Tokens could be valuable indicators for US elections

by Stephen Douglas
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Tokens could be valuable indicators for US elections
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Tokens could be valuable indicators for US elections
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That’s right, there are tokens designed to carry out hedging operations or even speculate on the United States elections through DeFi cryptocurrencies.

These are Swap instruments that are on Decentralized Finance platforms like Uniswap, for example. Typically, these candidate tokens (Harris and Trump) operate on the Ethereum network through Wrapped Ethereum. It is an ERC-20 standard token that represents Ethereum (ETH) in a “wrapped” form, making it fully compatible with the ERC-20 standard of the Ethereum blockchain. Complex? I’ll explain.

The ERC-20 network is a technical standard that creates and issues smart contracts on the Ethereum blockchain. It defines a list of rules that a token must follow to be considered an ERC-20 token. This standardization is fundamental to the interoperability of tokens within the Ethereum ecosystem, allowing different applications and contracts to interact in a consistent manner.

As mentioned above, WETH is an ERC-20 token that represents Ethereum (ETH) in a form compatible with the ERC-20 standard of the Ethereum blockchain. This token is essential in DeFi protocols like Uniswap, Aave or Compound, where most assets are based on the ERC-20 standard. Using WETH allows Ethereum to easily interact with these protocols and participate in liquidity pools or trading pairs.

What is Wrapped Ethereum?

WETH arises when users “wrap” their ETH by sending it to a smart contract that returns an equivalent amount of WETH. This process is reversible, allowing WETH to be “unwrapped” back into ETH at any time.

Now that we understand the mechanism behind it, it becomes more tangible to understand how the Harris and Trump tokens traded by WETH work.

The price of assets like HARRISWETH and TRUMPWETH (a combination of Kamala Harris and Wrapped Ether or Trump and Wrapped Ether) moves based on several factors common in the decentralized finance (DeFi) and cryptocurrency market.

The law that regulates all markets, whether centralized or decentralized, is supply and demand, and this asset is no different. The price is influenced by the availability of liquidity in pools like Uniswap. When there is little liquidity or large buy/sell orders, the price can vary drastically due to limited supply. But there are other factors that, in this particular case, create demand for the asset.

Market sentiment is perhaps the strongest here. Speculative assets see rapid price changes based on market emotions such as fear and greed. For an asset like this, which contains the name of a political figure (Donald Trump), any related news or public perception could affect demand. This is part of the meme culture in the cryptocurrency space.

Tokens could be valuable indicators for US elections

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Tokens could be valuable indicators for US elections

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