Arthur Hayes: The Future of Political Memecoin

Original title: Zero Knowledge Proof

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

Over the past century, as communication technology has advanced, the skills necessary for politicians to attract the public have also changed. To illustrate my point, I want to quickly review the history of American presidents and focus on key advances in communication technology.

Radio:

The hottest tech stock in 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 it has never recovered since then. This is something to remember about technology stocks... and it's the same this time. Radio began to emerge as a military technology during World War I, and after the war, radio was commercialized under the leadership of the United States. By 1940, almost 80% of American households owned a radio. Wartime President Franklin Roosevelt, famous for his fireside radio talks, spoke to the American public, filling them with the pro-war propaganda needed at the time to rally society to sacrifice blood and treasure against the Germans and Japanese. To succeed, later politicians had to have a presence on the airwaves.

Television:

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

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 mild-mannered, inexperienced young man. However, the televised debates presented the American people with a Nixon who looked old and frail and a Kennedy who looked young and energetic. Nixon's poor TV performance turned the tide and Kennedy won the election. From that point on, a poised TV performance became a necessity for winning high office.

Internet/Social Media:

It took a while for politicians to really take advantage of social media, which had its roots in the personal computer and internet revolution. However, by 2016, this political force had emerged. To get an idea of ​​the amount of political TV and radio ads purchased in a presidential election year, let's look at this statistic: In the 2012 U.S. presidential election, Barack Obama and Mitt Romney spent an estimated $2.6 billion on TV and radio ads.

Donald Trump's rise began almost as a joke. He joined the Republican race for the 2016 presidential nomination. No one thought he could succeed, and Trump wasn't going to spend a ton of money on TV and radio ads and then take a political hit. He was considered a nuisance within the party, and therefore wouldn't receive a lot of donations. However, while Trump lacked a lot of campaign funds to spend lavishly on TV and radio ads, he did understand how new technologies were changing the media landscape.

Pew Media estimated that 68% of adults had a Facebook account in 2016.At the time, it was not common to micro-target groups for political gain based on their activity within the social network. Team Trump seized on this gold mine, cheaply targeting likely supporters and delivering political ads to them at a much cheaper cost than through television or radio. In addition, Trump used Twitter (now called X) to communicate directly with people in real time. It was raw, uncensored, and messy. But it was human, and it made supporters and opponents alike pay attention. Attention is always a commodity in play, and Trump used social media to attract more attention at a much lower cost than any other politician and won the presidency.

Podcasts:

Politicians around the world saw the success of social media in swaying public opinion and changed their communication strategies. The full effectiveness of social media in spreading political propaganda was on full display during the COVID pandemic. Governments around the world asked big tech social media platforms to spread lies about COVID and vaccines to the world and suppress any opinions that differed from the official narrative. Cancelled and delisted content instead turned to private podcasts that survive and thrive on the internet.

By 2024, many people are getting their news and forming their political opinions by listening to their favorite podcast hosts. Joe Rogan is by far the most successful podcaster in the United States. He recently signed a multi-year contract with Spotify worth $250 million. Rogan influenced public opinion in the recent US presidential election, especially among undecided voters. Trump appeared on Rogan's show, but Harris did not. Trump appeared on numerous podcasts that appealed to his supporters. Harris continued with the tried-and-true TV and radio shows, supplemented by well-worn ads on social media platforms. Trump defeated Harris because he once again used advances in communications technology to connect himself more directly with voters.

What Have We Learned?

As technology has evolved, allowing information to reach larger audiences faster and cheaper, politicians have become more directly connected to the people they rule. As rulers become more human, they must adapt the way they communicate their platforms to the people. Humanizing politicians is not always good for them, as the public quickly realizes that they are as weak-minded as fools.

TRUMP

Trump is the first politician to officially launch his own memecoin, and arguably one of the three most influential politicians in the world (with the leaders of China and Russia on par or close). Trump has ushered in a new era of political memecoins.

I think Political MemeCoin will do the following:

• Provide true real-time global polls on politicians

• Increase participation and influence of political campaigns at almost no cost

• Enable billions of people to join Web3

Let's dig deeper.

Common Sense Game

Political popularity is a common sense game. What everyone believes everyone else believes influences our opinion of politicians more than what we believe ourselves. This leads to information asymmetry because publicly we believe one thing and privately believe another. As a result, we feed pollsters garbage information about our true opinions. This puts politicians in a difficult position because they want to know our true private opinions in real time. However, if it is socially acceptable to publicly support unpopular politicians, this also allows unpopular politicians to pretend to be popular. In short, both the government and the governed have imperfect information, which leads to policy errors.

