politicians to pretend to be popular. In short, both the government and the governed possess imperfect information, which can lead to policy failures.

Political Memecoin provides zero-knowledge proofs of political popularity. Specifically, as an individual, you can now privately support politicians by purchasing their memecoin, much to the chagrin of your friends, without facing any social stigma. As a result, politicians can understand the true opinions of the public. Ultimately, those who just want to go with the flow can support politicians because their memecoin prices have risen, which gives them the confidence to back the side that everyone knows will win.

The rise of Polymarket exemplifies this phenomenon, as Polymarket is a decentralized exchange that allows users to bet on political outcomes using cryptocurrency. Polymarket gained fame for its 2024 Trump vs. Harris election prediction market, which displays in real-time who the global community believes is more likely to become the next President of the United States. Anyone with an internet connection and cryptocurrency can place bets on the outcomes, allowing participants from around the world to make guesses.

Polymarket is under attack in the United States because their market shows that the Democratic candidate, establishment favorite Harris, will lose. The Democrats are trying to deceive the public into believing that Joe Biden is not a lunatic and that Harris is very popular. But this is not the case; the mainstream media has been using this trick until Biden self-destructed in the debate against Trump, and Harris lost the election. However, despite the establishment media and big tech platforms lying to the public, Polymarket clearly indicates that Trump is the most likely to win. The establishment is very angry because the public has a real barometer of the election, to the point that the CEO of Polymarket has come under heavy attack.

In other parts of the world, authorities may preemptively ban Polymarket to prevent unfiltered public opinion from being expressed in real-time. France has banned Polymarket. Why would France care about political prediction markets in a non-election year? President Macron is very unpopular, but he will not allow new elections to be held before necessary in 2027. If there is a real-time market showing that Marine Le Pen is most likely to win the 2027 French presidential election, this is not good news for him and his political allies. This could accelerate the collapse of his globalist order in France. Therefore, Polymarket must disappear.

If the goal is a globally accessible, easy-to-understand, and impossible-to-ban popularity metric, then trading political Memecoins on a DEX is the perfect tool.

Three Attributes of Political Meme Coins

Let's evaluate the political Meme coin based on the three attributes needed to create a global political trending market:

Globally Accessible:

Meme coins are just a unique public address that will issue a certain number of tokens, which exist on a public blockchain. DEX itself is a snippet of code executed on the public blockchain where you can trade these tokens. The most popular trading pair is [Memecoin / USDe]. Therefore, anyone with a connected device can trade political Memecoin.

Easy to understand:

Do you like this politician and are you willing to express support?

Do you believe that other people like this politician or will like this politician in the future?

Before you decide to buy a political memecoin, you just need to answer these two questions.

People buy TRUMP because they want to be part of the group of Trump supporters, or they believe that Trump's popularity will increase in the future.

That's it. You don't need to understand any fancy economic or financial theories. You don't need to know algebra, basic calculus, statistics, or probability theory. You just need to think and feel like a vibrant person. Therefore, anyone can understand what gives political meme coins their value.

Impossible to prohibit:

Memecoins are built on public blockchains, and the existence of the public chain itself is due to miners or validators running specific software. At a high level, to destroy a public chain, you need to remove all miners/validators and then shut down the internet.

Given the current scale and penetration of public chains, it is impossible to remove all miners/validators. It's like whack-a-mole. Once an operator is removed from the network, profit motives will attract others to join.

As modern society relies on internet-connected devices, the government cannot shut down the internet and survive as a governing body in its current form.

Therefore, although the government can severely criticize the negative impact of Memecoin from its own perspective and selectively prosecute individuals and companies that provide or participate in Memecoin transactions, they will never be able to eradicate Memecoin on a large scale. Trying to do so will only make Memecoin trading more popular.

What information does the political Memecoin tell us about politicians?

Since participants vote with their wallets, memecoin is the purest and most honest indicator of popularity. When people talk to pollsters or friends, they often misreport their true political views for fear of going against the mainstream. Memecoin trading is a zero-knowledge proof of political popularity; unless traders expose their identities, no one knows who owns or trades what. Given that true digital currencies are at risk, if you hate Trump or believe his popularity won't rise, then buying $TRUMP makes no sense. If you think this way, you simply wouldn’t buy it, or you would short the $TRUMP/USDe perpetual contract. That’s why the price movement of $TRUMP indicates his true global popularity.

Belonging and greed are the two most powerful motivating factors in memecoin trading. Therefore, I believe we can infer the specific situations of politicians by looking at the memecoin charts. If the price of the memecoin rises, it indicates that people are satisfied with the current and expected policies; if the price falls, it indicates dissatisfaction. With the surge in political memecoin trading, we will be able to identify changes in public sentiment directly based on discrete policy outcomes. Bills passed, wars declared, speeches made, etc., will immediately impact citizens, which can be observed by looking at the price performance of specific political memecoins after such events.

Most politicians only want the public to know when others like them, not when others disdain them. So why would they launch their own memecoin? I believe that in so-called democratic countries, any politician officially endorsing their own memecoin would become a political necessity. To understand the reasons, let's discuss how to win elections.

