Reasonable valuation of 7 billion? Buying PUMP in the public sale is a profit?

Original: A Valuation of $PUMP

Author: Sunny Shi, Messari Crypto

Compiled by: Alex Liu, Foresight News

According to various media outlets citing informed sources, pump.fun is preparing to sell 25% of its PUMP tokens at a valuation of $4 billion to raise $1 billion. Is this price attractive? Sunny Shi from Messari has built a valuation model for PUMP, which shows that its FDV (Fully Diluted Valuation) could reach $7 billion. If the prediction is correct, buying PUMP tokens would be profitable. However, there is an important premise. Here is their valuation process (from Sunny Shi's perspective, "we" refers to Messari):

Regardless of how you view memecoins, this sector continues to "print money." Although the trading volume on the pump.fun issuance platform has declined compared to the beginning of the year, it remains well above the levels seen for most of 2024.

Pump.fun's trading volume is higher than most of 2024, data: Messari

People may also underestimate the success of PumpSwap. This DEX launched about three months ago but has already significantly eaten into Raydium's market share on Solana.

Comparison of PumpSwap and Raydium's market share, data: Messari

Our valuation method uses a top-down model, assuming the overall trading volume of the crypto market, Solana's share, the launch platform's share, and PumpSwap's market share. These assumptions and models are only available to enterprise clients, but I will share the main conclusions.

In our base case scenario, we believe that memecoins will occupy a niche market within the broader crypto economy, as they are more suitable for speculative purposes than NFTs. Of course, as the Solana ecosystem matures, it will undoubtedly diversify into new asset pairs, but this is also likely to hold true.

We believe that even if pump.fun's share within the Solana ecosystem slightly declines, PumpSwap's continuous growth means that the pump project is still expected to generate about $675 million in revenue over the next two years. Based on a 10x valuation multiple, the corresponding FDV would be approximately $7 billion.

However, the key premise is: if the project team chooses an opaque token/equity structure that allocates most of the revenue to insiders rather than token holders, we believe the current market has become quite cautious and will not overlook such a poor value accumulation method. In our full report, we provide a valuation table to assess PUMP's potential value based on the percentage of revenue that token holders can access.

Regardless of how the market ultimately judges, this is an excellent opportunity to participate in one of the most profitable crypto applications in history. It now depends on whether the project team provides token holders with sufficient participation value (buy-in) to make it a worthwhile investment.

Editor's note: At this moment, the price of PUMP in Aevo's pre-market perpetual trading is $6, corresponding to a $6 billion FDV (Fully Diluted Valuation).

PUMP's pre-market price on Aevo

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