PUMP.FUN protocol: From Bonding Curve calculation to profit strategy construction

Source: Gryphsis Academy

introduction

Bitcoin has laid the value foundation for cryptocurrencies due to its inability to issue additional funds, Ethereum has triggered an ICO craze through smart contracts, and Inscriptions and Memecoin have attracted massive amounts of funds due to fair distribution.The change of new technologies has led to the continuous expansion of the audience’s audience scope of crypto applications; and the differences in emerging token issuance mechanisms further reflect the change in audience’s investment value concepts.

Unlike old meme coins such as $DOGE $SHIB $FLOKI, which try to combine practical applications, the Memecoin market has shown a new business model since the beginning of this year under the leadership of $BOME $SLERF.From issuance to transactions, around the upstream, middle and downstream of the Memecoin ecosystem, many innovative applications worth paying attention to have appeared on the track.

PUMP.FUN is a decentralized Memecoin distribution platform. Users only need to provide creativity to publish their own Memecoin on the platform at an extremely low cost (0.02 sol) one click; users can also participate in tokens issued by others to witness aMemecoin’s process of becoming famous from scratch to a large scale.

PUMP.FUN is a phenomenon-level performance application in the track and has research value and is worthy of repeated discussion.The PUMP.FUN Dune Kanban can explain new business formats in terms of platform, users, products in terms of behavior, activity, growth trends, etc., and is worth tracking for a long time.

1. Introduction to PUMP.FUN

1.1 A comparison

Let’s start with a comparison. In the author’s opinion, the market performance of PUMP.FUN is very similar to FRIEND.TECH, which was launched last year. First, the Degen player circle on the chain attracted attention on a small scale, and the track and platform data after the circle was out of the circle were both on a large scale.Showing a spiral upward trend.Both soon occupied an extremely high market share as industry pioneers, with real users and protocol revenues increasing dramatically with Japan. Fud, which is never absent from the crypto world, has almost no impact on the ecological status of both.

From the perspective of product design, the two platforms are similar but still have certain differences. Both asset issuance adoptsPAMM (Primary Automated Market Makers Level 1 Automatic Market Makers)The mechanism is to facilitate users, but their assets and specific pricing curves are still different.

Taking PUMP.FUN as an example (FRIEND.TECH Similarly), PAMM is divided into two mechanisms: Fund-to-Mint and Burn-to-Withdraw. The former can store the user’s $SOL into the PAMM smart contract reserve pool and smart contract reserve.The pool mints an appropriate number of Memecoin based on the current reported pricing of Bonding Curve and sends it to the user; the latter can complete the exit by selling Memecoin to the PAMM smart contract.

Unlike Memecoin on PUMP.FUN, the FRIEND.TECH token has the characteristics of integer Mint and the theoretical “infinite issuance” (social relationship establishment).In addition, FRIEND.TECH assets are tokens representing users’ social accounts, while PUMP.FUN is Memecoin issued by users.

The two projects have very different approaches to enter the market and follow-up. Behind FRIEND.TECH is the top crypto-institution Paradigm. The Pointsfi user incentives adopted by the NFT markets Blur and Ethereum Layer 2 network Blast in its portfolio are also copied to help.FRIEND.TECH retention of users; FRIEND.TECH V2 launches airdrop tokens and Club Key gameplay to trigger a new round of market hype; while PUMP.FUN implements the tone of Memecoin’s popularization and fair launch, and the investment and financing background is difficult to check, even if you make a daily profit.No token plans have been released for hundreds of thousands of dollars, and the platform functions are expanded in a low-key manner.

For more in-depth research on FRIEND.TECH, please refer to previous sharing: Friend Tech — Gryphsis Academy Sharing Session (https://www.youtube.com/watch?v=J-aCleuL-HA).

1.2PUMP.FUN Bonding Curve and Products

Since the project contract is not open source, the products launched by PUMP.FUN only announced the gameplay and fees, and the official did not mention the mechanism and product details of the adopted one.During the research process, we need to build a product model and perform data comparison and verification. The specific research for PUMP.FUN Bonding Curve is as follows:

(1) Product model construction

Compared with other track tokens, Memecoin focuses on designing community consensus and group trading sentiment. Generally, the total amount of tokens is large and fully circulated, and can be used to cooperate with different promotional strategies; the initial price will not be set too high, and the previous price curve is relativelySteep, violent price fluctuations attract capital to enter.

PUMP.FUN Products:

1. When users think of a good idea, they first select the Ticker you want to publish on PUMP.FUN and release the brand new Memecoin with one click.

2. Other users of the platform continue to buy and sell Memecoin tokens on the pricing curve.

3. PUMP.FUN then sends the newly created Memecoin to Raydium.

4. The new Memecoin has become more popular. Users can trade on Raydium a brand new Memecoin founded by PUMP.FUN users and raised funds by other PUMP.FUN users, a total of 1 billion pieces and an initial market value of $69k (410 $SOL).

Users only need to think about Ticker, upload a picture, and write an introduction. You can easily create Memecoin with a little cost; other users can comment below, and the similar message board function set by PUMP.FUN also provides convenience for the establishment of the Memecoin community;Open the user address, and the platform can display tokens held/created by the user and the objects they are following.

