1. What is pump.fun?
1. Company business introduction - The birth of a no-threshold on-chain lottery issuance institution: Pump.Fun is a decentralized token launch platform built on the Solana chain, requiring no coding of smart contracts, significantly lowering the participation threshold for ordinary people. Since its launch in January 2024, influenced by the current Meme coin craze, it has attracted a large number of users over one and a half years, becoming a commonly used platform for 'gold digging' with over 8 million types of Meme coins issued.
2. Operational mechanism - no threshold at the start, profit-sharing after scaling: Pump.Fun stipulates that the initial fixed supply benchmark for tokens issued by users is 1 billion, with an initial price of approximately 0.000000028 SOL. Regardless of the initial market value set by Pump.Fun, which is around 28-30 SOL (these figures can be adjusted by Pump.Fun according to market conditions), all users can trade the token on Pump.Fun after issuance.
When the market value of the token surpasses $100,000, the token will be automatically listed on Raydium (a decentralized exchange on the Solana chain), and tokens worth $17,000 will be deposited into Raydium to initiate the AMM (automated market maker) for the trading pair. If the token performs well or if the issuer cooperates actively, it may also be listed on a centralized exchange, further driving up the token price.
This operational mechanism essentially differentiates through the value of tokens in a layered manner, allowing investors to choose token products that suit them.
3. Company operating situation (at least $700 million, expected to exceed $1 billion): Revenue mainly comes from four aspects: ① Token issuance fees (each token issuance costs $2-3); ② Transaction fees (1% of each transaction); ③ Listing fees on Raydium (6 SOL, approximately $1,000); ④ Revenue sharing from transactions after listing on Raydium (not disclosed);
As of now, the cumulative disclosed revenue exceeds $700 million. Due to the fourth point being undisclosed, the actual revenue is expected to be around $1 billion or even more. However, this is based on the current data amidst the popularity of Meme coins. With future shifts in hot topics and attention, Pump.Fun's revenue may experience significant volatility. Considering the company's low operating costs, it is predicted that the company's profitability exceeds 80%.
2. Token value analysis
1. Token value projection and future earnings - Extremely high uncertainty: The logic of tokens is similar to company stocks, related to the value acquisition of the company. The overall valuation of the token equals the company valuation, but currently, tokens have no actual use or future earnings planning, leading to significant uncertainty.
2. Summary of online public opinion - Most are criticizing: The general sentiment condemns the Pump.Fun team, arguing that the company currently has over 700 million in fees and does not lack funds. They believe that issuing tokens for financing serves no reasonable purpose other than draining liquidity for cashing out. With the decreasing attention on Meme coins, the high-income business model lacks sustainability, and the token issuance is seen as a meticulously planned scheme to exploit investors. Additionally, the market valuation for fundraising is estimated at $4 billion, which is significantly higher than previous rounds of valuations at $12 million, $100 million, and $250 million, leading to skepticism about cashing out market liquidity.
3. Summary of the current situation of token issuance after 3 days - Heavy FOMO emotions, grabbing while criticizing: The $4 billion valuation raised 12.5% of funds from the market to buy tokens, and the $500 million fundraising was filled in just 12 minutes, breaking the record for the largest ICO in recent years. Due to the overwhelming demand, many retail investors who subscribed through exchanges mistakenly believed they had secured the allocation because the exchange itself did not have enough quota. This led to a series of impacts (after short selling for arbitrage, they found there was no spot to close). From the price perspective, the market value on the day of issuance peaked at $7.2 billion (1.8 times the valuation), and as of now, the price has decreased to $5.6 billion (1.4 times the valuation). Those who secured public offering quotas have made a profit of 40%-80%. In the balance between rationality and FOMO, FOMO participants continue to profit.
3. Is it worth participating for ordinary people?
The author believes that everyone should be clear about what kind of money they are earning. The essence of participating in new token issuance on Pump.Fun is similar to betting on Meme coins; it is a zero-sum game (PVP), gambling on whether there will be more FOMO (fear of missing out) investors willing to buy at a higher price after they take over. This kind of money is 'gambled' and is only suitable for high-risk speculators. It is recommended that ordinary people earn money within their understanding, which is stable and allows for better sleep.