Arthur Hayes: The Future of Political Memecoins

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 essential skills politicians need 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 hottest tech stock of the 1920s was RCA, the dominant consumer radio manufacturer of the time. RCA's price-to-earnings ratio reached an all-time high of 73 before the crash, from which it never recovered. This is a point to remember about tech stocks… it’s the same this time. During World War I, radio emerged as a military technology, and post-war, it was commercialized under the leadership of the United States. By 1940, nearly 80% of American households owned a radio. Wartime President Franklin Roosevelt was famous for his fireside chats, where he communicated with the American public, instilling the necessary wartime propaganda to unite society in sacrificing blood and wealth to fight against the Germans and Japanese. For future success, politicians had to carve out a space in the radio waves.

Television

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

Nixon was the favored candidate due to his greater political experience. People were familiar with his voice but not his face. Kennedy, on the other hand, was a polished but inexperienced young man. However, the televised debate showcased an aging, haggard Nixon against a youthful, vibrant Kennedy. Nixon's poor television performance turned the tide, and Kennedy won the election. From that point on, a calm and composed television presence became a prerequisite for winning high office.

Internet / Social Media

It took politicians some time to truly leverage social media, which emerged from the personal computer and internet revolution. However, by 2016, this political power had emerged. To understand the volume of political television and radio ads purchased during presidential election years, consider this statistic: in the 2012 U.S. presidential election, Barack Obama and Mitt Romney spent approximately $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 would succeed, and Trump did not intend to spend a large amount on television and radio ads, only to take political hits. He was seen as a nuisance within the party and would not receive significant donations. However, while Trump lacked the substantial campaign funds to lavishly spend on television and radio ads, he understood 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 uncommon to micro-target groups for political gain based on activities within social networks. Trump's team seized this goldmine, cheaply targeting potential supporters and delivering political ads to them at a much lower cost than through television or radio. Additionally, Trump utilized Twitter (now known as X) to communicate directly and in real-time with people. It was raw, unfiltered, and chaotic. But it was humanizing, capturing the attention of both supporters and opponents. Attention has always been a commodity in play, and Trump used social media to attract more attention at a fraction of the cost of any other politician, ultimately winning the presidency.

Podcasts

Global politicians saw the success of social media in shaping public opinion and changed their communication strategies. During the COVID-19 pandemic, the comprehensive effect of social media in spreading political propaganda was fully demonstrated. Governments around the world demanded that major tech social media platforms disseminate lies about COVID and vaccines while suppressing any dissenting opinions. Canceled and taken-down content turned to private podcasts that survived and thrived on the internet.

By 2024, many people were 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, particularly among undecided voters. Trump appeared on Rogan's show, while Harris did not. Trump appeared on numerous podcasts that attracted his supporters. Harris continued to rely on traditional television and radio programs, supplemented by stale ads on social media platforms. Trump defeated Harris because he once again leveraged advancements in communication technology to connect more directly with voters.

What have we learned?

As technology evolves, information can be disseminated faster and cheaper to a larger audience, and the connection between politicians and the populace they govern becomes more direct. As rulers become increasingly humanized, they must adapt their methods of conveying political agendas to the public. Humanization is not always beneficial for politicians, as the public quickly realizes they are just as foolish.

TRUMP

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

I believe political memecoins will achieve the following:

• Provide real-time global opinion polls on politicians
• Increase political campaign engagement and influence at almost no cost
• Allow billions to join Web3

Let’s delve deeper.

Common Sense Game

Political popularity is a common sense game. Everyone believes that what others believe influences our views of politicians more than what we believe ourselves. This leads to information asymmetry, as we publicly believe one thing while privately believing another. Thus, we provide pollsters with garbage information about our true opinions. This puts politicians in a bind, as they want to know our real private views 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, leading to policy missteps.

Political memecoins provide zero-knowledge proofs of political popularity. Specifically, as an individual, you can now privately support a politician by purchasing their memecoin, which your friends despise, without facing any social stigma. Therefore, 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 are rising, giving 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 betting on political outcomes using cryptocurrency. Polymarket gained notoriety for its 2024 Trump vs. Harris election prediction market, which shows in real-time who the global community believes is more likely to become the next U.S. president. Anyone with an internet connection and cryptocurrency can bet on the outcome, allowing participants from around the world to speculate.

Polymarket faced backlash in the U.S. because their market indicated that the Democratic candidate, establishment favorite Harris, would lose. The Democrats attempted to deceive the public into believing that Joe Biden was not insane and that Harris was popular. But that was not the case; mainstream media had been using this trick until Biden self-destructed in a debate with Trump, and Harris lost the election. However, despite the establishment media and major tech platforms lying to the public, Polymarket clearly indicated that Trump was the most likely to win. The establishment was furious because the public had a real barometer of the election, leading to a fierce backlash against Polymarket's CEO.

