Syncracy Capital Co-founder Deconstructs PumpFun: The Imagination of Platform Equity and the Reality of Capital

Source: Pump.fuhttps://www.youtube.com/watch?v=69t3aOMoJiYn's $1 Billion ICO Has Caused Controversy. Can It Succeed?

Compiled by: lenaxin, ChainCatcher

Editor’s Note:

This article is compiled from a video interview with Ryan Watkins, co-founder of Unchained and Syncracy Capital, analyzing thePumpFun's profit model, valuation logic, systemic risks, and potential transformation paths.

On June 3, @NextFuckingThing reported that "PumpFun plans to raise $1 billion through an ICO with a fully diluted valuation of $4 billion, and may airdrop 10% of tokens to the community." This news sparked a strong reaction in the community, with trader Ansem comparing it to "the second plane hitting the Twin Towers." A poll he initiated showed that 70% of participants believe PumpFun has a negative impact on the crypto industry.

ChainCatcher has compiled the content.

Key Insights

• Without clarifying the use of funds, PumpFun is both profiting and refinancing $1 billion, which severely undermines user trust.

• Nearly half of the trading volume is controlled by bots and third parties, and PumpFun is gradually losing control over its own ecosystem.

• What truly retains users is never the airdrop, but the product itself.

• The value of the token relies not on financing gimmicks, but on clear utility and execution capability.

(1) Why PumpFun Made $700 Million Yet Is on the Brink of Trust Collapse

Laura Shin: I would like to ask for your views on the event and how you evaluate the market's reaction?

Ryan Watkins: Over the past two years, meme coins have been the most controversial asset class in the crypto space, and PumpFun has become a typical representative of this controversy. Since its launch in the first quarter of 2024, the platform has accumulated $700 million in revenue through a 1% trading fee and a binding curve mechanism, making it one of the most profitable projects in the crypto economy.

However, this commercial success is accompanied by numerous issues: ordinary investors are increasingly losing money, mainly due to systemic risks such as market manipulation bots and insider trading; the originally simple community culture has evolved into a complex "meme coin industrial chain"; more concerning is that the platform has initiated a $1 billion financing round without clarifying the use of funds.

From a business value perspective, although its profit model is controversial, the financial performance is solid; in the current market environment, if the meme coin trend continues, its valuation remains reasonable; essentially, the project offers an investment opportunity in "platform equity," which explains the coexistence of its controversy and value.

Laura Shin: Is PumpFun still trustworthy?

Ryan Watkins: If PumpFun's $1 billion ICO is successful, it will become the third-largest financing in crypto history, following EOS's $4.2 billion and Telegram's $1.7 billion. The scale of a single financing round for a meme coin platform is comparable to industry giants like Circle, and this phenomenon itself is worth exploring.

Although its newly launched AMM protocol has an annualized revenue of $52 million, it is still insignificant compared to the platform's total revenue of $700 million. More critically, in the absence of significant product breakthroughs, the platform has neither clarified the specific use of funds nor responded to industry insiders like Vanna Charmer regarding the efficiency of capital allocation.

From a development strategy perspective, signing top content creators with substantial sums may be the most direct breakthrough, referencing the contract values of over $100 million for top creators like Aiden Ross. In the long run, developing a public chain, establishing an exchange, or issuing stablecoins are all possible directions in the mature business models of the crypto field. But the core issue is that when the platform is still dominated by bots in trading, any ecological layout will struggle to resolve the fundamental trust crisis. For PumpFun, rebuilding community consensus is far more important than pursuing the scale of financing.

(2) PumpFun's Gamble: Ambitions and Concerns Behind the $1 Billion Financing

Laura Shin: If the ICO is successful, what strategy do you think would be the best choice?

Ryan Watkins: If I were to lead the use of these funds, the first priority would be to assemble a top-notch social media product team. I would focus on recruiting talent with AI backgrounds from platforms like TikTok and Meta to reconstruct the currently chaotic content discovery mechanism. Currently, PumpFun's information flow experience has obvious flaws, with users often caught in meaningless browsing loops.

Secondly, significant funds would be invested to bring in top content creators, including crypto-native KOLs and top streamers from traditional fields. Although the signing costs are high, this is a necessary step to quickly establish a content ecosystem. On the trading product side, collaboration with innovative protocols like Hyperliquid could be considered, drawing on their HIP-3 profit-sharing mechanism to develop a perpetual contract market for meme coins; of course, with existing financial strength, building an exchange independently is also entirely feasible.

But the key remains to clarify the use of funds. If a large-scale token buyback plan can be launched to directly enhance the token value capture capability, it may be the most recognized solution by the community. After all, in the absence of a clear roadmap, any grand vision is unlikely to gain user trust.

Laura Shin: Does PumpFun really need such a massive financing to transform?

Ryan Watkins: PumpFun can completely break through the limitations of meme coins and transform into a broader asset issuance platform. As the leading issuance platform currently holding 95% market share, its advantages are evident: ample capital reserves, one of the most popular front ends in the Solana ecosystem, and a continuously growing mobile user base.

The transformation direction could focus on building a general capital market infrastructure:

• Expanding asset categories to introduce new types of assets like internet capital market tokens

• Establishing a strict asset screening mechanism, distinguishing it from the current disorderly state

• Developing supporting functions, such as founder lock-up periods, compliance fundraising tools, etc.

This transformation touches on the fundamental contradiction in the crypto field: how to set reasonable boundaries in an unlicensed system? PumpFun's current situation has sparked profound discussions about "what should be built on the blockchain"—whether to continue supporting purely speculative tools or to shift towards creating platforms that generate real value. There is no standard answer to this question, but it is indeed a topic that the entire ecosystem must face.

