Original Author: @malloyberac3
Mentor: @CryptoScott_ETH
Introduction
Bitcoin has established the value foundation of cryptocurrency due to its non-inflationary nature, Ethereum triggered the ICO frenzy through smart contracts, and NFTs and Memecoins have attracted massive funds due to fair distribution. The continuous evolution of new technologies has expanded the audience for crypto applications, and the differences in emerging token issuance mechanisms further reflect the changing investment values of the audience.
Unlike traditional meme coins such as $DOGE, $SHIB, and $FLOKI attempting to integrate practical applications, the meme coin market since the beginning of this year has presented a new trend under the leadership of $BOME and $SLERF. From issuance to trading, many innovative applications worthy of attention have emerged around the meme coin ecosystem.
PUMP.FUN is a decentralized meme coin issuance platform where users only need to provide creativity to easily launch their own meme coins on the platform at a very low cost (0.02 sol); users can also participate in tokens issued by others, witnessing the process of a meme coin gaining widespread attention from scratch.
As a phenomenon-level application in the meme coin market, PUMP.FUN has research value and is worthy of repeated discussion. The PUMP.FUN Dune board can provide explanations for the new trend in the meme coin market from the perspectives of the platform, users, product behavior, activity, and growth trends, and is worth long-term tracking.
1. PUMP.FUN Overview
1.1 A Comparison
Let's start with a comparison. In the author's view, PUMP.FUN and last year's launched FRIEND.TECH have very similar market performances. They initially attracted attention in the on-chain Degen player circle on a small scale, and after gaining widespread attention, both the track and platform data showed a spiral upward trend. Both quickly established a high market share as industry pioneers, with real users and protocol income increasing day by day, and the FUD that is ever-present in the crypto world has almost no impact on their ecological status.
From a product design perspective, the two platforms are similar but still have some differences. Both asset issuances use the PAMM (Primary Automated Market Makers) mechanism to provide convenience to users, but their assets and specific pricing curves are different. Taking PUMP.FUN as an example (FRIEND.TECH is similar), PAMM is divided into two mechanisms: Fund-to-Mint and Burn-to-Withdraw. The former allows users to deposit their $SOL into the PAMM smart contract reserve pool, and the smart contract reserve pool mints an appropriate amount of meme coins based on the current pricing reported by the Bonding Curve and sends them to the user. The latter allows users to complete the withdrawal by selling meme coins to the PAMM smart contract. Unlike meme coins on PUMP.FUN, FRIEND.TECH tokens have the characteristics of integer minting and theoretical "infinite issuance" (establishing social relationships). In addition, FRIEND.TECH assets represent user social accounts, while PUMP.FUN represents user-issued meme coins.
The two projects have very different market entry and subsequent strategies. Behind FRIEND.TECH is the top crypto institution Paradigm, and the user incentive measures used by NFT market Blur and Ethereum Layer 2 network Blast in its investment portfolio have also been replicated to help FRIEND.TECH with user retention. The launch of FRIEND.TECH V2 airdropped tokens and introduced the Club Key gameplay, sparking a new round of market speculation. In contrast, PUMP.FUN adheres to the populist and fair launch nature of meme coins, with a difficult-to-research investment background, and even though it earns hundreds of thousands of dollars daily, it has not announced any token plans and is quietly expanding its platform. For more in-depth research on FRIEND.TECH, please refer to the previous sharing: Friend Tech — Gryphsis Academy Sharing Session
1.2 PUMP.FUN Bonding Curve and Products
Since the project contract is not open source, the products launched by PUMP.FUN have only disclosed gameplay and fees, and the official information on the adopted mechanisms and product details has not been mentioned. In the research process, it is necessary to build a product model and compare and verify the data. The specific research on the PUMP.FUN Bonding Curve is as follows:
(1) Construction of Product Model
Compared to other track tokens, Memecoins are designed around community consensus and group trading sentiment. The total supply of tokens is relatively large and fully circulated, which can be combined with different promotion strategies. The initial price will not be set too high, and the early price curve is steep, attracting funds through dramatic price fluctuations.
