The New Darling of the Solana Ecosystem: Analyzing the Rise and Challenges of Pump.fun

Meme coins and internet culture have played an important role in the cryptocurrency market. However, due to their high-risk nature, most investors find it difficult to profit from them and are more likely to suffer significant losses. This situation makes value investing in the Meme market unreliable and leads to excessive speculation.

Nevertheless, the traffic attributes inherent in Memes have become an indispensable part of public chain development. Therefore, how to maintain the fairness of the Meme market has become an important topic in this bull market. Recently, Pump.fun, the largest Meme launching platform in the Solana ecosystem, has attracted widespread attention from 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 this year, Pump.fun has issued over 460,000 tokens, leading the Meme coin sector into a new phase of "everyone issuing coins."

Introduction to Pump.fun

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

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

Pump.fun token distribution process

Users can choose to issue tokens using Blast or Solana. The token issuance 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 requires very little expertise and can be operated by ordinary people.

After creating a new coin, the 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 destroyed.

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 bot and web application terminal, thereby gaining more liquidity. At this point, the new token issued by Pump.fun looks like any other token, and the issuance of the new token is successful.

Pump.fun Token Features

1. Extremely low token issuance cost: Anyone can deploy their own Meme token for less than $2.

2. No need to seed liquidity: The system will automatically establish an initial liquidity pool (approximately $60,000) for newly issued tokens 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 Rayium Swap.

4. Waiver of Minting Rights: The creator waives the minting rights when deploying the token, and all tokens are fully issued at the time of creation.

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

6. High Risk High Reward: The price of Meme tokens on Pump.fun fluctuates dramatically, with serious PUMP & DUMP phenomena. The risks are high but may also yield substantial returns.

Success Factors of Pump.fun

With the rapid increase in interest in internet culture and Meme coins, many investors are very eager to launch their own tokens, but often lack the technical knowledge required to create a good token. For a long time, the issuance of Meme tokens has been monopolized by institutions with professional technical knowledge and strong capital, making it difficult for ordinary users to participate.

In addition, the frequent issues of insider trading, rug pulls, and scientists front-running in the Meme market have made the entire market unfriendly to ordinary investors. The "Meme Pre-sale Fever" model, which was recently popularized by BOME, has quickly become a new means of harvesting retail investors just a week later. Almost all pre-sale projects on the market have experienced rug pulls.

The lack of transparency and fairness has filled the Meme market with various risks. However, the hundredfold wealth code keeps investors and the community enthusiastic about Meme coins. To maintain the prosperous development of the market, there is an urgent need for a Meme token 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 token issuance costs, while simplifying the entire token issuance process by productizing Meme, making the entire process more open and transparent.

The creator automatically relinquished the minting rights when deploying the token, which also means that the tokens of Pump.fun will have no nominal project team or managers, thus avoiding the RUG issues caused by super permissions.

Secondly, Pump.fun also enhances the fairness of the platform by eliminating the creator's interference in the token issuance process. The liquidity on the platform is artificially created and operates on the joint curve retained by the platform. Once the Pump.fun token is launched on Raydium, the liquidity will automatically be burned, thereby locking the AMM liquidity. This means that even as a project creator, one cannot prevent this process from occurring.

In addition, compared to traditional token issuance platforms, Pump.fun not only has a fairer token issuance model but also integrates token issuance with social attributes, making it a major innovation. When creating a token on Pump.fun, in addition to the name of the token itself, users need to attach an image and a description, as well as have a comment function. This gives it the ability to quickly and intuitively spread the backstory and style. Furthermore, Pump.fun also has a function similar to a message board, where users can leave messages and communicate with each other.

Due to its combination of fairness, transparency, and social attributes, Pump.fun has become a sensation in the entire crypto industry, becoming the most popular Memecoin platform in the Solana ecosystem in less than three months since its launch. According to data, the total transaction fees of Pump.fun have exceeded 3 million USD in the past seven days. Notably, Pump.fun set a historical high on May 7, with daily transaction fees exceeding 752,000 USD, making it the highest revenue-generating application in the Solana ecosystem.

Pump.fun: Fairness and Risk Coexist

The original concept of Pump.fun was to maintain fairness in the Meme market. As a new project, Pump.fun has indeed achieved more fairness and transparency than traditional platforms, but in the crypto industry, the higher the profit, the greater the risk. Some rules of Pump.fun have also been exploited by malicious individuals, becoming a tool for harvesting others.

Pump.fun has lowered the threshold for issuing tokens, allowing ordinary investors to participate in the token issuance market. As a result, the daily number of issued tokens exceeds 10,000, but the vast majority of them are junk tokens. For investors, finding valuable tokens with potential among numerous junk tokens is not easy, as the available reference information is very limited. They can only rely on project social information, such as message boards or token information, to judge their quality.

Unfortunately, this social information can easily be forged. Ordinary investors are often more likely to believe and buy tokens when they see some celebrities creating or following them. However, they may not realize that these celebrities could be fabricated by others using accounts with a high number of followers, creating a false appearance of high attention. These individuals buy a large amount of bottom chips early in the token's life, and then wait for users to be misled by the illusion of high attention before quickly selling and exiting. Similarly, some celebrities may also leverage their influence to create new tokens, and then quickly realize the monetization of their influence (harvesting) through extreme price curves.

For example: TEST is the first deployed Meme token on Pump.fun, created by the development team. Early buyers used tools to purchase nearly 50% of the supply, leading to a sharp price increase. However, holders subsequently sold off, causing the price of TEST to drop significantly, resulting in many latecomer retail investors being wiped out. There is also BERT, which increased tenfold within 15 minutes of its opening, but then also experienced severe PUMP & DUMP phenomena that led to a price crash.

The fairness of Pump.fun allows every user the opportunity to place bets at the table, but the gambling nature is too high. Users who bet correctly may see their returns multiply hundreds of times in less than a day, but those who bet incorrectly could become targets for being harvested. Compared to Meme coin issuance platforms, Pump.fun feels more like a gambling platform, and even professional poker players in the U.S. have mentioned Pump.fun in tweets, suggesting their interest in the gambling entertainment offered by Pump.fun.

Pump.fun Sparks a National Token Issuance Craze

The popularity of Pump.fun has also driven a nationwide craze for token issuance. In the past two weeks, the Solana network has issued an average of 14,000 new tokens daily, the vast majority of which come from Pump.fun. Pump.fun has been creating 10,000 Meme tokens daily for six consecutive days, demonstrating its immense potential in the Meme market. In addition, the Base chain has also launched over 2,000 trading pairs for several days. The explosive popularity of one-click token issuance tools represented by Pump.fun also indicates that the Meme token sector is about to enter a new stage of "nationwide token issuance." Currently, besides Pump.fun, there are several other relatively popular Meme token issuance platforms.

We.rich

We.Rich is a UGA (User Generated Asset) platform that allows anyone to launch Meme tokens with one click without LP (liquidity pools). Building on the foundation of Pump.fun, We.Rich has added more features and optimized the user interface. For example, it maintains a very low token price during the initial fair launch phase and has a limited Mint function. However, We.Rich has shortcomings in terms of asset information and lacks social attributes. Although its issuance quantity and active users still lag significantly behind Pump.fun, the emergence of this project on the Base chain, which also has a large Meme market, adds a new competitor to the Meme coin battlefield for Pump.fun.

Rug.fun

Rug.fun is another meme coin issuance platform on the Base chain, which is somewhat similar to Pump.fun in its model, allowing anyone to issue coins 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 period of 12 hours. After the deadline,