Author: GLC
Compiled by: Deep Tide TechFlow
The upcoming token issuance of Pump.fun may become one of the most anticipated events in the crypto space this year. Since 2024, this launch platform has been at the core of the Memecoin craze, creating what can be said to be the most successful and controversial retail traffic channel in the ecosystem.
Whether you love it or hate it, Pump.fun has proven its product-market fit.
Its permissionless token issuance platform has attracted thousands of users and creators through viral distribution and gamified user experience (UX), generating astonishing trading volumes. Although overall Memecoin activity has cooled, Pump.fun retains a strong moat and continues to push forward with initiatives like PumpSwap.
As of this year, Pump's monthly median revenue is around $45 million, making it not only one of the most widely used platforms in the crypto space but also one of the most profitable. As the $PUMP token approaches launch, the protocol is at a critical turning point.
The key question is whether the team sees this moment as an opportunity to build a sustainable, investable asset, or chooses to extract value aggressively. Their past performance has raised some doubts, but opportunities still exist.
In any case, the risk-reward (R/R) looks asymmetric.
Next, we will delve into the bull and bear scenarios for $PUMP.
Agenda
Data and Performance: Revenue, Trading Volume, and User Base
Team and Narrative Shift: Can they align with holders?
Valuation: Cash Flow, Revenue, and P/E Considerations
Growth Catalysts: Airdrops, Acquisitions, and Vertical Expansion
Main Risks: Execution, Competition, and Market Structure
Summary Thoughts
Key Metrics: More Resilient than Expected
In January this year, with President Trump launching his personal token, the Memecoin market experienced a frenzy, marking the peak of activity across the industry. During that month, Pump.fun generated an astonishing $140 million in revenue. However, shortly thereafter, trading volume in the Memecoin market began to decline sharply, and market sentiment turned negative.
Talk of the 'End of Memecoin' has spread rapidly.
However, Pump.fun's performance has proven to be much more resilient than most expected.
Even in the context of an overall market downturn, Pump.fun has successfully retained a large and active user base. Currently, its daily active users number about 340,000, slightly down from 400,000 in January. Of course, PumpSwap had not launched at that time, but the point is: there are still a lot of users using Pump's products every day.
Since the beginning of the year, Pump.fun has averaged a monthly trading volume of approximately $14 billion through PumpSwap, with a total fee rate of 0.3% (of which 0.2% is allocated to liquidity providers, 0.05% to creators, and 0.05% to Pump).
Its core Bonding Curve product also maintains around $5 billion in monthly trading volume, charging a 1% fee on both buy and sell.
This series of active data explains why the platform can continue to generate $45 million to $60 million in revenue each month, with an annualized revenue of about $500 million. This makes $PUMP one of the highest-revenue tokens in the crypto space.
It is expected that $PUMP will launch its token issuance at a fully diluted valuation (FDV) of $4 billion, making it clear why this is one of the most anticipated launches of the year.
Later, we will delve into its valuation mechanism, but the core conclusion here is simple: even in a market downturn, $PUMP continues to "print money".
Team: Can they turn the narrative around?
Pump.fun has created one of the most profitable products in the crypto space, but the team behind it has not garnered the same level of respect. Critics argue that they focus too much on value extraction without providing sufficient returns to the community. Additionally, many see Memecoins as a factor dragging down the crypto industry's reputation rather than a catalyst for growth.
Nevertheless, their success is not accidental. Speculation remains the core driving force in this industry, and Pump.fun is the first team to fully capture this demand through product-market fit.
Now, they have the opportunity to turn this narrative around.
The upcoming $PUMP token issuance is an opportunity aligned with the holders. It is reported that part of the protocol's income may be used for buybacks, but the specific ratio has not been announced.
We do not expect a 100% revenue reinvestment model like Hyperliquid. While this model can stimulate price performance in the short term, it would undermine long-term sustainability. Pump is not an L1 blockchain; its growth requires capital support. A more realistic approach may be to allocate 50% of revenue for buybacks, similar to Raydium or Jupiter.
