PolitiFi: Blending Meme Coins with Politics
The political discourse is evolving with the introduction of PolitiFi, a new breed of meme coins. Though these tokens have not received formal recognition from politicians, they’re swiftly gaining popularity in the crypto community.
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In early 2024, the meme coin sector emerged as a hot trend in crypto, captivating users not for solving critical market problems like fee reduction or scalability but for their explosive growth potential. Despite their often simplistic creation, the allure of meme coins lies in their capacity for dramatic value increases.
Meme coins are generally divided into these subcategories:
- Shiba Inu dogs: This group focuses on meme coins inspired by the Shiba Inu dog breed, often depicted with various accessories like hats, helmets, and baseball bats.
- Cat-themed meme coins: As the antithesis to the dog-themed coins, the leading cat meme coin, “cat in a dogs world,” is based on the rivalry with dogs.
- Iconic meme characters: This category includes variations of famous internet memes such as Pepe, Wojak, Trollface, and others.
With the U.S. presidential election on the horizon, the crypto sphere has introduced a novel asset class—political meme coins. These coins capitalize on caricatures of well-known political figures like Donald Trump or Joe Biden.
CoinGecko Paves the Way for PolitiFi Adoption
On March 5, crypto data aggregator CoinGecko took a significant step by officially recognizing a new asset class, grouping them into a newly added PolitiFi category on its website. As of April 2024, while CoinGecko only features 10 such tokens, the actual count of these tokens extends into the hundreds.
The pioneering political meme coin, MAGA (TRUMP), came into existence in August 2023 but didn't catch on until six months later. Between January and March 2024, it saw its value skyrocket from $0.37 to $11.7. Currently, the token is priced at $4.5.
The meteoric rise of TRUMP spurred the emergence of its direct competitor—Jeo Boden (BODEN). This Democratic Party-themed meme coin astonished the community by surging 230 times in value within just a month. Notably, as BODEN climbed, TRUMP's price plunged by 70%.
The saga of MAGA and Jeo Boden has inspired the creation of hundreds of spin-off meme coins styled after Spodermen—a poorly-drawn version of Spiderman. Among these are danold tromp, jeem cromer, Wutalik Butterin, Merk Zukkreberg, and others.
While investing in certain political meme coins has yielded substantial returns, there's a looming risk that many PolitiFi tokens might end up being permanently unprofitable.
The Risks Associated with PolitiFi
Even though they're intertwined with politics, PolitiFi projects remain meme coins at heart. Meme coins are known for their speculative nature, with values that can either surge dramatically in a single day or drop to nothing just as quickly.
Political meme coins introduce an extra layer of risk since any rating, statement, or event associated with the meme coin could lead to fluctuations in its value. Here are a couple of hypothetical scenarios:
- Instances of Joe Biden falling. Throughout his presidency, Joe Biden has had his share of falls, at least eight times, including four incidents while ascending stairs. It's unpredictable how BODEN's value might respond to another such event.
- Donald Trump's controversial remarks. The former U.S. president is notorious for his provocative views on various topics. This led to the suspension of his X account in January 2021.
- Political rating shifts. As PolitiFi tokens gain higher market capitalization, their values could start to mirror the political ratings of the politicians they caricature.
The upcoming U.S. presidential election in November 2024 is anticipated to significantly influence PolitiFi asset values. The community speculates that a Joe Biden win could increase BODEN's price and devalue TRUMP, whereas a Donald Trump victory could boost TRUMP's price and diminish BODEN's value.
These speculations introduce a novel approach to engaging with political meme coins: they can serve as proxies for betting on the electoral success of particular candidates.
Political Meme Coins vs. Betting Platforms
Betting platforms do not offer the same level of profitability as political meme coins, which have demonstrated potential for 10 to 100-fold profits, while betting yields are seldom able to more than double or triple capital.
For example, bets on Donald Trump's victory total $9.1 million, with a successful outcome yielding a 113% profit for investors. Joe Biden's figures are slightly higher, with $9.8 million in bets and a 127% return.
Bets on the Winner of the 2024 U.S. Presidential Election. Source: polymarket.com
Despite the meteoric rise of political meme coins, the community views them as nascent. None of the PolitiFi assets are listed on major exchanges such as WhiteBIT, Coinbase, or OKX, and they have a lower market capitalization compared to leading meme coins.
Should the market capitalization of BODEN ($438 million) and TRUMP ($209 million) align with that of top meme coins like FLOKI, PEPE, WIF, and others, the value growth of PolitiFi assets could range from 4x to 10x.
PolitiFi and Its Relation to Friend.Tech
Friend.Tech is a Web3 social network enabling influencers to create tokens, the value of which correlates with the popularity of their content or events linked to the issuer. For instance, the value of tokens related to Su Zhu (the co-founder of Three Arrows Capital) drastically fell following his arrest.
Although BODEN and TRUMP are not directly linked to Friend.Tech, they fundamentally represent the same concept of creating personality-tied tokens.
Friend.Tech aimed to address the issue of consensus, allowing for the identification of authentic tokens among numerous Joe Biden coins, for example. In reality, such a coin does not exist without the president verifying his identity through X (formerly Twitter), preventing speculation on someone's social capital or name.
Activity Metrics of Friend.Tech. Source: dappradar.com
The community believes Friend.Tech failed to maintain its popularity due to:
- a complex user interface;
- limited functionality;
- a lengthy registration process;
- an insufficient variety of tokens.
Conversely, buying meme coins only requires a crypto wallet and adequate ETH, SOL, USDC, or other cryptocurrencies. With hundreds of meme coins generated daily, users do not face a scarcity of such assets.
Political meme coins lack the consensus mechanism seen in Friend.Tech: creating a token in a politician's name does not require being the politician. The legitimacy of a meme coin is intuitively determined, relying entirely on community activity and influencers' discussions.
In conclusion, PolitiFi could evolve into a new iteration of the Friend.Tech concept. However, this evolution will necessitate project creators finding ways to engage with politicians and other prominent figures.
Final Thoughts
Political meme coins enjoy popularity among both ordinary users and influencers. Ryan Selkis, CEO of analytics platform Messari, is among those showing interest in these assets through his posts.
PolitiFi tokens could serve as political campaigning tools. However, misapplication could undermine the seriousness of political discourse, trivializing the bases for candidates' ratings to mere caricature images.
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