PUMP.FUN Product:
When a user comes up with a good idea, they can first choose a Ticker to be released on PUMP.FUN and easily create a new Memecoin.
Other platform users continuously buy and sell Memecoin tokens on the pricing curve.
The new Memecoin further gains attention, and users can trade a brand new Memecoin created by a PUMP.FUN user, funded by other PUMP.FUN users, with a total supply of 1 billion coins and an initial market value of $69k (410 $SOL) on Raydium.
Users only need to come up with a Ticker, upload an image, write a description, and pay a small fee to easily create a Memecoin; other users can comment below, and the message board-like function set by PUMP.FUN also provides convenience for the Memecoin community to establish connections; clicking on a user's address, the platform can display the tokens created/owned by the user and the objects they follow.
Other users can trade this token, and when the fundraising limit is reached, the token will be sent to Raydium.
(2) Pricing Curve
Unlike FRIEND.TECH's pricing system, which only accepts integer inputs and outputs, the token pricing system on PUMP.FUN is a smooth curve. Unlike the theoretical infinite issuance of tokens on FRIEND.TECH, all Memecoins on PUMP.FUN share the same economic model, with a constant total supply of tokens. Users mint a portion of the tokens at a reasonable price on the Bonding Curve, and the remaining tokens form the LP pool with the raised funds.
After analyzing the front-end code, the function call named virtualSolReserves, it is found that the PUMP.FUN pricing system has a pre-virtual pool, with the quantity of $SOL in the virtual pool as x0 and the total token quantity as y0. By collecting data on the amount of $SOL purchased by platform users and the corresponding token data, and fitting it to the formula x*y=k, the pre-virtual pool is found to be 30 $SOL and 1,073,000,191 tokens, with an initial k value of 32,190,005,730, and a price of 0.000000028 $SOL per token.
The calculation process is shown in the following figure:
The joint curve pricing function is y=1,073,000,191 - 32,190,005,730/(30+x), where x is the amount of $SOL purchased and y is the corresponding token quantity. The derivative can be used to obtain the price of each token. The following is the function curve, with the blue line representing the pricing curve and the red line representing the price curve. According to the curve, it conforms to the steep characteristics of newly issued Memecoins in the early stage.
(3) Comparative Analysis of Cases
Users ultimately raised 85 $SOL, and after the exchange, received 800 million Memecoin tokens, which is consistent with reality.
The raised funds of 79 $SOL (with 6 $SOL as listing fee) and an additional 200 million tokens were added as the initial liquidity trading pool and sent to Raydium. The final token quantity is 1 billion, which is consistent with reality.
The price of each token on Raydium at the moment of fundraising completion is 0.00000041 $SOL, which is 14.64 times the initial virtual pool price, consistent with the actual situation.
Thus, the product details of PUMP.FUN are clear. Users can spend 0.02 $SOL to easily launch a Memecoin. This Memecoin has an initial virtual market value of 30 $SOL, other users raised 85 $SOL to obtain 800 million tokens, PUMP.FUN then mints an additional 200 million tokens, combined to form a trading pair added to Raydium, and ultimately listed with a market value of 410 $SOL, with a total token quantity of 1 billion, as a decentralized issuance of Memecoin. Throughout the process, PUMP.FUN charges a 1% platform transaction fee before listing on Raydium, as well as a "listing fee" of 6 $SOL during the listing process on Raydium.
2. Why Pay Attention to PUMP.FUN
2.1 Why Pay Attention to Meme
For people outside the crypto world, Bitcoin has no practical use and exists only for speculative trading. Its soaring price only represents the success of its meme properties in spreading. In the Ethereum ecosystem under smart contracts, $UNI had no empowerment before the voting mechanism, and like Dogecoin, its investment logic is based solely on industry recognition and the consensus of the crypto spirit. However, after the Meme Season, the Summer of NFTs, and the on-chain money-making frenzy of Memecoin pre-sales, crypto users have developed a unique understanding of Memecoins, which have no utility. The lack of mainstream narratives and the mismatch of funds over time, along with the continuous pursuit of fair launches by crypto users investing in Memecoins, have strengthened the reflexivity of the Memecoin market. For more viewpoints on memes, see the article on the public account: Deconstructing Memes, Why Have Memes Performed So Well in This Cycle?
