Gamblers have wins and losses, but the casino is always the winner.
Written by: Joel Khalili
Translated by: Luffy, Foresight News
In the early hours of January 18, just two days before Donald Trump was set to return to the White House, Tom had just collapsed onto his bed when his phone lit up with a message from an old friend: "Did you see? Trump just launched his own cryptocurrency."
Tom jumped up, sat at his desk, opened his laptop, and turned on two monitors. "It doesn't feel real," he said, "I'm trying to figure out what exactly is happening."
Tom is the head of Raydium, a decentralized cryptocurrency exchange registered in the British Virgin Islands where investors can trade cryptocurrencies without intermediaries. Like other employees at Raydium, Tom keeps his full name and whereabouts private for privacy and regulatory reasons.
Raydium is one of many cryptocurrency service providers that have profited significantly from the recent Memecoin craze. As an important part of the Solana network trading system, exchanges like Raydium have experienced rapid growth over the past year, even before the emergence of Trump's Memecoin.
In 2024, driven by the Memecoin craze, Raydium processed its highest trading volume ever. Tom quickly realized that the arrival of Trump's Memecoin was an opportunity for Raydium, as the platform takes a small fee from each transaction.
After verifying that Trump's Memecoin (TRUMP) was real and not some carefully orchestrated scam as some had speculated, he hurried to ensure that Raydium's servers could handle the impending wave of transactions. (The platform had previously crashed during another Memecoin trading frenzy at the end of 2023.) Then, Tom set about ensuring there was enough of this new coin available for people to trade freely on Raydium: he monitored the number of TRUMP coins people voluntarily listed (this practice allows the listers to earn a portion of the trading fees) and purchased more from elsewhere as needed to meet demand on the platform.
Around 5 a.m., Tom wearily lay back down in bed. In the chaos, he forgot to buy some TRUMP for himself.
While Tom slept, a flood of transactions poured in. The next day, January 19, Raydium saw $16 billion in trading volume, more than the total trading volume for all of 2023. Tom said the trading charts looked "like a hockey stick."
Despite the hundreds of billions of dollars changing hands during the frenzy triggered by Trump's Memecoin, only a handful of traders made a profit. The vast majority either lost money or broke even.
Value steadily flowed to Trump's affiliated companies managing this cryptocurrency and to cryptocurrency service providers like Raydium, which together made Memecoin trading possible. As one hedge fund manager described, the "Memecoin industrial complex" also includes the Solana network, companies providing wallet software for storing cryptocurrencies, liquidity providers ensuring cryptocurrencies can be traded at any time, entities aggregating price data, and more. They all benefit from the increase in trading activity.
"If you dig deep, you'll find there are many moving parts behind the scenes that the public doesn't understand," said Anurag Arjun, co-founder of cryptocurrency infrastructure startup Avail and the crypto network Polygon.
Until the end of 2023, when the Memecoin craze began to emerge, Solana was a relatively quiet place. Almost no one was using the network, and the services built on it could barely sustain themselves. Aside from financial speculation, there were very few applications built on Solana. "There were a lot of jokes about how developing on Solana was like chewing glass," Tom said, "it was really hard."
Memecoins had previously been criticized for being informal, so efforts to establish legitimacy in the crypto industry could be jeopardized. Trump's Memecoin was widely criticized as a "money grab." However, the emergence of cryptocurrencies like Trump's Memecoin could bring significant indirect benefits to the broader crypto network, creating a flywheel effect where the arrival of Memecoin investors attracts developers eager to build other applications for them. Theoretically, once people are equipped with Solana wallets, they are more likely to use various Solana-based applications, leading to sustained increases in network activity.
"Many application development teams will target these new users," Arjun said, "Memecoin is an example of something that can run on this infrastructure."
Experts say that the launch of Trump's Memecoin also has significant implications for the U.S. government's stance on cryptocurrencies. The industry has long complained about the lack of clear rules governing new coin issuances in the U.S.; given that Trump's Memecoin has presidential backing, its launch could be interpreted as a form of tacit approval.
"This will create a ruling that gradually influences all different institutions: the U.S. is embracing cryptocurrencies," said Demelza Hays, digital asset portfolio manager at investment firm Zeltner & Co. and chief economist at cryptocurrency industry publication CoinTelegraph. "We will see more celebrity Memecoins."
Like the launch of Trump's Memecoin, exchanges are the primary beneficiaries in the Solana Memecoin supply chain, rather than the traders.
"Trading Trump's Memecoin is like betting on roulette, while betting on Solana itself is like betting on the entire casino," Hays said, "when trading volume increases, we will definitely see exchanges perform very well."
While Raydium may profit from the Memecoin craze and any potential flywheel effect generated by the U.S. acceptance of cryptocurrencies, Tom feels conflicted about Trump's Memecoin.
"Raydium's business is to facilitate trading volume. We try to maintain a neutral stance on the tokens on the platform," he said, "the fact that the most powerful person in the world chose Solana to launch their Memecoin, for whatever reason, speaks volumes about Solana's current status."
But Tom said, for an industry that has long struggled to shake off a bad reputation, the temporary excitement brought by the launch of Trump's Memecoin may not compensate for the negative attention this cryptocurrency attracts and the losses suffered by ordinary investors.
"In my five years in this industry, I've been trying to change that default perception: that there is a lot of fraud and malice in the crypto space," Tom said, "I care a lot about that reputation."
Two days after trading began for Trump's Memecoin, First Lady Melania Trump launched her own Memecoin (MELANIA). Critics have also expressed similar concerns, arguing that there are conflicts of interest.
The White House did not respond to requests for comment. Requests sent to the email listed on the Melania Memecoin website also went unanswered.
The day TRUMP launched was exciting, but now Tom feels somewhat frustrated. "I feel much worse than yesterday," he said, "I definitely won't buy any MELANIA."
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