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The TRUMP Memecoin Strategy: A Masterclass in Financial Engineering

· 10 min read
Liquidity Master
DeFi Educator and Strategist

The launch of the TRUMP memecoin on January 17, 2025, wasn't just another meme token drop. It was a brilliantly executed financial strategy that generated nearly $100 million in trading fees in just two weeks-while small traders collectively lost over $2 billion. Here's how they did it, and why it's a masterclass in value extraction.

Monopoly Money and TRUMP Token

The Playbook: From Token Launch to Fee Extraction​

Create the Token and Sell to CEXs​

The TRUMP memecoin team launched the token as an "official" token tied to Donald Trump and his family through the Trump Organization. But instead of immediately dumping on retail traders, they took a smarter approach:

  1. Created the token with significant insider holdings (reportedly 80% of supply)
  2. Sold tokens to centralized exchanges (CEXs) like Binance, Coinbase, and OKX
  3. Captured initial capital from exchange listings and early institutional buyers

This initial sale provided the capital needed for the next phase-building massive liquidity pools.

Use Proceeds to Build Giant Liquidity Pools​

According to Reuters analysis, the team used the proceeds from CEX sales to:

  • Build massive liquidity pools on Solana DEXes (primarily Meteora)
  • Provide deep liquidity that attracted traders and generated volume
  • Control the trading infrastructure that would generate fees

The strategy was simple: more liquidity = more trading volume = more fees. By providing deep pools, they created a self-reinforcing cycle where traders were drawn to the token because of its liquidity, which generated more fees for the team.

Generate Massive Trading Fees​

With deep liquidity pools in place, the TRUMP token saw explosive trading volume. The team generated:

  • $86-100 million in trading fees in just two weeks, according to Reuters
  • Peak market cap of $14.5 billion by January 19, 2025
  • Massive daily trading volumes that generated continuous fee revenue

The genius of this approach: they profited from trading fees regardless of whether the token price went up or down. As long as people were trading, the team was earning.

Retail Traders Absorb the Losses​

While the team generated nearly $100 million in fees, retail traders suffered massive losses:

  • Over 800,000 wallets lost money on TRUMP, according to Fortune
  • Collective losses of $2 billion for small traders
  • Token price collapsed from highs above $75 to around $5-$6 (over 90% decline)

The math is stark: insiders made ~$100 million while retail lost $2 billion. That's a 20:1 ratio of losses to insider gains.

Why This Strategy Was Genius​

From a financial engineering perspective, the TRUMP memecoin strategy was brilliant:

Fee Revenue Independent of Price​

Unlike traditional token sales where insiders need to dump tokens (which crashes price), the TRUMP strategy generated revenue from trading fees. The team could profit whether the token went up, down, or sideways-as long as people kept trading.

Deep Liquidity Attracted Traders​

By providing massive liquidity pools, they created a virtuous cycle:

  • Deep liquidity → attracts traders → generates volume → earns fees → funds more liquidity

This is the opposite of most meme coins, which have shallow liquidity and crash quickly. TRUMP had staying power because the team controlled the liquidity infrastructure.

Controlled Exit Strategy​

Instead of a sudden "rug pull" that would trigger regulatory scrutiny, the team used a gradual unwinding strategy:

  • Single-sided liquidity positions on Meteora that automatically sold TRUMP into USDC as trades occurred
  • Silent extraction that avoided sudden price crashes
  • Professional execution that minimized attention and regulatory risk

Political Hype as Marketing​

The Trump brand provided:

  • Built-in marketing from political news cycles
  • Credibility from association with a major political figure
  • Sustained attention that kept trading volume high

This wasn't just a meme coin-it was a politically-themed financial product that leveraged real-world events for marketing.