Political Memecoin provides zero-knowledge proofs of political popularity. Specifically, as an individual, you can now privately support politicians by purchasing their memecoin, which your friends hate, and without facing any social stigma. Therefore, politicians can learn the true opinions of the people. Finally, those who just want to follow the crowd can support politicians because the price of their memecoin increases, giving them the confidence to support the side that everyone knows everyone else knows will win.

This phenomenon is exemplified by the rise of Polymarket, a decentralized exchange that allows betting on political outcomes using cryptocurrency. Polymarket rose to prominence for its 2024 Trump vs. Harris election prediction market, which shows in real time who the global community thinks is more likely to become the next US President. Anyone with an internet connection and cryptocurrency can bet on the outcome, allowing participants from all over the world to guess.

Polymarket came under attack in the US because their market showed that Democratic candidate and establishment favorite Harris would lose. The Democratic Party tried to deceive the public into believing that Joe Biden was not a lunatic and that Harris was popular. This was not the case, and the mainstream media used this ruse until Biden self-destructed in the debate with Trump and Harris lost the election. However, despite the lies the establishment media and big tech platforms told the public, Polymarket clearly showed that Trump was the favorite to win. The establishment was so angry that the public had a real barometer of the election that the Polymarket CEO was slammed.

In other parts of the world, authorities might preemptively ban Polymarket, lest unfiltered, real public opinion be expressed in real time. France bans Polymarket. Why should France care about political prediction markets in a non-election year? President Macron is deeply unpopular, but he won’t allow new elections until necessary in 2027. If there was a live market showing Marine Le Pen as the most likely to win the 2027 French election, that would not be a good thing for him and his political allies. It would likely accelerate the collapse of his globalist order in France. Therefore, Polymarket must go.

If the goal is a globally accessible, easily understandable, and impossible-to-ban popularity metric, then a political memecoin traded on a DEX is the perfect tool.

Political Meme Coins Three Properties

Let’s evaluate political meme coins based on the three properties needed to create a global political popularity market:

Globally accessible:

A meme coin is just a unique public address that issues a certain number of tokens, which exist on a public blockchain. The DEX itself is a piece of code executed on a public blockchain where you can trade these tokens. The most popular trading pair is [Memecoin / USDe]. Therefore, anyone with an internet-connected device can trade political memecoins.

Easy to understand:

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

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

You only need to answer these two questions before you decide to buy political memecoins.

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. There is no need to understand any fancy economic or financial theory. You don't need to understand algebra, basic calculus, statistics, or probability theory. You just need to think and feel like a living human being. Therefore, anyone can understand what gives political memecoins value.

Impossible to Ban:

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

With the current size and penetration of public chains, it is impossible to remove all miners/validators. It's like playing whack-a-mole. Once operators are removed from the network, the profit motive will attract others to join.

Because modern society relies on internet-connected devices, governments cannot shut down the internet and survive as governing bodies in their current form.

Therefore, while governments can harshly criticize the negative impacts of Memecoin from their perspective and selectively prosecute individuals and companies that offer 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 Do Political Memecoins Tell Us About Politicians?

Because participants vote with their wallets, memecoin is the purest and most honest indicator of popularity. When people talk to pollsters or friends, they often lie about their true political views for fear of going against the crowd. Memecoin trading is a zero-knowledge proof of political popularity, and no one knows who owns or trades what unless the traders reveal their identities themselves. Given that real digital currency is at stake, there is no point in buying $TRUMP if you hate Trump or think his popularity won’t rise. If you thought so, you wouldn’t buy it at all, or would short the $TRUMP/USDe perpetual contract. That’s why $TRUMP’s price action indicates his true global popularity.

Affiliation and greed are two of the most powerful motivators in memecoin trading. Therefore, I believe we can infer a politician's specific sentiment by looking at their memecoin charts. If the price of a memecoin is rising, it means people are happy with current and expected policies, and if the price is falling, it means they are unhappy. As political memecoin transactions surge, we will be able to identify changes in popularity directly based on discrete policy outcomes. Bills passed, wars fought, speeches given, etc. will immediately affect citizens, which can be observed by looking at the post-event price performance of a specific political memecoin.

Most politicians only want the public to know when others like them, not when others despise them. Therefore, why would they launch their own memecoin? I believe that in so-called democracies, it would become a political necessity for any politician to officially endorse their own memecoin. To understand why, let's discuss how elections are won.

Political Memecoins as Campaign Tools

In order to win elections, politicians must get people out to vote. This is difficult to do because voters have so many other things to do. But if that politician has memecoin, and you buy it, then it’s in your best interest to vote so that it retains its value. Therefore, memecoins are the best political engagement tool ever. They directly tie economic gain to voting support for every voter, not just large campaign donors.

