Author: Jessy, Jinse Finance
On August 13, the Memecoin launch platform Pump.fun on Solana hit a new high in daily revenue of $5.33 million. In July, its cumulative protocol revenue reached $28.73 million, setting a monthly high. As of August 13, Pump.fun’s cumulative revenue exceeded $94 million.
Pump.fun was launched in February 2024, and by mid-March the number of users and usage began to soar, and in just half a year, it achieved the achievement of exceeding Ethereum's daily revenue many times.
This makes people sigh that in the crypto, the most profitable business is still "casino".
Recently, Pump.fun launched a campaign to create tokens on it without fees. Coupled with the fact that most people lose money on it and there are many imitation platforms, there are more and more voices in the community that are pessimistic about Pump.fun.
Will a pure casino disappear? And what is the significance of such a project to the industry?
A token launch platform without barriers
Creating a Memecoin on Pump.fun is as simple as coming up with a catchy name and an attractive image, then clicking the "Start Creating a Coin" button at the top of the homepage. Users can write a short description of the coin, as well as links to relevant social media channels, and then pay 0.02 Sol to deploy his memecoin.
In the industry, innovations in token issuance methods have always been able to drive a new wave of narratives. For example, the Ordinary protocol, which became popular last year, innovated the way of issuing new assets on Bitcoin, which aroused everyone's attention to the Bitcoin ecosystem. Going back even further, it was the ICO that triggered the blockchain bull market in 2017.
More fundamentally, an important innovation of blockchain itself is the issuance of tokens and the establishment of project economic models.
Pump.fun actually also integrates the ICO issuance method. It adopts the pre-market fundraising method. For users, selecting the tokens they want to participate in and then entering the number of tokens they want to buy is equivalent to participating in the token issuance fundraising, and being able to sell the corresponding shares before the issuance. Pump.fun will charge a 1% fee.
Why is Pump.fun successful? The core reason may be that it simplifies the token issuance method and simplifies the process of users participating in projects and buying and selling. In essence, it has built a casino with rich projects and low participation threshold.
In terms of operating mechanism, the tokens originally created on Pump.fun can only be traded within the platform. When the token reaches a certain market value (approximately US$60,000), the pump.fun website will automatically close the transaction and migrate the token to the DEX Raydium on Solana.
At this point, it is time for most people to sell their tokens. Once buyers rush in to buy tokens from Raydium, users who bought low-priced tokens during the low-value stage of Pump.fun tokens can make huge profits by selling them at this time.
In the industry, the term “graduation rate” is used to describe the success rate of Memecoin issued on Pump.fun being listed on Dex.
Dune Analytics data shows that the success rate of tokens created on Pump.fun to successfully land on Raydium is 1.41%. Since May, the rate has fluctuated between 1.21% and 1.41%. As can be seen from the above, the vast majority of these Memecoins have failed to be listed on exchanges, and the probability of gambling success is extremely low.
From the low graduation rate of projects on Pump.fun, it can be seen that although there are many projects on it and users can choose to participate in "gambling" with rich products, the "odds" are also very high. Choosing a good project depends entirely on luck. Memecoin itself has no fundamentals, and it relies purely on the attention economy and chasing hot spots.
However, like BRC-20, it also achieves fair legal shooting, which is one of the reasons why users are willing to play on it.
There are many scammers, but there are always gamblers.
Although Pump.fun is using the gimmick of fair legal shooting, there is never absolute fairness. For the project parties that issue coins on the Pump.fun project, there are still ways to "harvest" users. In a completely free market without any supervision or restrictions, the implementation of the law of the jungle is more thorough.
Like any other crypto project, the project owner or dealer can still hold a large number of tokens at a very low price. The method is very simple. Create several new wallets, buy in early, and raise the price of tokens by continuously buying in small amounts. Then, use marketing methods such as buying fans on Twitter to increase the popularity of the project, attract a large number of users to take over, and then the project owner can sell at the right time. This method of cutting leeks is also a common practice in the industry.
The problem with Pump.fun is that anyone can issue coins on Pump.fun, and the cost of issuing coins is extremely low. According to statistics, more than 1.2 million projects have been issued on it. There are too many projects on the platform, and because the platform has a large number of users, the reach of scam projects has greatly increased.
And on August 9, the pump.fun team announced on the X platform that it would reduce the token issuance fee from $2 to $0, and would also give a 0.5Solana reward to Memecoin projects that completed the "bonding curve" and were listed on Raydium.
The team hopes that such incentives can, to a certain extent, encourage creators not to sell their tokens completely. From the perspective of project management, the introduction of this "free" policy may be a response to the current prosperity of imitations on various chains.
However, the actual impact of this move is to lower the threshold for issuing coins again, allowing more fraudulent projects. Pump.fun itself does not have a mechanism to screen projects.
However, for users, coming to Pump.fun is to gamble, and hyping up Memes is an act of hoping to "turn a bicycle into a motorcycle" and make a small investment for a big gain.
Compared with playing Meme on the chain alone, the user experience of the Pump.fun platform is actually better, especially because it has built-in social attributes into Meme transactions. When users operate Meme, they not only observe the K-line buying and selling to enjoy the adrenaline rush, but can also enjoy various funny pictures on the platform and comment and reply to the projects. This is an innovation that increases the fun of gambling products and platforms.
Recently, there have been a lot of negative comments about Pump.fun. Some people roughly call it a slaughterhouse-style harvest and believe that after losing the money-making effect, users will withdraw and the project will die.
But most people who go to casinos lose money, and yet people keep going. For this reason, Pump.fun will not only not disappear, but will become more prosperous, especially in this cycle where Memecoin has become an extremely important narrative.
What is the significance of Pump.fun to the industry? You can see it directly - it greatly improves the activity on the Solana chain. More? Which casino was founded to contribute to society!
