The Game Behind the Pump.fun Coin Issuance Craze

In the past week, the focus of the cryptocurrency market has been on the token issuance of Pump.fun. This highly anticipated event has been brewing since June, continuing to ferment amidst various speculations and discussions until it finally came to a conclusion on July 12. Although there are doubts about its $4 billion valuation in the market, investor enthusiasm remains high in reality. The public offering was sold out in just 12 minutes, and some even expressed dissatisfaction on social media for not being able to participate.

As of now, the performance of Pump.fun can be described as quite good. After going live, the coin price has steadily risen, and the project also achieved its first token buyback today using transaction fees. However, whether the coin price can maintain a high level in the long term remains a question in the minds of many.

In this bull market, Pump.fun is undoubtedly one of the most successful applications. It completely overturns the traditional token issuance model, significantly lowering the threshold - you can create a coin for just $3. This convenience remains highly attractive even after the MEME craze has subsided.

Mechanically, Pump.fun adopts a fully smart contract pricing system, without pre-sales or private placements, and also sets up an automatic coin issuance mechanism. This fully automated process is widely welcomed by the market and has made Pump.fun one of the strongest "money printers" in this round of the market.

Since its launch in January 2024, Pump.fun has issued over 11 million coins, with user addresses exceeding 22 million and total revenue nearing $720 million. At its peak, the daily transaction fee revenue even reached $5.43 million, with total daily revenue hitting $15.88 million. It can be said that most of the market dividends brought by this round of MEME frenzy have been captured by Pump.fun, further promoting the development of the Solana ecosystem.

However, when Pump.fun announced that it would issue its own coin, it sparked widespread controversy in the market. It was reported that Pump.fun plans to raise $1 billion through the coin sale, with a valuation of $4 billion. On July 10, Pump.fun officially announced that it would launch the public sale of its native coin PUMP on July 12, planning to sell 150 billion coins at a unit price of 0.004 USDT, accounting for 15% of the total supply.

Compared to previous expectations, the market reaction during the actual issue coin was relatively tepid. The controversy mainly centered around the $4 billion valuation. It is worth noting that even the stablecoin giant Circle has a valuation of only about $7 billion. Many people believe that this valuation is too high and may overdraw market liquidity.

More importantly, the current market environment has changed. Aside from a slight rebound in the past few days, the trends of most altcoins and MEME coins are not very optimistic. In terms of trading volume, Pump.fun peaked at $5.44 million on January 23 and has since started to decline significantly, with recent daily trading volumes stabilizing below $700,000, down 87.2% from the peak. The number of tokens created has also dropped from a peak of 70,000 to around 30,000, almost halving. These data indicate that the MEME market is cooling down, and user enthusiasm is rapidly waning.

Meanwhile, Pump.fun is also facing challenges from competitors. Letsbonk.fun, centered around BONK, has developed rapidly, surpassing Pump.fun multiple times in the number of tokens issued and once reaching the top position in market share. Although Pump.fun quickly retaliated, the competition between the two remains fierce, and Pump.fun's leading position is under threat.

It is under the influence of these factors that Pump.fun's $4 billion valuation has been severely questioned. Industry insiders believe that this ICO is more of a means to exit liquidity rather than a long-term development plan. Some even bluntly describe it as a "harvesting operation."

Interestingly, Alon, the co-founder of Pump.fun, stated in March 2024 that "every presale is a scam." Now, Pump.fun has chosen the presale method to issue coins, which feels somewhat ironic.

From the final results, although industry professionals generally maintain a cautious attitude, the enthusiasm of supporters and institutional investors remains high. The public offering completed a fundraising amount of 500 million USD in just 12 minutes, with several major exchanges participating. According to the data, a total of 23,959 wallet addresses completed KYC and participated in the pre-sale, of which 10,145 addresses successfully made purchases, with an average subscription amount of 44,209 USD.

It is worth noting that small-scale users are the main participating group, with 5,758 users having subscription amounts within 1,000 dollars. At the same time, there are 202 addresses with subscription amounts exceeding one million dollars, indicating strong interest from institutional investors.

After its launch, the performance of the PUMP token temporarily defeated skeptics. Although there was a brief decline after the GMGN launch on July 15, it soon began to recover. The current price is $0.0066, up 55% from the fundraising price of $0.004, and the fully diluted market cap has risen from $4 billion to $6.6 billion, providing substantial returns to early participants.

Of course, there are some operational factors behind this wave of price increase. According to on-chain analysis, Pump.fun started to use the fee income to buy back PUMP tokens after issuing the coin. In just 7 hours, the project team used 187,770 SOL in fee income for buybacks. So far, about 1.83 million USD has been used to purchase 3.04 billion PUMP at an average price of around 0.006 USD. Although this buyback behavior can support the coin price, it inevitably raises questions about whether there is a concern of manipulation.

Whether it's for exiting liquidity or simply for project development, the recent issue coin event of Pump.fun reflects the current state of the MEME market. The once sought-after MEME track is facing difficulties, and the myth of attention economy seems to be collapsing. Even the most representative projects are choosing to issue tokens, which may signal the impending end of the MEME narrative. The subsequent performance of the PUMP token will become an important indicator for the market's value judgment of the attention economy.

From the current situation, the project party is undoubtedly the biggest winner. Public and private placement participants have also temporarily received good returns, and short-term bullish investors have also made a considerable profit. However, it remains uncertain how long this situation can last, and how long the project party can maintain the coin price at a high level. Some large holders have already begun to choose to cash out. According to monitoring, a large holder spent 5 million USDC through 5 wallets to participate in the public offering, purchasing 1.25 billion PUMP, and sold all at an average price of 0.0067 USD today, making a profit of 3.416 million USD.

On the other hand, the improvement in the macro market environment may also have an impact on MEME. Leading tokens like Ethereum continue to strengthen, driving related ecological projects such as ENS to new highs this year. In the long run, although there is still uncertainty in the current market, the foreseeable expectations of interest rate cuts may bring a small climax to the altcoin market. The MEME sector may show polarization, with quality projects benefiting from sector rotation and rising, while other projects may fall into a slump due to liquidity being drained.

Overall, although MEME projects similar to the lipstick effect and lottery economy may always exist, it will be difficult to spark another "money wave" like in 2024. The market is entering a new phase, and investors need to more carefully assess the long-term value of each project.