By:
Alex Tapscott,
Managing Director of Digital Asset Group, a division of Ninepoint Partners, and Portfolio Manager of the Ninepoint Crypto and AI Leaders ETF at Ninepoint Partners
If you needed any more proof that we’re living in the strangest possible timeline, this past weekend Donald Trump, on the eve of his inauguration,
announced his very own memecoin $TRUMP.
The token, launched on the Solana blockchain network, home to many memecoins (and plenty of other more useful assets and applications) instantly took over the internet.
Within a day, $TRUMP skyrocketed to $72 per token, and a fully diluted market value of $72 billion, worth more than the market value of Moderna, American Airlines, and Dropbox. It has since settled back down to $34.
In a fitting end to the weekend meme-mania, Melania Trump
launched her own token, $MELANIA, which itself soared briefly into the billions of dollars. Rumours are Eric, Ivanka and other first family members are in the queue.
Now it lands on me to make some sense of this for our readers.
Let me start by saying I think memecoins are kind of dumb. Strangely, this is not the consensus view in the crypto world. Some people think memecoins help “build community” around shared ideas and culture. That might be true. But it’s also true that most memecoins, in the long run, lose most of their value. Some memecoins, like DOGE and PEPE have reached escape velocity and are now worth billions. They are the exception to the rule.
So basically. Memecoins are gambling. Gambling is not “good,” but it’s also mostly legal and broadly accepted in society these days. So, are memecoins just a bit of fun, then – like betting on The Super Bowl?
Not quite.
Consider $TRUMP the coin. Were people just speculating and having a bit of fun when they bought it? Or did they have other motivations? Maybe some of his followers saw this as an opportunity to somehow ‘invest in/with Trump’ Maybe they thought these tokens gave them ownership of one of Trump’s companies or buildings? Or maybe they thought this was a new kind of U.S. money that Trump was issuing as the incoming President. People can be exceptionally foolish and gullible with money. Or they can be very clever- perhaps some saw this as a way to compensate the incoming President and curry favour for later on. I worry a lot of people could get hurt and feel betrayed if this ends badly.
The TRUMP meme-coin raises other concerns. Is Trump using his position as incoming President to enrich himself? Will TRUMP coins become a convenient way for supports (including foreign nationals) to circumvent campaign finance rules and maybe influence the president directly? What kind of precedent does this set for other leaders around the world? One can imagine a dictator in a foreign country creating their own coin and demanding at gun-point that every citizen use it.
$TRUMP was also a missed opportunity for the incoming administration to show how government can be a model user of this technology. There are many examples of how to do this - through onchain voting and direct democracy via DAOs for example. Or by codifying new laws and regulations as smart contracts that only release funds as milestones are met.
Fortunately, in the past week, the administration has announced several initiatives that speak to a broader interest in the technology - including the creation of a strategic digital asset stockpile.
WHY SOLANA IS THE BIG WINNER OF $TRUMP
There are several positives to be gleaned from the launch of $TRUMP.
$TRUMP was a stress test for whether blockchain networks like Solana can handle a full-scale mobilization of investors and traders. The Solana network experienced its highest daily REV (real economic value) in history two days in a row, generating $131 million in transaction fees and tips in the first three days of the Trump launch which all went to stakers
. Despite the crazy activity on the network, Solana maintained 100% uptime, which is a big win for them considering downtime has been one of their main criticisms over the years.
TRUMP’s launch nearly doubled decentralized exchange volume compared with centralized exchange volume ratio, as it was initially only available on Solana DEXs, before being listed on several CEX exchange and it sent the SOL-to-ETH DEX volume ratio from 175% to 510%.
Source: The Block
Decentralized exchanges generally don’t concentrate risk the way centralized exchanges do (such as FTX). The more decentralized crypto gets, the more resilient it becomes. Trump may have inadvertently been a part of that!
Source: The Block
A final word on memecoins. Benjamin Graham once said “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Let’s update that for our times: “n the short run, the market is an ‘aping’ machine but in the long run, it is a HODLing machine." Or, as crypto founder and thought leader
Erik Voorhees said on X “Quantity wise, 99% of projects are bad and have zero utility. But value wise, 80-90% of all the value in the crypto market is in quality things (BTC, ETH, stables, DeFi, RWAs, etc.).”
Crypto makes it east to launch any token from anywhere. That’s kind of chaotic and weird but kind of beautiful. And it directly benefits the core platforms like Solana which stand to benefit the most from this explosion of new assets.
January 24, 2025
