The driving force behind the rapid growth of Solana's ecosystem tokens continues to set new historical highs, interpreting the growth engine Pump.fun
Fair narratives will run through the entire bull market, while memes become the ultimate weapon for the growth of public chains.Author: Nan Zhi, Odaily Planet Daily
In April, the market experienced a significant correction, yet the Solana market became increasingly vibrant. On May 4, the number of newly issued SPL tokens reached a historic high of 14,648. More than half of the newly issued tokens came from pump.fun, and Odaily Planet Daily will interpret the platform's functions, data, and this phenomenon.
Introduction to Pump.fun
Launched in February 2024, Pump.fun is a one-click issuance platform for Meme tokens. When it was launched in February, it did not attract much user attention or usage, but by mid-March, the number of users and usage began to soar.
Operating Process
Creating Tokens: Issuers only need to input the token's name, description, and image, and pay about 0.02 SOL to initiate a token's "fundraising" issuance process.
In-platform Fundraising: For users, selecting the token they want to participate in and entering the desired amount of tokens to purchase is equivalent to participating in the token issuance fundraising, and they can sell the corresponding shares before the issuance. Pump.fun will charge a 1% fee.
Price Curve: It is important to note that the price of Pump.fun's tokens before the official launch is not evenly distributed but is calculated based on the Bonding curve. Simply put, the token price will rise as fundraising progresses and fall as the number of tokens sold in the platform decreases.
Token Issuance: When users purchase enough tokens and the market cap reaches $69,000, Pump.fun will add $12,000 in liquidity to Raydium (the leading DEX on Solana) and burn the LP.
How Pump.fun Stands Out
As of May 5, Pump.fun has issued a total of 418,936 tokens, generating cumulative revenue of $6.9 million. From April 1 to May 1, Pump.fun's revenue reached $4.99 million, equivalent to an annualized revenue of about $60 million, and the growth trend shows no signs of decline. So how did Pump.fun achieve this success?
Continuation of Fair Narrative
The answer lies in the narrative of "fairness." Since the rise of Meme tokens in 2021, they have flourished on Ethereum and BSC, but with issues like insider trading, rug pulls, and front-running by scientists, user enthusiasm for Meme tokens has been severely impacted, leading to the emergence of a series of launch platforms like Pinksale.
In Solana, the year 2023 and earlier were filled with rug tokens. To avoid excessive losses from rug pulls, many users became "10 U warriors," participating in trades with minimal amounts, hindering the development of various ecosystems.
The automatic LP addition and burning function of Pump perfectly meets the fundamental needs of users. Tokens from Pump do not have nominal project parties or managers, thus avoiding issues related to super admin rug pulls.
Meme and Social Attributes
In addition to the token's name, Pump.fun's tokens also require an image and description, along with a comment feature, which gives them the ability to quickly and intuitively spread their underlying stories and styles.
Previously, Meme tokens, project websites, and official media mostly relied on mutual references to achieve information linkage, whereas Pump.fun has effectively completed a one-click aggregation. On one hand, this allows users to quickly obtain most information, while on the other hand, it endows the tokens themselves with social and effective dissemination capabilities.
A "Harvesting" New Path?
Although born out of the pursuit of "fairness," some mechanisms of Pump.fun have still become harvesting tools for certain users. As mentioned earlier, Pump.fun issues tokens very quickly, resulting in a large number of new tokens daily, and most users can only judge the quality of projects based on their "social" attributes.
On the other hand, the prices on Pump.fun are not evenly distributed; the cost for the latest users is often more than five times that of the earliest users. This has led to some malicious users purchasing high-follower X accounts to create a false impression of high attention, buying large amounts of tokens at the bottom, and then quickly exiting before the issuance once users are misled by the illusion of high attention. Similarly, some influencers create new tokens through their influence and then use extreme price curves to quickly monetize their influence (harvest).
Conclusion
Since the emergence of BRC-20, the call for fairness and opposition to high FDV VC tokens has intensified, with PEPE and WIF's push for the top ten being prime examples of this trend. Pump.fun embodies this narrative, and it is not difficult to foresee that the concept of fairness will run through this bull market, becoming a trigger point for many disruptive projects.
On the other hand, Pump.fun also holds significant importance for the Solana ecosystem, not only in terms of the annual revenue of $60 million but also in the billions or even tens of billions of dollars in trading volume behind that revenue, representing considerable growth for DEXs and nodes, and serving as the ultimate tool for Solana to attract users.