Any time a challenger supports a political memecoin in a given race, they have the upper hand. That’s because they can offer a direct economic benefit for getting out and voting, without having to pay for it. Memecoins are the most effective form of political advertising because they act as viral digital word-of-mouth. Trump hit it in one fell swoop and just enacted campaign finance reform, which I don’t think he even knows about.

To activate their supporters, challengers will participate in online events that cost nothing. Trump won the 2024 election because he was willing to appear on a podcast like Joe Rogan. The next major election cycle will be won or lost in X-spaces or Discord channels. The goal for politicians is to discuss their political platform and increase the number of memecoin holders. With the internet and social media, one-to-many conversations are free; building communities is difficult and time-consuming. However, it is much easier to build a community of fervent supporters when everyone benefits financially from political success. It is far more effective than radio, TV, or internet advertising. Many “old school” politicians won’t believe me. In the US at least, the 2026 election will see a flood of new personal political brands created via memecoins who will defeat the supposedly unbeatable incumbents. What if Elizabeth Warren, Nancy Pelosi, and Maxine Waters all lose to upstarts in their own party because of political memecoins? While we still have a few years to wait for the political memecoin earthquake to shake up the Pax Americana, its effects may soon be felt in Europe. Germany will hold new elections next week. The establishment is doing everything they can to stop the AfD (Alternative for Germany) from taking power. What would happen if the AfD created a ton of political memecoins for each MP running for office? What would happen if they became the largest party in Germany, with so much support that a government could not be formed without their participation?

I know time is running out, but it took less time to create a political memecoin than it did to be denied entry to the Bundestag.

What would happen if the UK Conservative Party restructured and didn't want young girls to be seduced by creepy old men, and Keir Starmer was forced to call new elections? Could Reform UK take back the UK Parliament by launching a series of political memecoins backed by its future MPs? I don't know, but memecoins are the most popular way to spread the wisdom of the crowd, and Trump has just opened Pandora's box.

Campaign Finance Thought Experiment

For any reader with new ideas and a desire to serve society but empty pockets, this article can serve as a blueprint for funding your budding political career.

Let’s make a joke. Imagine that broke Infowars host Alex Jones wants to run for the New York State U.S. Senate seat in 2026 against powerful incumbent Chuck Schumer. Alex obviously has no money and no credibility with large corporate donors. While people may agree with some of his views, no one wants to take a chance on a loser in broad daylight.

Alex decides to raise money for his campaign by issuing $JONES memecoin. At the time of issuance, only 10% of the supply is in circulation, and 90% is held by Alex’s campaign organization and is not locked up. Experienced memecoin traders may yell “RUG PULL” because the campaign holds a large number of unlocked tokens. However, the campaign needs to raise funds by selling tokens.

Anyone who buys $JONES implicitly understands that they are exit liquidity for the campaign. The campaign has to raise money by selling memecoin, so by buying $JONES at a higher price, the buyer is effectively donating to Alex's campaign. However, the likelihood that Alex wins is that the price of $JONES will soar.

$JONES holders are incentivized to tell everyone about Alex's political platform and how it will benefit the constituency. This brings in more buyers, which allows the campaign to raise more money by selling memecoin, which increases the chances of Alex winning, which increases the price of $JONES, and so on. Additionally, schadenfreude may drive many buyers to buy $JONES to support the establishment, because it would be fun to see Schumer lose to Alex Jones.

This is how Web3-savvy political saboteurs fund campaigns and create viral marketing machines.

Before discussing how Maelstrom will profit from the future of political memecoin, I want to address some of the negative sentiment surrounding this new asset class.

Arguments Against Political Memecoin and Their Counterarguments

It is hilarious to listen to the crypto folks pooh-pooh political memecoin. I will go through some of the main complaints and why I disagree.

Politicians should not use their power for personal gain.

The easiest way to allay this concern is to distribute 100% of the tokens at launch. Then, if the politician wants to give credence to themselves, they enter the market at the same price as everyone else. If their popularity rises, they will personally profit, but I would rather do that than accept bribes and pseudo-bribes from wealthy corporations and individuals behind the scenes. If politicians could more transparently make more money simply by holding their memecoin, they would be doing the right thing for the people, not the right thing for the rich, because popularity can become very profitable.

$TRUMP looks like a fraud because his family and close associates hold 80% of the supply. However, I don't believe it. The token economics are well known. If you choose to buy it, you buy it with your eyes wide open. It's much better than the Biden family lining their pockets by funneling massive secret bribes from foreign businesses to this or that super secret corporate entity. Well, they're super secret if the recipients of the money aren't junkies.

