Gamblers have wins and losses, but the casino is always the winner.

Author: Joel Khalili

Source: Wired Magazine

Translated by: Luffy, Foresight News

In the early hours of January 18, just two days before Donald Trump's expected return to the White House, Tom had just collapsed into bed when his phone lit up with a message from an old friend: "Did you see? Trump just launched his own cryptocurrency."

Tom sprang up, sat down at his desk, opened his laptop, and turned on two additional monitors. "It doesn't seem real," he said, "I'm trying to figure out what's going on."

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 Raydium employees, Tom keeps his full name and whereabouts private for privacy and regulatory reasons.

Raydium is one of many crypto service providers that have profited handsomely from the recent Memecoin frenzy. As a key part of the Solana network trading ecosystem, exchanges like Raydium have experienced rapid growth over the past year, even before the arrival of Trump's Memecoin.

In 2024, the Memecoin boom drove Raydium to handle its highest-ever trading volumes. Tom quickly realized that the arrival of Trump's Memecoin presented an opportunity for Raydium, as it would earn a small fee on every transaction.

After verifying that Trump's Memecoin (TRUMP) was real and not the elaborate hoax some had speculated, Tom rushed to ensure Raydium's servers could handle the incoming trading wave. (The platform had crashed during another Memecoin trading frenzy at the end of 2023.) He then set about ensuring there was enough of the new coin available for free trading on Raydium: monitoring the quantities of TRUMP voluntarily listed by traders (a practice that allows listers to earn a portion of the trading fees), and purchasing more from elsewhere when needed to meet platform demand.

Around 5 am, Tom wearily returned to bed. In the chaos, he had forgotten to buy some TRUMP for himself.

While Tom slept, the trading flooded in. The next day, January 19, Raydium saw $16 billion in trading volume, more than its entire 2023. Tom said the trading chart looked "like a hockey stick."

Though billions of dollars changed hands in the frenzy around Trump's Memecoin, only a tiny fraction of traders profited. Most either lost money or broke even.

The value flowed steadily to the Trump-affiliated companies managing the cryptocurrency and the crypto service providers like Raydium that enabled the Memecoin trading. As one hedge fund manager described it, the "Memecoin industrial complex" also includes the Solana network, companies providing cryptocurrency wallets, liquidity providers ensuring the coins can be traded, and entities aggregating price data - all able to benefit from the increased trading activity.

"If you dig into it, you'll find there are a lot of moving parts behind the scenes that the public isn't aware of," said Anurag Arjun, co-founder of crypto infrastructure startup Avail and the Polygon network.

Until the Memecoin frenzy emerged at the end of 2023, Solana had been a relatively quiet backwater. Almost no one was using the network, and the services built on it were barely hanging on. Beyond financial speculation, there were few real-world applications built on Solana. "There are a lot of jokes about Solana development being like chewing glass, it's really hard," Tom said.

Memecoins have previously been criticized as unregulated, potentially undermining efforts to legitimize the crypto industry. Trump's Memecoin has been widely derided as a "grift." However, the emergence of cryptocurrencies like Trump's could provide important indirect benefits for the broader crypto networks, creating a flywheel effect where Memecoin investors' arrival attracts developers eager to build other applications for them. In theory, once people have a Solana wallet, they're more likely to use the various Solana-based apps, driving ongoing network activity.

"A lot of app development teams will be targeting these new users," Arjun said. "The Memecoin is an example of something that can run on that infrastructure."

Experts say the launch of Trump's Memecoin also has significant implications for the US government's attitude toward cryptocurrencies. The industry has long complained about the lack of clear rules governing new coin issuances; with Trump's Memecoin backed by a president, its launch may be interpreted as tacit approval.

"This will set a precedent that will gradually influence all the different institutions: the US is embracing crypto," said Demelza Hays, digital asset portfolio manager at investment firm Zeltner & Co and chief economist at crypto industry publication CoinTelegraph. "We're going to see more celebrity Memecoins."

Like the launch of Trump's Memecoin, the exchanges are the primary beneficiaries in the Solana Memecoin supply chain, not the traders.

"Trading Trump's Memecoin is like betting on the roulette wheel, whereas betting on Solana itself is like betting on the whole casino," Hays said. "When the trading volume increases, we're definitely going to see the exchanges doing very well."

While Raydium may profit from the Memecoin frenzy and any potential flywheel effects from US crypto adoption, Tom feels ambivalent about Trump's Memecoin.

"Raydium's business is facilitating trading volume. We try to be neutral on the tokens on our platform," he said. "The fact that the most powerful person in the world has chosen Solana to launch their Memecoin, for whatever reason, really speaks to Solana's current standing."

But Tom said the temporary excitement the Trump Memecoin launch has brought to an industry long struggling to shed its poor reputation may not outweigh the negative attention the cryptocurrency has attracted and the losses suffered by retail investors.

"In my five years in this industry, I've consistently tried to change the default perception that crypto is full of fraud and malicious behavior," Tom said. "I really care about that reputation."

Two days after TRUMP began trading, First Lady Melania Trump launched her own Memecoin (MELANIA). Critics have expressed similar concerns about potential conflicts of interest.

The White House did not respond to a request for comment. Emails sent to the addresses listed on the Melania Memecoin website also went unanswered.

The day of TRUMP's launch was exhilarating, but now Tom feels somewhat deflated. "I feel a lot worse than I did yesterday," he said. "I definitely won't be buying any MELANIA."