The Slow Unwind: Signs They're Pulling Back​

Recent on-chain analysis suggests the team is now quietly extracting liquidity rather than maintaining the pools:

Recent Liquidity Withdrawals​

According to Yahoo Finance and on-chain analysts:

  • $94 million in USDC withdrawn from liquidity pools over the last three weeks
  • $33 million removed in a single day (December 31, 2025) and transferred to Coinbase
  • Gradual extraction using Meteora's single-sided liquidity positions

The Extraction Mechanism​

The team used a sophisticated approach to avoid sudden price crashes:

  1. Single-sided liquidity positions: They supplied only TRUMP tokens (no USDC) at specific price ranges
  2. Automatic selling: As trades occurred within those price ranges, the mechanism automatically sold TRUMP into USDC
  3. Silent extraction: Value was extracted gradually without triggering sudden dumps

This "soft rug pull" approach is more sophisticated than traditional rug pulls-it avoids regulatory attention while systematically extracting value.

Pattern Recognition​

The same strategy appears to have been used for:

  • MELANIA memecoin: Launched days after TRUMP with similar liquidity dynamics
  • LIBRA memecoin: Alleged connections to the same wallet addresses

This suggests a coordinated playbook rather than a one-off project.

The Numbers: What Insiders Actually Made​

Combining trading fees, token sales, and liquidity management:

  • Trading fees: $86-100 million (from Reuters analysis)
  • Token sales to CEXs: Estimated $50-100 million (from initial listings)
  • Liquidity extraction: $94 million+ (recent withdrawals)
  • Total estimated gains: $230-294 million+

Meanwhile, retail traders lost $2 billion collectively, creating a massive wealth transfer from small traders to insiders.

Why This Matters for Liquidity Providers​

The TRUMP memecoin story illustrates several critical lessons for liquidity providers:

Deep Liquidity Doesn't Mean Fair Play​

Large liquidity pools can be used to extract fees while insiders profit. Just because a pool has deep liquidity doesn't mean it's safe or fair. For more on this, see our guide on why we don't recommend meme coin liquidity.

Fee Revenue Can Be Extracted​

Projects can generate massive fees ($100M+) while retail traders lose money. The fee structure itself can be a value extraction mechanism.

Watch for Liquidity Withdrawals​

Gradual liquidity removal often precedes price collapses. If you see large, systematic withdrawals from pools, it's a red flag. Understanding impermanent loss and smart contract risks can help you identify these patterns early.

Transparency Matters​

Projects that don't clearly disclose their fee structure, liquidity management, and insider holdings should be viewed with suspicion. The TRUMP team's strategy worked because of opacity.

Political/Meme Coins Are High Risk​

Tokens that rely on hype, politics, or memes rather than utility are particularly vulnerable to this type of value extraction. The marketing advantage (political attention) also creates the conditions for exploitation.

The Contrast with Legitimate Protocols​

This is exactly why transparent, decentralized protocols matter. When you provide liquidity on Orca or Uniswap:

  • You know who gets the fees: 87% to LPs, 12% to protocol, 1% to climate fund (Orca)
  • No hidden extraction: Fees are disclosed upfront and distributed transparently
  • No insider advantage: Protocols don't control pools to extract value from traders
  • Stable pairs are safe: Common trades like SOL/USDC, SOL/mSOL have never had issues on Solana

The TRUMP strategy worked because it exploited opacity and misaligned incentives. Legitimate protocols ensure that fees benefit LPs and the protocol transparently, not hidden insiders.

The Bottom Line​

The TRUMP memecoin strategy was a masterclass in financial engineering from the perspective of value extraction:

Brilliant execution: Created token → sold to CEXs → built liquidity pools → generated fees
Fee revenue independent of price: Profited whether token went up or down
Controlled exit: Gradual unwinding avoided sudden crashes and regulatory attention
Massive returns: $230-294 million+ in estimated gains vs. $2 billion in retail losses

But from a trader and LP perspective, it was a disaster:

Retail traders lost $2 billion while insiders made ~$100M in fees alone
Token collapsed 90%+ from peak to current levels
Opaque fee structure that extracted value without clear disclosure
Coordinated extraction across multiple tokens (TRUMP, MELANIA, LIBRA)

The lesson: When you see deep liquidity pools, high trading volume, and political hype, ask yourself: Who's actually making money, and how? If the answer isn't transparent, you're probably the product, not the customer.

For liquidity providers, stick to established protocols with transparent fee structures like Orca, Uniswap, and Curve. The TRUMP strategy proves that deep liquidity and high volume don't guarantee fair play-transparency and aligned incentives do.

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