This ratio is competitive and leaves room for reinvestment in new business lines, acquisitions, or ecosystem expansion. Pump.fun is a young company with real growth potential. We would prefer to see them aim for an annual dividend of around 10%, while using the remaining funds for compounding long-term value growth.
More important than the numbers is transparency. If the team wants to be taken seriously, they need to disclose how funds are used, including operational costs, capital expenditure (Capex), funding reserve plans, and governance structures.
Raising $1 billion requires a real sense of responsibility.
If they can do this, even modest buybacks could work. But if they fall back into silent value extraction behavior, market reactions may not be favorable.
That said, even if they make mistakes, the downside risk seems limited. We will explore this in the next section.
$PUMP Valuation Analysis
In this section, I will not provide a complete valuation framework as we usually do at GLC. The reason is simple: we are not experts in the Memecoin space, and any modeling attempt may carry a high degree of subjectivity.
That said, Messari's @defi_monk has proposed a fairly solid valuation framework, and I feel comfortable with his assumptions. He is an excellent analyst and seems to have taken a more conservative than optimistic stance, which aligns well with how I assess such issues.
In his foundational forecast, Monk expects Bonding Curve trading volume to decline, but AMM (Automated Market Maker) activity to increase, potentially reaching an annualized revenue of about $670 million by 2027. These forecasts reflect the overall growth of on-chain trading volume, potential increases in market share relative to Raydium, and advantages brought about by vertical integration.
In my view, this outlook is not only reasonable but very realistic.
Of course, we cannot know the exact plans of the PUMP team. This is also one of the reasons why this is an asymmetric opportunity. If revenues truly reach this range, it is hard to say that $PUMP is overvalued at a fully diluted valuation (FDV) of $4 billion, especially with a price-to-earnings ratio (P/E) of about 12.
Certainly, the long-term existence of Memecoins remains uncertain, but the fact is that they have lasted longer than many expected. Memecoins have strong community support, and if Bitcoin breaks its historical high later this year, speculation will likely surge again, with $PUMP likely being one of the major beneficiaries.
In the past, the main way to invest in Memecoins was through $SOL, but now $PUMP is gradually becoming a more direct and logical choice. If the market turns bullish, $PUMP is likely to become a high beta asset that quickly reflects this trend.
Overall, with the protocol already generating around $500 million in annual revenue and holding $1 billion in cash reserves, buying $PUMP at a $4 billion valuation seems like a relatively limited downside risk option, especially with 75% of the token supply potentially allocated for community incentives or airdrops.
Unless we unexpectedly enter a deep bear market with a collapse in on-chain trading volume (a scenario I did not believe in back in February and still do not), this opportunity seems quite attractive to me.
Growth Catalysts: Airdrops and Acquisition Engines
$PUMP is seen as an asymmetric investment opportunity for several key reasons:
First, most participants in the crypto space now recognize that Hyperliquid's operational model is working—building products for the community, sharing profits with the community, and ultimately reaping returns. Game theory strongly favors founding teams that follow the Hyperliquid model. Now, $PUMP is in the issuance phase, fully controlling its token supply, backed by a highly profitable business, holding $1 billion in cash reserves, and with potential large-scale airdrop plans, all conditions undoubtedly equip it with all elements for success.
Notably, the team has generated hundreds of millions in revenue without issuing tokens. It is reasonable to speculate that most team members have earned far beyond expectations, and they now hold all the resources to build $PUMP into a long-term successful asset.
Although it is difficult to predict growth based solely on airdrop speculation, a more practical source of growth is the potential for vertical acquisitions. With its cash reserves and strong profitability, Pump.fun is fully capable of acquiring businesses that perfectly fit its model.
Jack Kubinec recently shared some insights in Blockworks' Lightspeed newsletter, where two of the acquisition targets he suggested particularly align with Pump's growth strategy:
Telegram trading bots (like BullX)
Telegram trading bots are used by a large number of active traders for sniping and following trades. These bots generate income by taking a cut from trading volume. According to Blockworks, Solana trading bots alone generate at least $500 million in annual revenue. Acquiring such bots would not only integrate well with Pump's core product but also add a significant new revenue source.
