After the clash of two memetic figures of all time (Elon and Trump), Pump Fun made $850,000 in revenue on the back of blatant permissionless gambling on Solana. These numbers put the protocol in 3rd place of all crypto protocols and chains, just behind Aave and Ethereum. But what is Pumpdotfun exactly and why should you be careful?
What is it Pump.fun?
Pump Fun is a platform where users can explore and exchange meme coins instantaneously. What is perhaps more important is that it is a kind of arena where the value of coins can surge within moments, and let it, in a matter of fact, pump.
What is so special about pump.fun is the fact that anyone can launch their own token, and by token we mean memecoins. As these tokens are 99% associated with current memes on real time events, see the Trump and Elon debate for example.
But the ‘degen’ terminal where new engagements or broadcasts are shown is also a trademark of the platform. A place where every gambler joins in and tries to find the next memecoin to dump on or get dumped upon. More on this later.
How does Pump.fun work?
To get started on Pump Fun, visit their website and connect your Solana (SOL) wallet. Purchasing tokens is as simple as on centralized or decentralized exchanges – just enter the amount you want to buy and click buy.
However, launching a new token on Pump Fun involves a few more steps. Each coin on Pump Fun starts as a fair launch, with no presale or team allocations. Here is a quick overview of the launch process:
- Pick a coin concept that appeals to you.
- Purchase the coin on the bonding curve.
- You can sell your coins at any time to lock in profits or cut losses.
- Once enough buyers purchase on the bonding curve, the coin reaches a market cap of $69k.
- $12k of liquidity is then deposited into Raydium and burned.
When a coin is created, it is not put on-chain until someone buys it. Therefore, there may sometimes be a discrepancy between the time it launched on the Pump Fun interface and when it appeared on the mainnet, such as what you might observe on Solscan.
Is Coin Creation Free on Pump.fun?
Yes, coin creation is now completely free. Originally, creators had to pay around $2 for coin creation. Now, this cost is covered by the first buyer of the coin. This change unlocks the potential for someone to create a coin without buying any of its supply. Is this a good thing? You can decide for yourself. We take a look at some criticisms later in this article, but it lowers the already low barrier and provides anyone with an idea to launch a coin.
Paying Coin Creators
Pump.fun goes yet another step further as they incentivize coin creators, in a way that they will receive 0.5 SOL (approximately $80) when their coin completes its bonding curve. Meaning, enough people buy the token. This incentive is funded by the Pump Fun migration fee. The reward is paid regardless of whether the coin developer has ever held the coin or is still holding it, encouraging all developers to ensure their coin reaches 100% completion.
The Controversial Impact of Pump Fun on the Meme Coin Space
Not only are the meme coins often criticized as worthless and a waste of time, but a website like Pump Fun, that facilitates the rapid creation and trading of meme-based cryptocurrencies, has also been criticized even harder.
Many critics argue that Pump Fun has turned the meme coin market into a playground for degenerate gamblers and scammers. And only the Pump Fun team and their pockets are benefiting, while 99% of people lose money.
Another concern is that it promotes a culture of quick money with minimal regard for sustainable community building or genuine engagement. Most participants end up losing money, which casts a shadow over the legitimacy and fun of such speculative ventures.
Did Pump Fun kill the original meme game on Solana by turning everything into a lottery-like system? Or is this the end of the memecoin cycle?
Despite the hard points of criticism, some see the platform’s role in the meme coin narrative as a form of entertainment and permissionless gambling, and degens in crypto are not new to this. They can either choose to let this hype fade or use common sense while engaging in it.
What Mindset Should Pump.Fun Users Have?
Users should understand that trading on Pump Fun is essentially gambling. They should be prepared to potentially lose their entire portfolio, while also being open to the possibility of significant gains.
IF you are using it. Be Careful and…
- Understand the high risks involved
- Don’t play the victim when losses occur
- Be aware that you’re gambling, not investing
- Have fun, but be prepared for potential significant losses
- Recognize the chance for substantial returns, but don’t count on them
What this could mean for Solana?
The decentralized casino and ‘potentially’ lucrative nature of meme coins are all built on Solana. So, if you consider what the utility of SOL is, you could say it will depend on the degeneracy of some of the best internet gamblers. If you think this is going to get worse, or better, depending on how you look at it, you could position yourself in the underlying infrastructure by buying or selling Solana.
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