In November last year, $ORDI was listed on a top exchange, starting the Summer of NFTs, and the new assets that appeared during the change of the crypto cycle injected a new narrative into the market. Currently, the number of Bitcoin NFTs has exceeded 66 million, contributing a total of over $470 million in fees.
The meme coin $GME last gained market attention three months ago, and the recent activity of the protagonist of the GME event on social media has brought stocks and related cryptocurrencies back into the public eye. On the Solana chain, $GME has surged by 30 times, and related concepts have exploded on PUMP.FUN, showing an explosive growth in popularity.
Celebrities choosing to issue tokens on PUMP.FUN, in collaboration with insiders in the crypto community, further break the barriers. The token $JENNER released by the Kardashian family's Caitlyn Jenner has also brought drama to the crypto world, achieving a 160-fold increase in one night, with a peak market value of $30 million.
Why pay attention to memes? Using the definition mentioned in the previous article, "memes spread through imitation; any information that can be replicated through imitation can be called a meme." As humans, who are essentially parrots, the spread of memes is a phenomenon, a result, and a process of the evolving genetic collective seeking order in chaos. In addition to the wealth effect of the Memecoin track, many crypto assets themselves also have meme properties, whether it is Bitcoin, which has built the value foundation of the crypto world, decentralized tokens issued through smart contracts, or celebrity coins based on simple logic.
2.2 PUMP.FUN Operating Data
The Memecoins handled by PUMP.FUN users and the platform will experience a copycat effect after being validated by market logic, continuously amplifying the trading volume. All token information will be labeled on PUMP.FUN, and the repeated mention of hot events has brought huge profits to the platform. After verification and construction, we believe that the amplified data results in the Dune board can explain most of the phenomena of the new Memecoin business model established by PUMP.FUN. The Dune board includes platform users, platform revenue, token creation status, and high-frequency trading activities, and can analyze the platform's behavior, activity, and growth trends from a data perspective. Dune board website: PUMP.FUN by Gryphsis Academy
(1) Platform Revenue
Based on the Dune data dashboard, PUMP.FUN platform experienced its first wave of growth in mid-March. As a player who did not occupy the ecological position earliest in the race, users gradually accepted the platform during this time. Several Memecoins selected by the platform also created many wealth stories, with $SC, launched on March 26, reaching a market value of over a hundred million within a few days. Other Memecoins created by users also had varying degrees of wealth effects due to being in the early stages. The platform's daily revenue reached 1000 $SOL, and continued to grow.
PUMP.FUN experienced an explosive period from April to early May, with $MICHI, launched on April 8, breaking through a market value of 200 million, igniting market sentiment. The Memecoin narrative switched rapidly, and copycat coins emerged endlessly, from national coins brought by the Summer Olympics to religious coins, and then to Trump concept coins. Thousands of Memecoins were created and traded every day. The platform's average daily revenue surpassed 2000 $SOL.
From mid-May to the end of May, on May 13, while GME stocks surged, Memecoins created by users on PUMP.FUN also set a record for platform revenue, reaching $1.2 million. After experiencing attacks from former employees, PUMP.FUN briefly experienced a decrease in popularity, but then further broke through the barriers with the heat brought by Memecoins created by celebrities, raising the platform's revenue back to $1 million. After breaking through the barriers, the average daily revenue reached $700,000, and the platform's total revenue reached nearly $37 million.
On May 16, due to the theft of the wallet account permissions for creating trading pairs on the PUMP.FUN platform by former employees, a large number of Memecoins that completed fundraising could not be listed on Raydium, resulting in user losses of $2 million. PUMP.FUN took measures to reduce platform revenue to compensate for the users' losses.
(2) User Growth
According to Dune data, the number of PUMP.FUN users is still in the growth phase, with occasional setbacks, but the enthusiasm brought by users to the platform has not diminished. Before April 16, the number of new users on the platform increased dramatically, gathering nearly 35,000 active users within a month, gradually laying the foundation for subsequent retention of user habits nurtured by the platform's products. From late April to May, the daily number of new users on the platform slowed down. After breaking through the barriers with the celebrity effect, the number of active users on the platform peaked at 64,378 on May 30, and the daily number of new users continued to slow down. The platform is likely to encounter its first user growth bottleneck.