In other parts of the world, authorities might preemptively ban Polymarket to prevent unfiltered real public opinion from being expressed in real-time. France banned Polymarket. Why would France care about a political prediction market in a non-election year? President Macron is very unpopular, but he will not allow new elections before 2027 if he can help it. If there were a real-time market showing that Marine Le Pen was most likely to win the 2027 French election, that would not be good 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 measure of popularity, then trading political memecoins on a DEX is the perfect tool.

Three Attributes of Political Memecoins

Let’s evaluate political memecoins based on the three attributes needed to create a global political popularity market:

Globally Accessible:

Memecoins are simply a unique public address that issues a certain number of tokens existing on a public blockchain. DEXs are snippets of code executed on public blockchains where these tokens can be traded. The most popular trading pair is [Memecoin / USDe]. Therefore, anyone with a connected device can trade political memecoins.

Easy to Understand:

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

Do you believe others like this politician or will like this politician in the future?

Before you decide to purchase a political memecoin, you only need to answer these two questions.

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

That's it. There’s no 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. Thus, anyone can understand what gives political memecoins value.

Impossible to Ban:

Memecoins are built on public blockchains, and the existence of public chains 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 playing whack-a-mole. Once operators are removed from the network, profit motives will attract others to join.

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

Therefore, while governments can harshly criticize the negative impacts of memecoins from their perspective and selectively prosecute individuals and companies involved in providing or participating in memecoin trading, they can never eradicate memecoins on a large scale. Attempting to do so will only make memecoin trading more popular.

What information do political memecoins tell us about politicians?

Since participants vote with their wallets, memecoins are the purest and most honest indicators of popularity. When people talk to pollsters or friends, they often misreport their true political views out of fear of going against the crowd. 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 will not rise, then buying $TRUMP makes no sense. If you think that way, you wouldn’t buy it at all, or you would short the $TRUMP/USDe perpetual contract. That’s why the price trajectory of $TRUMP indicates his true global popularity.

Belonging and greed are the two most powerful incentives in memecoin trading. Therefore, I believe we can infer specific situations about politicians by looking at their memecoin charts. If the price of a memecoin rises, it means people are satisfied with current and expected policies; if the price falls, it indicates dissatisfaction. As political memecoin trading surges, we will be able to directly identify changes in popularity based on discrete policy outcomes. Bills passed, wars started, speeches given, etc., will immediately affect citizens, which can be observed by looking at the post-event price performance of specific political memecoins.

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

Political Memecoins as Campaign Tools

To win elections, politicians must get people out to 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 that it retains its value. Therefore, memecoins are the best political engagement tools ever. They directly link economic benefits to each voter's support, 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 incentives for going out to vote without paying. Memecoins are the most effective form of political advertising because they can serve as viral digital word-of-mouth promotion. Trump succeeded in this regard, having just enacted campaign finance reform, and I believe he didn’t even realize it.

To activate their supporters, challengers will participate in online events at no cost. 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’ goals are to discuss their political agendas and increase the number of memecoin holders. With the internet and social media, one-to-many conversations are free; building a community is both difficult and time-consuming. However, when everyone can gain economic benefits from political success, it becomes much easier to build a community of fervent supporters. This is far more effective than broadcasting, television, or internet advertising.

Many "old-school" politicians won’t believe me. At least in the U.S., the 2026 elections will see a plethora of new personal political brands created through memecoins that will defeat supposedly unbeatable incumbents. What if Elizabeth Warren, Nancy Pelosi, and Maxine Waters all lost to new upstarts in their party because of political memecoins?

While we still have a few years to wait for the political memecoin earthquake to shake the peace under U.S. governance, its effects may soon be felt in Europe. Germany will hold new elections next week. The establishment is doing everything it can to prevent the AfD (Alternative for Germany) from coming to power. What if the AfD created a large number of political memecoins for every candidate they campaigned 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 denied entry into the Bundestag.

What would happen if the UK Conservative Party restructured and did not want young girls to be lured by creepy old men, forcing Keir Starmer to hold new elections? Could Reform UK launch a series of political memecoins supported by its future MPs to reclaim the UK Parliament? I don’t know, but memecoins are the most popular way to spread the wisdom of the masses, 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 is empty-pocketed, this article can serve as a blueprint for funding your budding political career.

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

Alex decides to raise funds for his campaign by issuing the $JONES memecoin. At issuance, only 10% of the supply is in circulation, with 90% held by Alex's campaign organization, with no lock-up. Experienced memecoin traders might shout "RUG PULL," as the campaign holds a large amount of unlocked 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 bring in more buyers, allowing the campaign to raise more funds through memecoin sales, increasing Alex's chances of winning, which in turn raises the price of $JONES, and so on. 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 a politically savvy Web3 disruptor funds a campaign and creates a viral marketing machine.

