Solana's new star ignites a nationwide craze for token issuance, Pump.fun balances fairness and risk

Author: Daniel Li, CoinVoice

Internet culture and memes have always played an important role in the cryptocurrency market. However, due to the high-risk nature of meme coins, most investors rarely profit from them and are instead prone to significant losses. This situation has made value investing in the meme market unreliable, leading to excessive speculation.

Nevertheless, the inherent traffic attributes of memes have long become an indispensable part of the development of public chains. Therefore, how to maintain fairness in the meme market has become an important topic in this bull market. As the largest meme launch platform in the Solana ecosystem, Pump.fun has recently attracted widespread attention in the market. Pump.fun continues the narrative of fairness, allowing users to deploy and issue tokens at a very low cost (0.02 SOL) without any development experience. Since its launch in January, Pump.fun has issued over 460,000 tokens. The rise of Pump.fun has also led the meme coin sector into a new phase of "mass token issuance."

01 What is Pump.fun

Pump.fun is a token issuance tool and community platform focused on meme coins. It was launched on Solana in January 2024 and soon added support for Ethereum L2 Blast after going live on the mainnet. Pump.fun simplifies the token issuance process and lowers technical barriers, providing users with a simple and low-cost way to deploy and issue tokens. Users only need to pay a fee of 0.02 SOL and can easily use the platform without any development experience.

This simplification and low-cost feature has made Pump.fun rapidly popular in a short time, achieving significant accomplishments. In the past 10 days, Pump.fun's trading volume has shown a parabolic growth trend, creating nearly 50% growth in total revenue. Currently, the platform's daily revenue remains above $450,000, with no signs of decline.

Pump.Fun Token Issuance Process

Users can currently choose to use Blast or Solana. From there, the initiation process is very simple; just click "Start a New Coin" and enter the name, code, description, and brand image, and pay 0.02 SOL to start the "fundraising" issuance process for a token. The entire process is very straightforward, requiring no adjustments to the issuance quantity and token ownership settings, making it very accessible for ordinary people.

Once the new coin is created, the new token will launch along the joint curve on the Pump.Fun platform. The joint curve is a mathematical curve that determines the token price based on supply. As more tokens are purchased, the token price typically rises. Anyone can buy and sell on the platform, and when the total market value of the token reaches $69,000, the liquidity of the joint curve will be deposited into Raydium and burned.

After the liquidity of the token is deposited and burned, users can purchase it through the Solana decentralized exchange Raydium or through their preferred Telegram bots and web application terminals, thereby gaining more liquidity. Once this is achieved, the new coins issued by Pump.Fun will look like any other token, marking the successful issuance of the new coin.

Pump.Fun Token Issuance Features

(1) Extremely Low Issuance Cost: Anyone can deploy their own meme token on Pump.Fun for less than $2.

(2) No Need for Liquidity Seeding: Pump.Fun does not require a large amount of liquidity to be seeded for newly issued tokens; the system will automatically establish an initial liquidity pool (approximately $60,000) on the DEX.

(3) Automated Process: Once the market value of the new token reaches $60,000, the system will automatically inject all buying funds into the liquidity pool and launch trading on Raydium Swap.

(4) Abandonment of Minting Rights: Creators automatically abandon minting rights when deploying tokens, and all tokens are fully issued at creation.

(5) Fair Distribution: Since creators cannot reserve tokens, all tokens enter the public market upon creation, with no hidden wallets.

(6) High Risk, High Reward: Meme tokens on Pump.Fun exhibit extreme price volatility, with serious PUMP&DUMP phenomena, presenting high risks but also the potential for high returns.

02 Why Pump.fun is Popular Across the Internet

With a sharp increase in interest in internet culture and meme coins, many investors are eager to launch their own tokens but often lack the technical knowledge required to create good tokens. As a result, the issuance of meme tokens has long been monopolized by institutions with professional technical knowledge and substantial capital, making it difficult for ordinary users to participate.

Moreover, frequent issues such as insider trading, rug pulls, and early exits by "scientists" have made the entire market unfriendly to ordinary investors. Recently, the "meme presale craze" model sparked by BOME became a new means of harvesting retail investors just a week later. Most presale projects on the market have experienced rug pulls; for example, the Avalanche fundraising project Sener raised approximately 93,000 AVAX (about $4.8 million) before the founder transferred a large amount of AVAX away, leading to the project token SENDER entering a full sell-off phase after a slight initial price increase.

The lack of transparency and fairness has filled the meme market with various risks. However, the allure of hundredfold wealth has kept investors and communities enthusiastic about meme coins. To maintain the prosperous development of the market, there is an urgent need for a meme issuance platform similar to Birdeye, but with a greater focus on fairness. Pump.fun just happens to meet the needs of meme enthusiasts.

In terms of fairness, Pump.fun meets the entry needs of ordinary investors through extremely low issuance costs, while simplifying the entire token issuance process by productizing memes, making the entire issuance process more open and transparent.

Creators automatically abandon minting rights when deploying tokens, which also means that Pump.fun tokens will have no nominal project parties or managers, thus avoiding rug pull issues caused by super permissions.

Additionally, Pump.Fun enhances the platform's fairness by eliminating creator intervention in the token issuance process. The liquidity on the platform is artificially created and operates along the joint curve retained by the platform. Once Pump.Fun tokens go live on Raydium, the liquidity will be automatically burned, locking in AMM liquidity. This means that even as project creators, they cannot prevent this process from occurring.