(3) Memecoin Products
If we consider each user's participation in the issuance and trading of Memecoins on PUMP.FUN as a platform product, the data related to the platform's products can reflect user behavior, making it convenient to improve corresponding issues.
The number of Memecoins created on PUMP.FUN fluctuates with the number of active users. A total of 862,988 Memecoins have been created since the platform's launch, with an average of 15,000 new Memecoins added daily since May.
Only 10,707 of these can be launched on Raydium for broader trading, indicating that the platform's revenue largely depends on transaction fees, with token creation fees and listing fees accounting for a small portion.
Currently, PUMP.FUN has not disclosed financing information, and the platform is still in the growth phase. Dune data shows a high frequency of trading behavior, and it cannot be ruled out that there may be volume manipulation.
The platform has also added live streaming functionality, showcasing the issuance and operation of emerging Memecoins in the form of live broadcasts and videos, providing a suitable way for traffic and fund breakthroughs.
PUMP.FUN has also partnered with @bubblemaps to view the associated bubbles of traders, to see the relationship of token holding wallets, and whether they may be targeted by Dev's burning token wallets, reducing the possibility of Rug Pull. The effectiveness of the platform's new features still needs to be verified through data, and the rapidly changing Memecoin narratives and the launch of new features also reflect the team's ability to adjust in a timely manner.
Overall, PUMP.FUN ignited the market after its launch, satisfying users' needs through the Bonding Curve mechanism without institutional endorsement. The platform also completed drainage and promotion through the wealth effect brought by users issuing Memecoins, and subsequently, the Memecoin narrative switched rapidly. The severe user PVP phenomenon did not structurally affect data growth, but instead continued to break through the barriers due to several hot events. Subsequently, external competing platforms may encounter growth bottlenecks, but for applications that occupy advantageous ecological positions, the choices they can make are only more, not less.
2.3 Competitive Comparison
Compared to other Memecoin Launchpad competitors, PUMP.FUN is better able to build the underlying value of Memecoins based on community consensus and group trading sentiment. As of the completion date of this article on June 6, PUMP.FUN has 16 tokens with a market value exceeding $3 million, with the $SC token having the highest market value of $300 million.
The reason for PUMP.FUN's outstanding performance and the weakness of other competitors can be attributed to its product and ecological support.
(1) Unlike other competitors that give users a peaceful and static feeling, when you visit the PUMP.FUN website, the most immediate feeling is the pulsating numbers and dynamic visuals. The high-saturation design stimulates users' senses, stirring emotions as if facing Memecoin trading, passionate and magical. The gameplay introduction consists of only five simple sentences, in line with the characteristics of Memecoin traders who prefer quick and short interactions. However, other pages provide detailed information about the tokens, making it easy for new buyers to quickly form community consensus. The platform's logo is a small green pill, seemingly expressing a healing pill that is addictive, causing users on the platform to be unable to resist.
(2) Unlike PUMP.FUN, which is backed by the Solana ecosystem, meme.market / werich_ / rugdotfun / Momentum_v1 have all chosen to develop on the Base chain. However, the funds and attention on the Base chain have been diverted by FRIEND.TECH and Farcaster. Memecoins have used the Socialfi platform to solve the problem of cold start, and the $DEGEN and $FRIEND tokens have large market values, providing imagination space for other Memecoin platforms. In the Memecoin Launchpad race on the Base chain, users have become accustomed to the echo wall constructed by FRIEND.TECH and Farcaster through a social model, and funds and traffic have been almost completely divided.
(3) During the attack on PUMP.FUN, DEGEN.FUND launched on Solana, similar Bonding Curve and attempts to attract the market with lower platform fees did not continue to attract enough scale. The $IYKYK token, as a leading target for speculation, also returned to normal after short-term speculation by on-chain players.