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

Arguments Against Political Memecoins and Their Rebuttals

It’s amusing to hear those in the cryptocurrency space scoff at political memecoins. I will outline some of the main complaints and why I disagree with them.

Politicians should not exploit their power for personal gain.

The simplest way to alleviate this concern is to distribute 100% of the tokens at 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 prefer this to accepting bribes and pseudo-bribes from wealthy corporations and individuals behind the scenes. If politicians can earn more transparently by simply holding their memecoins, they will do the right thing for the people rather than for the wealthy, as popularity will become very profitable.

$TRUMP looks like a scam because his family and close associates hold 80% of the supply. However, I don’t believe that. Token economics are well-known. If you choose to buy it, you will be wide-eyed about your purchase. This is far better than the Biden family lining their pockets through massive secret bribes from foreign companies to this or that super-secret corporate entity. Well, if the recipient isn’t a junkie, they will become super-secretive.

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

The volatility of memecoins is a feature, not a bug. Cryptocurrency is a free market, while stocks are manipulated by central banks, commercial banks, and governments. Everyone knows this and understands that the game is rigged. Remember GameStop? Cryptocurrency, for better or worse, is a global competitive free market without a ruling authority. If people can now express their views on politicians through financial markets, that is progress. If politicians deceive their followers, they will be voted out.

Trump should focus on creating regulations that support cryptocurrency instead of memecoins.

I believe Trump inadvertently provided the people with a new weapon against political corruption. That’s why mainstream media is trying to cover this phenomenon up. They realize that the improper exchanges of election advertising and campaign financing will come to a halt. They also recognize that political movements that are not allowed to win can now change the narrative by showing the correct political memecoin prices.

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

Anyone who says this has a portfolio full of zombie cryptocurrencies. Or they are a founder of a project whose token price has been declining. They see people expressing their enthusiasm through trading culture and are dissatisfied that they haven’t done something "useful" with their money. They only believe that if the common people's money goes into their pockets, that is "useful." Screw you and your garbage coins.

As an asset class, political memecoins

Maelstrom can benefit from this movement in several ways.

L1 Blockchain

L1 blockchains benefit from memecoin trading because every transaction must pay gas in the native token. Clearly, Solana is the chain for most memecoin trading, and it is also the chain on which $TRUMP was launched. However, according to Moonshot statistics, 50% of wallets holding $TRUMP are new Solana wallets with almost no funds. Therefore, Solana may not necessarily be the chain for most political memecoin trading.

You all know what I’m going to say. Remember, Maelstrom will not provide 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 from the Web2 giant Facebook, and its team has the capability to execute such collaborations. Stay tuned!

Spot.dog

Jupiter and Raydium are the two most popular places to trade memecoins on-chain. Their tokens have performed very well, and trading volume will continue to increase. However, the user experience is more suited for cryptocurrency-native 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 partnership with Stocktwits, they have a large user base, and we believe this will become the go-to place for ordinary people to trade memecoins.

Political Memecoin Derivatives

Options

Political memecoins have created a demand for options trading. This is because certain discrete events (like elections or votes on a bill) can cause significant changes in the popularity and price of specific memecoins. The best way to express bullish or bearish views on outcomes is through options, which give you 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 tap into these markets.

On-chain ETFs

In the near future, when every politician globally supports their own political memecoin, traders will want to trade a basket of memecoins related to specific parties. Imagine if you could trade the popularity of the U.S. Democratic Party versus the Republican Party based on the vote prices of all elected members of the House. Or, in a parliamentary system, you could trade the UK Labour Party against the Conservative Party. Maelstrom will 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 perhaps later.

While enjoying the glory of the people through objective standards is great, there are also downsides when your words and actions lead to a decline in the price of your 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 believe dishonest pollsters and the mainstream media machine. They will demand a political memecoin and eventually issue political memecoins.

Political Memecoins as a Barometer

Narcissism is an essential character trait of successful politicians. They must be confident in their unique ability to plan a better future for everyone and constantly tell everyone how great they are. Therefore, I believe Trump checks the price of $TRUMP as frequently as he checks the level of the S&P 500, meaning he is constantly checking.

$TRUMP has fallen about 80% from its peak, while Bitcoin has yet to recover the $110,000 level (the peak frenzy level of $TRUMP). I believe that if cryptocurrency sentiment improves, $TRUMP will lead Bitcoin. If political figures believe certain policies will positively impact cryptocurrency, then $TRUMP will surge significantly before good news is announced, followed closely by Bitcoin.

Given that other major fiat currency printing centers are reacting to Trump's macroeconomic and monetary policies, the U.S. is in the lead, with other countries following suit. Therefore, I will list $TRUMP as a prominent part of my cryptocurrency watchlist. If I see it rapidly rise or fall, then I know something is happening.

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

The game has begun!