Laura Shin: What strategic considerations does PumpFun have in launching the ICO at this time amid declining revenues?

Ryan Watkins: Analyzing the valuation issue of PumpFun's ICO from an investment perspective, its $4 billion valuation corresponds to a pricing logic of an 8x sales multiple, which is worth questioning. Although the platform's recent 30-day revenue performance of $45 million (annualized $500 million) seems to support this valuation, the peculiarities of the meme coin market render this linear extrapolation fundamentally flawed.

The Trump meme coin case proves that the trading volume of such assets heavily relies on sporadic celebrity effects, and the market clearly struggles to continuously create more impactful events. Even if current trading volumes remain relatively high, the sustainability of this growth model is questionable.

A deeper issue is that the platform has yet to demonstrate the ability to break through the cyclical characteristics of meme coins, and the growth expectations implied by the 8x sales multiple may have overdrawn future potential. If PumpFun cannot build a new growth engine that transcends celebrity token issuance, its current valuation may face severe challenges.

Laura Shin: Are there hidden risks in the early liquidity terms under PumpFun's current $4 billion valuation?

Ryan Watkins: From the essence of the ICO, this design of complete liquidity is not surprising—tokens can be freely traded once listed. As long as all investors participate at a uniform valuation, this non-lockup clause itself does not pose a problem.

(3) Can PumpFun Redeem Solana's Reputation Instead of Creating Another Airdrop Game?

Laura Shin: How can Solana find a strategic balance between maintaining the traffic dividends brought by memes and escaping the stigma of being a "speculative public chain"?

Ryan Watkins: The market has reasonable doubts about PumpFun's $1 billion ICO, after all, the platform has already made $700 million but is still financing heavily. In the short term, this may lead to capital diversion, resulting in selling pressure on Solana and related assets.

However, in the long run, if financing is successful, it will enhance Solana's status as a mainstream financing platform, attracting more quality projects and changing the current meme coin-dominated ecological landscape. This benchmark case could also lower the psychological threshold for ICO scales in the market, stimulating more compliant fundraising activities.

The key is whether PumpFun can use the funds for substantive innovation rather than continuing financial games, which will determine whether this ICO is ultimately an opportunity for ecological upgrade or yet another capital harvest.

Laura Shin: What considerations are behind PumpFun's choice of an ICO-first, airdrop-second financing strategy?

Ryan Watkins: Most airdrop projects have not brought substantial value to the product; instead, they distribute free funds to users who do not genuinely care about the product—these individuals often sell off immediately after receiving the airdrop. Hyperliquid has become one of the few success stories, not because users hold onto the airdrop tokens long-term (in fact, most choose to sell), but because it possesses strong product capabilities and a sustainable revenue model. The airdrop here merely serves as an auxiliary means to demonstrate community consistency, aligning with the decentralized ethos. The key insights are:

• Airdrops should be implemented after the product matures and must provide users with sufficient reasons to hold the tokens.

• For the Solana ecosystem, airdrops may compensate some meme coin traders' losses and reactivate market enthusiasm.

• But fundamentally, airdrops are just icing on the cake; the intrinsic value of the product is the determining factor.

Blindly imitating the airdrop model will only lead to resource waste; project parties should focus more on building products with real demand.

(4) From Trading Venue to Super App? PumpFun's Path to Breakthrough and Pivotal Moment

Laura Shin: How can PumpFun maintain its leading position amid increasingly fierce competition?

Ryan Watkins: PumpFun is facing a core challenge: nearly half of the trading volume is controlled by third-party interfaces and bots, causing the platform to gradually lose its entry position for asset distribution. This ongoing trend will weaken its dominance over the ecosystem, as large third parties can easily build their own token issuance platforms (as demonstrated by the Radium case), diverting users and liquidity. Although it currently maintains its position due to liquidity advantages, it must enhance user stickiness in the long run to solidify its competitiveness. Its response strategy focuses on two directions:

1. Social Transformation: By building a social graph to create emotional stickiness, allowing users to remain due to social relationships rather than purely trading needs (in line with Chris Dixon's principle that "tools attract users, network effects retain users").

2. Function Generalization: Transforming competitors' innovations into its own functional modules, upgrading from a single meme platform to a comprehensive entry point.

Fundamentally, PumpFun **needs to complete the transformation from "trading venue" to "social + financial super app" before its liquidity advantage fades; otherwise, it is only a matter of time before third parties eat into the ecosystem. The failures of cases like Radium show that pure technical replication cannot shake market leaders, but ecological reconstruction combined with social relationships may change the game.

Laura Shin: Do you have any other opinions or suggestions regarding PumpFun?

Ryan Watkins: This industry will always have exciting yet controversial turning points. Will PumpFun successfully raise $1 billion? How will the market digest this news? What is the specific use of the funds? Regardless of the final outcome, as one of the most well-funded and widely used products in the crypto space, every move of PumpFun could have a profound impact on Solana and even the entire industry ecosystem. This is destined to be a landmark event worth close attention.

Disclaimer

The content of this article does not represent the views of ChainCatcher. The opinions, data, and conclusions in the text represent the personal positions of the original author or interviewee. The compiler maintains a neutral stance and does not endorse their accuracy. It does not constitute any professional advice or guidance, and readers should exercise caution based on independent judgment. This compilation is for knowledge-sharing purposes only; readers should strictly adhere to the laws and regulations of their respective regions and refrain from participating in any illegal financial activities.