Furthermore, compared to traditional token issuance platforms, Pump.fun not only offers a fairer issuance model but also combines token issuance with social attributes, which is a major innovation. When creating tokens on Pump.fun, users must attach an image and a brief description along with the token's name, and there is a commenting feature. This endows the platform with the ability to quickly and intuitively spread the story and style behind the tokens. Additionally, Pump.fun has set up a message board-like feature where users can leave messages and communicate with each other.

With its combination of fairness, transparency, and social attributes, Pump.Fun has quickly become popular throughout the cryptocurrency industry. In less than three months since its launch, Pump.Fun has become the most trafficked memecoin platform in the Solana ecosystem. According to DeFiLlama, the total fees generated by Pump.Fun in the past seven days have exceeded $3 million. Notably, Pump.Fun set a historical high on May 7, with daily fees exceeding $752,000, becoming the highest-earning application in the Solana ecosystem.

03 Pump.Fun: Fairness and Risk Coexist

The initial concept of Pump.Fun was to maintain fairness in the meme market. As a new project, Pump.Fun has indeed achieved greater fairness and transparency than traditional platforms, but in the cryptocurrency industry, higher profits often come with higher risks. Some of Pump.Fun's rules have also been exploited by malicious actors, becoming tools for harvesting others.

Pump.Fun has lowered the barriers to token issuance, allowing ordinary investors to participate in the token market, resulting in over 10,000 tokens being issued daily, the vast majority of which are junk coins. For investors, finding valuable coins among the many junk coins is not easy, as the available information for reference is very limited, forcing them to rely on social information about the projects, such as message boards or token information, to judge their quality.

Unfortunately, this social information can be easily fabricated. Ordinary investors are often more likely to believe and purchase tokens created or endorsed by well-known individuals. However, they may not realize that these well-known individuals could be impersonated by others using accounts with a large number of followers, creating a false impression of high interest. These individuals buy large amounts of bottom tokens early on and then quickly sell out once users are misled by the illusion of high attention. Similarly, some well-known individuals may also leverage their influence to create new tokens and then rapidly monetize their influence through extreme price curves.

For example, TEST is the first meme token deployed on Pump.Fun, created by the development team. Early buyers used tools to purchase nearly 50% of the supply, causing the price to surge. However, subsequent holders sold off, leading to a significant price drop for TEST, resulting in many latecomers being harvested. Another example is BERT, which saw a tenfold increase within 15 minutes of launch but subsequently experienced severe PUMP&DUMP phenomena, causing the price to plummet.

The fairness of Pump.Fun allows every user to have the opportunity to place bets, but the stakes are too high. Users can potentially multiply their investment several hundred times in less than a day if they bet correctly, but if they bet incorrectly, they may become victims of harvesting. Compared to other meme token issuance platforms, Pump.Fun feels more like a gambling platform. Even professional poker player Tom Dwan mentioned Pump.fun in a tweet, hinting at his interest in the gambling entertainment aspect of Pump.fun.

04 Pump.fun Sparks a Nationwide Token Issuance Craze

The popularity of Pump.Fun has also sparked a nationwide token issuance craze. In the past two weeks, the Solana network has averaged 14,000 new tokens issued daily, the vast majority of which come from Pump.Fun. Pump.Fun has consistently created 10,000 meme coins daily for six consecutive days, demonstrating its enormous potential in the meme market. Additionally, the Base chain has also launched over 2,000 trading pairs for several consecutive days. The explosive popularity of one-click token issuance tools like Pump.Fun indicates that the meme coin sector is about to enter a new phase of "mass token issuance." Currently, besides Pump.Fun, there are several other popular meme token issuance platforms.

We.rich

We.Rich is a UGA (User Generated Assets) platform that allows anyone to launch meme tokens without liquidity pools with just one click. Building on the foundation laid by Pump.Fun, We.Rich has added more features and optimized the user interface. For example, it maintains extremely low token prices during the initial fair issuance phase and has a limited minting function. However, We.Rich lacks social attributes and has shortcomings in asset information. Although its issuance volume and active users are still significantly lower than Pump.Fun, the emergence of this project adds a new competitor for Pump.Fun in the meme coin battlefield, especially on the Base chain, which also has a large meme market.

Rug.fun

Rug.fun is another meme coin issuance platform on the Base chain, which shares some similarities with Pump.fun in its model, allowing anyone to issue tokens on the platform. However, in terms of rules, Rug.fun is more aggressive and riskier compared to Pump.fun.

The token issuance rules of Rug.fun are divided into two phases. The first phase is the creation of tokens, where anyone can create tokens within a continuous 12-hour period. After this period, only the top 10 tokens with high liquidity enter the second phase, while eliminated tokens will have their purchase funds returned. The second phase involves competition among the top 10 tokens, lasting 12 hours, after which only the 1st and 10th tokens will win. The holders of these two tokens will share all the liquidity funds from the 2nd to 9th tokens, each receiving 50% of the share. Additionally, each token purchase incurs a tax, which gradually increases over time, and winners have the opportunity to share in the tax revenue. The ultimately winning token will qualify for listing on decentralized exchanges (DEX).

Friend.tech

Friend.tech is a decentralized social platform that released the Friend.tech V2 version in March 2024, introducing a club feature. On Friend.tech and Club, anyone can create non-abusable and 100% secure tokens with the click of a button.

Once a token is created, it will have joint curve characteristics. This means there is a correlation between the token's supply and price. As the supply increases, the price will rise, incentivizing people to hold and participate. Since this is a decentralized social platform, the created tokens will bind the creators and holders to social links, tied to their reputation on the internet and blockchain. This will bring more responsibility and motivation to creators to ensure the success of their projects.