When $TRUMP dumps, it will devastate retail holders and set the industry back many years.

Memecoin volatility is a feature, not a bug. Crypto is a free market and stocks are manipulated by central banks, commercial banks and governments. Everyone knows that and knows the game is rigged. Remember GameStop? Crypto, for better or worse, is a global competitive free market with no ruling body. If people can now express their opinions about politicians through the financial markets, that's progress. If politicians deceive their followers, they will be voted out of office.

Trump should focus on creating regulations that support cryptocurrencies, not memecoins.

I think Trump has inadvertently given the people a new weapon against political corruption. That’s why the mainstream media is trying to cover it up. They recognize that the improper trading of election ads and campaign funds will come to a screeching halt. They also recognize that political campaigns that are not allowed to win can now change common sense by showing the correct political memecoin prices.

Memecoins, especially political ones, are useless; the industry should re-build “real” technology.

Anyone who says this has a bunch of zombie cryptocurrencies in their portfolio. Or they are the founder of a project whose token price keeps falling. They see people expressing their passion through trading culture and are unhappy that they are not doing something “useful” with their money. They only believe that if the civilians’ money goes into their pockets, that is “useful”. Screw yourself and your shitcoin.

Political memecoins as an asset class

Maelstrom can benefit from this movement in several ways.

L1 Blockchains

L1 blockchains benefit from memecoin transactions because every transaction must pay gas in the native token. Obviously, Solana is the chain with most memecoin transactions and the chain where $TRUMP was launched. However, according to Moonshot statistics, 50% of the wallets holding $TRUMP are new to Solana and have almost no funds in the wallets. Therefore, Solana is not necessarily the chain with most political memecoin transactions.

You all know what I am going to say. Remember, Maelstrom will not provide services for free. We believe Aptos has a chance to corner this market. It comes down to speed and cost. Aptos has the fastest block time and cheapest transaction fees of all L1s. The way for Aptos to win this market is to seamlessly integrate with Web2 platforms that have users. Aptos was born from the Web2 giant Facebook, and its team is capable of executing such cooperation. Stay tuned!

Spot.dog

Jupiter and Raydium are two of the most popular places to trade memecoin on-chain. Their tokens are performing very well and will continue to see increased trading volume. However, the UX is more geared towards crypto-native users. For those who just want a memecoin that mimics their favorite politician, Spot.dog (a Maelstrom portfolio company) offers a much better and simpler UX for memecoin trading. Their user base is large due to their partnership with Stocktwits, and we believe this will become the go-to place for the average person to trade memecoin.

Political Memecoin Derivatives

Options

Political memecoins have created a need for options trading. This is because some discrete events, like an election or a vote on a bill, can cause a drastic change in the popularity and price of a particular memecoin. The best way to express a bullish or bearish view on the outcome is with options, where you have the right but not the obligation to buy (call) or sell (put) at a predetermined strike price. Platforms like Derive (a Maelstrom portfolio company) are well suited to exploit these markets.

On-chain ETFs

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

Political Memecoins in Non-Western Countries

Will certain non-Western leaders launch their own political memecoins? No, not now, but maybe later.

While it is great to enjoy the glory of your people through objective criteria, there are also some drawbacks when your words and actions cause the price of a memecoin to drop. Eventually, every leader, democratically elected or not, will support their own political memecoin, because people will no longer trust dishonest pollsters and the propaganda mainstream media machine when it comes to political popularity. They will demand a political memecoin, and eventually political memecoins will be issued.

Political Memecoin as a Barometer

Narcissism is a necessary character trait for successful politicians. They must be confident in their unique ability to plan a better future for everyone and constantly tell everyone how awesome they are. Therefore, I believe Trump checks the price of $TRUMP as often as he checks the level of the S&P 500, which is to say, all the time.

$TRUMP is down about 80% from its highs, while Bitcoin has yet to reclaim $110,000 (the level reached at the peak of the $TRUMP mania). I believe that if crypto sentiment improves, $TRUMP will lead Bitcoin. If politicians believe that certain policies will have a positive impact on crypto, $TRUMP will surge ahead of the good news and then Bitcoin will follow. Given that other major fiat printing centers are reacting to Trump's macroeconomic and monetary policies, with the U.S. leading the way and the rest of the world following closely behind, I have made $TRUMP a prominent part of my crypto watch list. If I see it surging or falling rapidly, then I know something is happening. We have entered a new phase in crypto capital markets. We will now have a plethora of forward-looking tools to trade on political factors that directly affect crypto price action. Game on!