3. How to Participate in PUMP.FUN
For this new sub-field of Memecoin Launchpad, PUMP.FUN should be the object of investment research and deep involvement. We divide the platform's users into three roles: Memecoin Creator, Memecoin Trader, and Memecoin Opportunist. The roles can be fluid, and users may make different opportunity choices when facing the same Memecoin as they switch roles.
3.1 Memecoin Creator
The Memecoin Creator can be a crypto artist, an early evangelist of Memecoin narratives, a project party using the platform for promotion, or even a celebrity after breaking through the barriers. As a role that needs to release/discover new Memecoins worth trading, they need to have a certain knowledge of communication and influence. A good Memecoin Dev can work with social media to select strong-performing Tickers for the market. A Dev who is not very sensitive to the market, with the help of PUMP.FUN, can also reduce trial and error costs. And if you, like Caitlyn Jenner and Iggy Azalea, have a special identity, the decentralized issuance platform PUMP.FUN can help you bypass the intermediate process and quickly bring enough support in terms of funds and traffic to your token.
Crypto-native crypto artists and Memecoin enthusiasts can reduce token issuance costs with PUMP.FUN after selecting good Tickers.
Early discoverers use cognition and influence to form new Memecoin narratives for specific Memecoins, and the communities established under these narratives have the opportunity to break through the barriers further.
Celebrities issuing tokens on PUMP.FUN, interacting across barriers and participating in the Memecoin craze with crypto users, is the latest breakthrough in the crypto concept. Compared to FRIEND.TECH, celebrity tokens and NFT assets can be one of the products of celebrity IP; tokenizing social relationships will not attract people with a certain influence, as their public social resources are very rich, and their private social relationships satisfy their own needs.
3.2 Memecoin Trader
As the most active players on the chain recently, Memecoin Traders need to track wallets, use tools, and follow social media while building their own trading strategies to profit in the high-risk, high-reward game. Compared to other risky assets, trading on Memecoin is even more unstable, with generally low win rates, and the platform's characteristics lead to an increasingly fast trading pace, increasing the probability of losses.
The experience of Memecoin Traders on PUMP.FUN has made the author realize that besides the need for a constantly improving trading system, the power from the team is very important. Even on-chain players facing huge opportunities need the cooperation of community members, and the community consensus formed by trading ultimately returns to the consensus of the trading target. Below is a replay of how @0xSunNFT and community members reviewed the process of celebrity Iggy Azalea issuing the $MOTHER token.
3.3 Memecoin Opportunist
Whether it's on-chain scientists arbitraging targets or high-frequency trading bots looking for Alpha opportunities, Memecoin Opportunist is an object that smart wallets should focus on. It is worth considering how to choose the right strategy as a Memecoin Opportunist on PUMP.FUN. Using a Texas Hold'em analogy, when the table is hot, you should enter the pot, and you can choose a sniper robot strategy with good market liquidity to increase participation and amplify profits; when the table is not so hot, or the market is relatively at the bottom or stable, you can choose a reverse sniper strategy to maintain sensitivity to the market while generating income.
(1) Memecoin Opportunist Sniper Strategy
PUMP.FUN Protocol Insight: From Bonding Curve Calculation to Profit Strategy Construction
When a new Memecoin is launched on PUMP.FUN, the snipe bot, after filtering through indicators, completes the first few buy transactions within seconds. Because the entry position is low enough and the initial pricing curve is steep, this strategy has been able to capture significant gains in the overall Memecoin market over the past few months.
From left to right, the highest market values are $DONALDCAT at $15 million, $JAPAN at $5 million, and $NIGI at $12 million.
The sniper bot's opening strategy requires a high sensitivity to market sentiment. Unlike the Solana Sniper Bot that regular users might use, there are no contracts available for sniping on PUMP.FUN. Instead, it involves sniping the act of token issuance, requiring clear monitoring of user interactions on the Solana chain and the platform, and the ability to isolate tokens issued by Devs with rug behaviors. After the snipe, parameters for timely adjustment of stop-loss or take-profit need to be set, and backtesting data needs to be adjusted to optimize the use of sniping funds.