DEX Screener:
As Jack pointed out, another pain point for Pump regarding user retention is token discovery. Traders often rely on platforms like DEX Screener for real-time, data-rich analysis. DEX Screener also generates significant revenue by charging Memecoin projects for enhanced visibility. According to DeFiLlama data, the platform earned over $100 million in revenue in just the past year. If Pump can acquire such a platform, it would help them better control user experience and improve user retention.
The above are just two examples within the vertical integration cases that can strengthen Pump's market position, but the potential possibilities go far beyond this. We believe Pump will actively utilize its raised funds and operational cash flow to acquire businesses that can expand its moat, drive diversification, and accelerate growth.
With strong fundamentals, deep cash reserves, and a clear path for vertical expansion, Pump is likely to evolve into a comprehensive acquisition engine to drive its next phase of growth.
Risks and Downsides
Clearly, Pump.fun faces some risks.
The first thought is competition. Everyone sees how profitable Pump's business model is, and several teams are trying to capture market share, including Launchlabs, Believe App, Moonshot, etc. One of them may ultimately succeed in gaining market attention.
Another risk is regulatory pressure. Pump has already faced some challenges, and it can be said that their current model does not fully align with regulatory expectations. Further scrutiny is entirely possible.
However, in my view, the biggest risk lies in the team's future operational choices. As mentioned earlier, to earn positive assessments for this issuance, the team needs to embrace transparency, maintain consistent reporting, and align appropriately with token holders. If they fall back into value extraction behavior or transfer value to insiders without clear communication, I believe the market will not respond favorably.
Currently, the market seems to expect the team to follow Hyperliquid's model, viewing the token as a long-term, community-aligned asset rather than a short-term extraction tool.
Even if the team fails to meet these expectations, I believe the downside risk may be limited to around -50%, assuming on-chain trading volume remains stable. Of course, broad market changes could alter all of this.
Nonetheless, I find it hard to believe that a company with $1 billion in cash and $500 million in annual revenue would stay below a $2 billion valuation in the long term.
Final Thoughts
Pump.fun stands at the intersection of crypto speculation and on-chain infrastructure. Although the narrative around Memecoins remains controversial, the platform has demonstrated clear product-market fit, becoming one of the most profitable and widely used applications in the space.
The upcoming $PUMP is a critical moment. Beyond being a highly anticipated event, it also represents a broader test:
Will the team be able to shift from a closed, extractive model to a more transparent model aligned with token holders' interests and focused on long-term sustainability?
If possible, $PUMP has the potential to evolve into a more enduring asset in the ecosystem.
At the same time, long-term success may also depend on whether the team can move beyond the Memecoin space and diversify. Competing with more established platforms like Jupiter to become a broader on-chain 'super app' requires ongoing product development, deeper integration, and strategic acquisitions. While this is fraught with uncertainty, the groundwork has been laid.
This report focuses particularly on the asymmetric opportunity at the time of $PUMP's listing, based on the current fundamentals and market expectations. Considering its annual revenue of around $500 million, $1 billion in cash reserves, and flexible token supply mechanism, a fully diluted valuation (FDV) of $4 billion does not seem excessive, provided the team can execute a credible strategy aligned with investor interests. Furthermore, as the market's direct exposure demand for Memecoin infrastructure increases, $PUMP may receive a higher valuation premium.
It is important to clarify that we typically do not focus on the Memecoin space, nor do we consider it our core area of expertise. However, from a financial perspective, if the team takes the right steps, the valuation of $PUMP at the time of listing seems reasonable. Given its current cash flow and balance sheet strength, downside risk in the short term also appears to be limited, unless macro conditions or on-chain activity deteriorate significantly.
In short, $PUMP is a high-risk, high-reward opportunity with some clear potential growth drivers, while the downside risk in the short term seems limited. Although we typically approach this space with caution, this is indeed a prime example of a worthwhile asymmetric opportunity.
Disclosure Statement: The analysts of this study plan to purchase this asset upon the listing of $PUMP.