Political Memecoin as a Campaign Tool

To win an election, politicians must get people to come out and vote. This is difficult because voters have too many other things to do. But if the politician has a memecoin, and you purchase it, then voting is in your best interest, so it can retain its value. Therefore, memecoins are the best political participation tool ever. They directly link economic benefits to the voting support of each voter, not just to large campaign donors.

As long as challengers support political memecoins in a campaign, they have the upper hand. This is because they can provide direct economic benefits for going out to vote without any cost. Memecoins are the most effective form of political advertising, as they can serve as viral digital word-of-mouth promotion. Trump succeeded in one fell swoop, just enacting campaign finance reform, and I think he doesn't even realize it.

To activate their supporters, challengers will participate in cost-free online events. Trump won the 2024 election because he was willing to appear on podcasts like Joe Rogan. The outcome of the next major election cycle will be decided in X-spaces or Discord channels. Politicians aim to discuss their political agenda and increase the number of memecoin holders. With the use of the internet and social media, one-to-many conversations are free; building a community is both difficult and time-consuming. However, it is much easier to build a community of enthusiastic supporters when everyone can gain economic benefits from political success. This is far more effective than broadcasting, television, or internet advertising.

Many "old-school" politicians won't believe me. At least in the United States, the 2026 election will see a large number of new personal political brands created through memecoins, which will defeat the supposedly invincible incumbents. What if Elizabeth Warren, Nancy Pelosi, and Maxine Waters were defeated by the new elites within their own party because of political memecoins?

Although we still need to wait a few years for the political memecoin earthquake to shake the peace under U.S. governance, its effects may soon be seen in Europe. Germany will hold new elections next week. The authorities are doing everything possible to prevent the AfD (Alternative für Deutschland) from coming to power. What would happen if the AfD created a large number of political memecoins for every candidate they are campaigning for? What if they became the largest party in Germany, gaining so much support that a government could not be formed without their participation?

I know time is short, but creating a political Memecoin takes less time than being rejected from entering the Federal Assembly.

If the UK Conservative Party is reorganized and does not want young girls to be lured by creepy old men, what would happen if Keir Starmer was forced to hold a new election? Can Reform UK launch a series of political memecoins supported by its future MPs to take back the UK Parliament? I don't know, but memecoins are the most popular way to spread collective intelligence, and Trump has just opened Pandora's box.

Campaign Finance Thought Experiment

For any reader with new ideas who is eager to serve society but has empty pockets, this article can serve as a blueprint to fund your budding political career.

Let's make a joke. Imagine that the bankrupt Infowars host Alex Jones wants to run for the New York State U.S. Senate seat in 2026, competing against the powerful incumbent Chuck Schumer. Alex clearly has no money and no credibility with large corporate donors. While people may agree with some of his views, no one is willing to risk being associated with a loser in broad daylight.

Alex decided to raise funds for his campaign by issuing the $JONES memecoin. At the time of issuance, only 10% of the supply was in circulation, with 90% held by Alex's campaign organization, and there was no lock-up. Experienced memecoin traders might shout "RUG PULL" because the campaign holds a large amount of unblocked tokens. However, the campaign needs to raise funds by selling tokens.

Anyone who buys $JONES implicitly understands that they are providing exit liquidity for the campaign. The campaign must raise funds by selling memecoins, so by purchasing $JONES at a higher price, buyers are effectively donating to Alex's campaign. However, the likelihood of Alex winning is that the price of $JONES will skyrocket.

$JONES holders will be incentivized to promote Alex's political agenda and how it will benefit the constituency. This will attract more buyers, allowing the campaign to raise more funds through the sale of memecoin, which will increase Alex's chances of winning, thus raising the price of $JONES, creating a cycle. Additionally, schadenfreude may prompt many buyers to purchase $JONES to support the establishment, as it would be amusing to see Schumer lose to Alex Jones.

This is how politically disruptive masters of Web3 fund campaigns and create viral marketing machines.

Before discussing how Maelstrom will profit from the future of political memecoins, I would like to first talk about some negative sentiments surrounding this new asset class.

Views Against Political Memecoins and Their Rebuttals

It's really amusing to hear those cryptocurrency people scoff at political Memecoins. I will elaborate on some of the main complaints and the reasons why I disagree.

Politicians should not use their power for personal gain.

The simplest way to alleviate this concern is to distribute 100% of the tokens at the time of issuance. Then, if politicians want to believe in themselves, they will enter the market at the same price as everyone else. If their popularity rises, they will profit personally, but I would rather do this than accept bribes or pseudo-bribes from wealthy companies and individuals behind the scenes. If politicians can earn more money more transparently just by holding their memecoins, then they will do the right thing for the people instead of doing the right thing for the rich, because popularity will become very profitable.

$TRUMP looks like a scammer because his family and close associates hold 80% of the supply. However, I don't believe it. The tokenomics is well-known. If you choose to buy it, you will be wide-eyed when purchasing. This is much better than the Biden family lining their pockets through large secret bribes from foreign companies to this or that super-secret corporate entity. Well, if the recipients aren't junkies, they will become super secretive.

