coindesk.com
One day, the Donald Trump-themed MAGA coin, which surged nearly 400% over the last month according to CoinGecko data, and boasts a market cap of over $285 million, might enter the meme coin hall of fame alongside the category's canine icons.
"My intention is really to have this up there with a DOGE or SHIB, that kind of scale and market cap and popularity," the project's marketing director, YouTube talk show host Steven Steele, said in an interview with CoinDesk.
It might sound absurd, but this is crypto.
Remember, those two dog-themed meme coins have market caps well into the billions, but they started as jokes. As memes. Since then, Shiba Inu stewards have floated Shibarium, their own blockchain ecosystem, while the Dogecoin community is similarly working on several real-world use cases.
Meme coins are a polarizing issue in crypto. For some, they represent the worst, most “degenerate” aspects of the global crypto casino while for others, they capture the lighthearted spirit that comes with the herculean task of trying to reinvent the global financial system — an ethos the Avalanche Foundation captured recently when saying it would invest in these community-building in-jokes.
See also: Avalanche Foundation to Purchase Meme Coins
It’s a divide many meme coin projects are trying to mend by directing their tokens toward useful purposes (or saying they are).
Steele said that his Trump coins actually have a form of utility. It's the first chapter of an experiment in PoliFi, merging politics, finance, and community. (The name is a portmanteau a la DeFi, short for decentralized finance.)
Predicting success?
Apparently, Steele noted, whenever there's been a major event involving Trump, there has been “a direct correspondence in the value of the coin," making it a prediction market of sorts.
"It's evolved to become this kind of de facto betting market on the election for many investors," Steele said. The supposed accuracy of the coin movements is the most amusing part of this great big joke, for Steele.
While there are prediction market contracts that would allow a trader to monetize their belief in the success of the Trump campaign, Kang argued that this token offers a superior rate or return. Call it a value proposition, so to speak. Prediction markets have been accused the same sort of degeneracy as meme coins. While being a useful hedge against macroeconomic calamity, there are plenty of contracts out there for the absurd, such as the date of Taylor Swift's possible pregnancy announcement or if John McAfee is still alive.
See also: What Prediction Markets Are Forecasting for Crypto in 2024
"Prediction markets do not offer the same return potential or profile as meme coins," he said. "While it is possible to achieve 100x or 1,000x returns with meme coins like TRUMP, prediction markets are not liquid enough to generate nine-figure returns."
On the prediction market Polymarket, a contract regarding Trump's chances of winning the presidency has over $6 million in liquidity with some bets well over a half-million dollars.
In contrast, an open bet about President Joseph Biden's chances of winning re-election – effectively the same question but reversed – has just under $4.5 million in liquidity.
The road map is the election season
Biden coins have been attempted, but none of them have really "caught fire" as Steele puts it.
On-chain data supports this. The largest Biden meme coin has a market cap of $340,000, and its chain activity looks like a relative ghost town in comparison with 1,500 holders versus the 7,433 for TRUMP (which is the largest holding in the former president's wallet identified by Arkham).
It’s not quite clear whether the relative success of meme coins is an accurate way to test the temperature of a candidate’s prospects — in the way some view prediction markets.
While token holders certainly have “skin in the game,” in a sense, bettors aren’t trying to adjudicate any likely outcome outside of whether the price will go up.
It could be that meme coin holders have a sense of degeneracy not found in prediction market bettors, simply because at the end of the prediction market contract, the value of the losing side goes to zero. Trump coins might have life after November 5, 2024.
"In the meme scene, people want a rabble-rouser, someone exciting and unpredictable, perceived as a total rebel," Steele said. "Trump embodies all of those qualities in the eyes of many."
As for the project's roadmap, well, that's the election season.
"The roadmap is tied to election-related events, particularly those involving Donald Trump. As the election season heats up, he's going to provide plenty of fodder," Steele said. For the terminally online, there's something particularly captivating about Trump, a natural gravity towards him.
And just as Trump inadvertently gives value to the litany of unsanctioned Donald-themed coins, the MAGA coin team is trying to give back to Trump’s fanbase.
See also: Trump: Bitcoin Has Taken on 'a Life of Its Own,'
Steele said that one of the activities that the decentralized autonomous organization (DAO) behind the MAGA coin has been doing is "sweeping the floor" of the first series of official Trump-themed non-fungible tokens (NFTs), used as a fundraising tool by the former president, to build interest in both his unofficial token and official NFT series.
"That's been pretty successful because we've really focused on Series One of Trump's official NFTs, where the floor price wasn't that impressive until we started sweeping the floor. This has caused a resurgence and excitement among his NFT holders," he said.
Steele also said that some of the proceeds from MAGA coin sales go to charitable endeavors that assist victims of child trafficking and shelter homeless veterans.
It's an investment, not a vote
NFTs and DAOs have long been touted as enabling online communities and providing a way for these groups to monetize their memberships.
Yuga Labs is testing exactly this with its collection of Bored Ape Yacht Club NFTs, which act as tickets to real-life events.
But it's hard to articulate what the BAYC NFT community stands for. Certainly, there's a shared interest in crypto, but that's a fairly broad topic. And some things in the BAYC universe have fallen flat, like the Kingship ape band which lacks a critical mass of traffic on its videos. Sinking floor prices would suggest the community has its attention focused elsewhere.
In contrast, much has been written about the kinship of Trump supporters. Be it political and economic disenfranchisement, conservative politics or a shared love of trolling, Trump has a vote that sticks. Consider that the day of Trump's indictment was one of his best yet for fundraising.
However, not all Trump token holders are part of this club. They aren't necessarily voters.
It's crypto, and when the number goes up people buy in.
"It's kind of a rallying cry for people who are Trump enthusiasts, but also, we have a fair amount of investors who aren't necessarily Trump fans, either they just see what they perceive to be a great investment," Steele said.
In February, Mechanism Capital's Andrew Kang laid out his non-partisan investment thesis for the Trump token.
The investment is based on the attention economy, with Trump being a constant in the news cycle due to the U.S. primary elections and his provocative nature. The bet is on his continuous media presence, not just his potential election win, Kang wrote on X.
The bet is on his continuous media presence, not just his potential election win, and Trump is probably one of the best attention monopolizers in the world," Kang wrote on X.
In an interview with CoinDesk, Kang said that a "surprising number" of fund managers and VCs have reached out to express interest in the Trump coin, calling the attention token a subcategory of altcoins.
See also: Ex-President Trump Calls CBDCs and AI 'Dangerous'
"Sharp investors and traders are always looking for the next coin that will drive the greatest returns and recognize that Trump fits that bill well, given his ability to galvanize attention," he said, adding that professional token investors are alongside die-hard MAGA supporters in their HODLing.
Post-election – which Kang says Trump will win – there might be a “sell the news” effect if the coin has experienced significant growth.
"However, I anticipate a period of consolidation following his election victory, similar to how dogecoin behaved after it became associated with Elon Musk," he said.
As for his personal support for the former president, Kang said he personally hates politics.
"I don’t like spending my time thinking about it or having discussions around politics," he said. "Trump is entertaining enough for me to get over that."
Shaurya Malwa contributed to this report.