(2) Memecoin Opportunist Reverse Sniper Strategy
The sniper bot's opening strategy relies heavily on the overall market conditions. The wide net approach requires both opportunities and capital, and competition from similar strategies continues to emerge, further compressing profit margins. As a result, the number of Memecoins that can emerge from this mutual game is gradually decreasing. The emergence of the Memecoin Opportunist reverse sniper strategy is a response to this market change. The specific implementation includes:
- Regularly summarizing market hotspots and building a token issuance material library
- Testing the sniper bot's sniping behavior and organizing the bot's strategy (ticker, amount, time…)
- Automating the token issuance process and building the reverse sniper process
- Adjusting parameters to increase capital utilization
The reverse sniper strategy leverages the low-cost token issuance feature of PUMP.FUN. In practice, a well-adjusted reverse sniper strategy can bring single-time returns ranging from 2% to 20% in a very short time.
The construction of parameters requires analysis of the sniper bot's address behavior. Mimicking behaviors of short-term hotspots in the market will continuously trigger strategy signals. Automating the entire reverse sniper strategy process is key to increasing capital utilization and expanding profits. The reverse sniper strategy can achieve low-risk arbitrage while also being able to select good Memecoin narratives at low cost and potentially gain future airdrops.
The Meme-Innovation-Program on the BSC chain has attracted traffic and funds to complete the initial layout of the Meme track. The Base chain is currently launching the Base Onchain Summer event under the leadership of its founders, and Base's Memecoin is sure to receive a biased flow of traffic. Public chains organize campaigns to lay out Memecoin and related tracks, and PUMP.FUN, as a unicorn application in the emerging track, is currently only running on Solana. While believing in the PUMP.FUN team and product, the track participation strategy should also consider hot cycles. In the author's view, the way institutions enter the market has almost been determined, whether it is strong acquisition at a low point or participation as an investor in construction. The track leader, whether in the primary or secondary market, will return to its rightful value. Therefore, the author believes that adopting the Memecoin Opportunist reverse sniper strategy is the best way to lay out the entire track through PUMP.FUN in advance.
- Conclusion
From Ethereum to Solana, from Shiba Inu to frogs, from crypto enthusiasts to breaking through the barriers of celebrity effects, the pursuit of traffic hotspots never stops. From the sloth burning the pool to the innovative token issuance on PUMP.FUN, people continue to explore the decentralization and fair mechanisms of Memecoin. As a leading emerging track, PUMP.FUN's extremely low-cost issuance model has completely changed the ecosystem of Memecoin and its application ecosystem meets user needs, making it a unicorn project in the crypto field. Even the most crypto-native narrative application has not yet released its own platform token. What kind of economic flywheel it will eventually form requires pioneers in the track to continue exploring.
According to Defillama, the PUMP.FUN protocol's monthly revenue on Solana for Memecoin issuance exceeds that of Uniswap Labs, making it the fourth-largest protocol across all blockchain networks. Faced with this unicorn application that has no additional disclosure of information, we need to understand what it really is. Some may see it as a large-scale casino, while others may view it as another platform for liquidity-depleted PVP in the crypto world. Besides these characteristics, the author believes it should be a revolutionary product for new crypto assets, embodying the spirit of decentralization in an extremely low-cost manner. Just as Bitcoin rewarded early miners and evangelists, Memecoin built on community consensus and trading sentiment should also reward users who discover its value through the game process. Is it just because Bitcoin consumes electricity and PUMP.FUN consumes mental and physical effort?
"Before learning to construct, do not take apart what has been deconstructed as the final answer to the problem." Faced with the surging wave of Memecoin reform in the crypto MATRIX world, the author will swallow the green pill of PUMP.FUN with a calm mindset.
References:
[1] https://foresightnews.pro/article/detail/59863
[2] https://messari.io/report/analyst-discussion-pump-fun
[3] https://www.theblockbeats.info/news/53703
[4] https://x.com/lukema95/status/1788858814420382121?t=A2CvlJFGTTlxko7Ymtpojw&s=05
[5] https://mp.weixin.qq.com/s/JwqVcjY0ENUFFk9oI79VfQ
[6] https://www.youtube.com/watch?v=losZU4qcs-M&t=4s
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