When $TRUMP is dumped, it will destroy retail holders and take the industry back many years.

The volatility of Memecoin is a characteristic, not a defect. Cryptocurrency is a free market, manipulated by central banks, commercial banks, and governments. Everyone knows this and understands that the game is rigged. Remember GameStop? Cryptocurrency, whether good or bad, is a globally competitive free market without a governing body. If people can now express their opinions about politicians through the financial market, that is progress. If politicians deceive their followers, they will be voted out.

Trump should focus on creating regulations that support cryptocurrency, rather than memecoin.

I believe Trump has inadvertently provided the people with a new weapon to combat political corruption. This is why the mainstream media tries to cover up this phenomenon. They realize that improper dealings in election advertising and campaign funding will come to a halt. They also recognize that political movements that are not allowed to win can now change the common sense by showcasing the correct political Memecoin prices.

Memecoins, especially political Memecoins, are useless; the industry should rebuild "real" technology.

Anyone who says this has a bunch of zombie cryptocurrencies in their portfolio. Or they are the founders of a project whose token price has been continuously falling. They see people expressing their enthusiasm through trading culture and are dissatisfied that they haven't done anything "useful" with their money. They only believe that it is "useful" if the common people's money goes into their pockets. Screw you and your trash coins.

Political memecoin as an asset class

Maelstrom can benefit from this movement in several ways.

L1 Blockchain

L1 blockchain benefits from memecoin trading, as each transaction must pay gas with the native token. Clearly, Solana is the chain for most memecoin trading and is also the chain launched by $TRUMP. However, according to Moonshot statistics, 50% of the wallets holding $TRUMP are new Solana wallets with almost no funds in them. Therefore, Solana is not necessarily the chain for most political memecoin trading.

You all know what I am going to say. Remember, Maelstrom will not offer services for free. We believe Aptos has the opportunity to monopolize this market. It depends on speed and cost. Aptos has the fastest block times and the cheapest transaction fees among all L1s. The way Aptos wins this market is through seamless integration with Web2 platforms that have users. Aptos was born out of the Web2 giant Facebook, and its team has the capability to execute such collaborations. Stay tuned!

Spot.dog

Jupiter and Raydium are two of the most popular places for trading memecoins on-chain. Their tokens have performed very well, and trading volume is expected to continue increasing. However, the user experience is more suited for native cryptocurrency users. For those who just want to mimic the memecoins of their favorite politicians, Spot.dog (a Maelstrom portfolio company) offers a better and simpler user experience for memecoin trading. With their collaboration with Stocktwits, they have a large user base, and we believe this will become the preferred place for the general public to trade memecoins.

Political memecoin derivatives

Options

Political memecoins have created a demand for options trading. This is because certain discrete events, such as elections or votes on a bill, can lead to significant changes in the popularity and price of specific memecoins. The best way to express a bullish or bearish view on the outcome is to use options, which give you the right but not the obligation to buy (call) or sell (put) at a predetermined strike price. Platforms like Derive (Maelstrom Portfolio Company) are well-suited for exploring these markets.

On-chain ETF

In the near future, when every politician around the world supports their own political memecoin, traders will want to trade a basket of memecoins related to specific political parties. Imagine if you could trade the popularity of the Democratic Party and the Republican Party based on the voting price of all elected members in the House of Representatives. Or, in a parliamentary system, you could trade the UK Labour Party and the Conservative Party. Maelstrom will certainly invest in a protocol that allows for the easy creation, listing, trading, and redemption of these types of political memecoin ETFs.

Political memecoin of non-Western countries

Will some leaders of Western countries launch their own political memecoins? No, not now, but it might happen in the future.

While it is great to enjoy the glory of the people through objective standards, there are also some drawbacks when your words and actions lead to a decline in the price of a memecoin. Ultimately, every leader, whether elected democratically or not, will support their own political memecoin, because when it comes to political popularity, people will no longer trust dishonest pollsters and the mainstream media machine. They will demand a political memecoin and eventually issue a political memecoin.

Political memecoin as a barometer

Narcissism is an essential personality trait for successful politicians. They must be confident in their unique ability to plan a better future for everyone and constantly remind everyone how great they are. Therefore, I believe Trump's frequency of checking the $TRUMP price is just as high as his frequency of checking the S&P 500 index level, meaning he is checking all the time.

$TRUMP has dropped about 80% from its peak, while Bitcoin has yet to recover the $110,000 level (which $TRUMP reached at its peak frenzy). I believe that if cryptocurrency sentiment improves, $TRUMP will lead Bitcoin. If politicians believe that certain policies will have a positive impact on cryptocurrency, then $TRUMP will surge significantly before the good news is announced, followed closely by Bitcoin.

Given that other major fiat currency issuance centers are responding to Trump's macroeconomic and monetary policies, the United States is in the lead, with other countries following closely behind. Therefore, I have listed $TRUMP as a prominent part of my cryptocurrency watchlist. If I see it skyrocketing or plummeting quickly, then I know something is happening.

We have entered a new stage in the crypto capital market. Now, we will have a plethora of forward-looking tools to trade based on political factors that directly influence cryptocurrency price trends.

The game has started!