Other users can trade this token, and the token will be sent to Raydium when the transaction reaches the capital raise limit.

(2) Pricing curve

Unlike the FRIEND.TECH pricing system that only accepts the input and output of integers, the token pricing system on PUMP.FUN is a smooth curve; unlike the FRIEND.TECH token theory that unlimited issuance, all Memecoin on PUMP.FUN share the same economic model, and the tokensThe total amount is constant, and users use some tokens on Bonding Curve to Mint at a reasonable price, and the remaining tokens and raised funds form an LP pool.

After front-end code parsing, a function call named virtualSolReserves is obtained. The PUMP.FUN pricing system has a pre-virtual pool. The number of $Sol in the virtual pool is x0 and the total amount of tokens is y0.By collecting the number of $SOL purchased by platform users and obtaining the data of corresponding tokens, fitting it with the x*y=k formula, we obtain the pre-virtual pool of 30 $SOL and 1073000191 tokens, with the initial k value being32190005730, the price per token is 0.00000028 $SOL,

The following figure shows the calculation process:

The pricing function of the joint curve is y=1073000191 – 32190005730/(30+x) , x is the number of bought $SOL, y is the corresponding number of tokens, and you can obtain the price of each token.

The following is the function curve, blue is the pricing curve and red is the price curve.According to the curve, it can be consistent with the steep characteristics of the newly issued Memecoin in the early stage.

(3) Case comparison analysis

1. The user bought and sold the funds to raise 85 $SOL, and after replacement, he obtained 800 million Memecoin tokens, which is in line with the reality.

2. The funds raised were $79 (6 $SOL as a listing fee) and an additional 200 million tokens were added as the trading pool of initial liquidity and sent to Raydium, with the final total of 1 billion coins, which is in line with the reality.

3. The price of each token on the Internet, that is, the instantaneous price of fundraising is 0.00000041 $SOL, which is 14.64 times the price of the initial virtual pool, which is in line with the actual situation.

At this point, the PUMP.FUN product details are clear, and users can spend 0.02 $SOL to publish Memecoin with one click. This MemecoinThe initial virtual market value is 30$SOL,Other users raise funds 85$SOLObtained 800 million tokens, PUMP.FUN minted another 200 million tokens, combined with the formation of a trading pair, it was added to Raydium, and finally went online to get a market value of 410.$SOL, the total tokens are 1 billion decentralized issuance Memecoin.

The entire process PUMP.FUN charges 1% of the transaction fee before the Raydium launch, and the “coin fee” of 6 $SOL during the package launch.

2. Why you need to pay attention to PUMP.FUN

2.1 Why pay attention to Meme

For people outside the crypto world, Bitcoin has no practical purpose and only speculation. The soaring price only means the success of Meme attributes in communication; for the Ethereum ecosystem under smart contracts, $UNI does not have any before the voting mechanismEmpowerment, like Dogecoin, investment logic is based only on the consensus of communication between industry pioneers and the crypto spirit.

And encrypted users who have experienced the money-making boom on Meme Season, Inscription Summer and Memecoin Pre-sale have a unique understanding of Memecoin without any Utility.

The lack of mainstream narratives, the mismatch of funds in time dimensions, and the continuous pursuit of fair launch by encrypted users investing in Memecoin have made the Memecoin market reflexiveness continue to strengthen.More articles about Meme’s opinion:Deconstruct memes, why do MEMEs perform excellently this cycle?

Last November, $ORDI launched the top exchange and opened the summer of inscriptions. The new assets that emerged in the crypto cycle transformed the market injected new narratives.Currently, the number of Bitcoin inscriptions has exceeded 66 million, contributing more than US$470 million in total.

The last time the meme coin $GME gained market attention was three months ago. The recent active status of the protagonists in the GME incident on social media has brought stocks and related cryptocurrencies back into the public eye.

$GME on Solana’s chain has increased by as much as 30 times, and related concept imitation trading on PUMP.FUN has exploded, and its popularity has also shown explosive growth.

Celebrities chose to issue tokens on PUMP.FUN, and further broke the circle with industry insiders in the crypto industry. The token $jenner released by the Kardashian family Caitlyn Jenner also brought Drama to the crypto world, completing a 160-fold increase in one night, the highestThe market value has reached US$30 million.

Why focus on Meme? To borrow the definition in the article mentioned above, “Memes are spread through imitation; any information, as long as it can be copied through imitation, can be called a meme.”As humans whose essence is a repeater, spreading Meme is a phenomenon and a result, and it is an ever-evolving gene assembly to find an orderly process in disorder.

Paying attention to Memecoin, in addition to the wealth-making effect of the Memecoin track, many crypto assets themselves also have Meme attributes, whether it is Bitcoin that builds the value base of the crypto world, decentralized tokens issued in combination with smart contracts, or based onSimple logic introduced inscription meme coins Celebrity coins.

2.2PUMP.FUN business data

PUMP.FUN Memecoin, which has been passed by users and platforms, will have a simulated disk effect after market logic verification, and continuously amplify transaction volume; all information about tokens will be marked on PUMP.FUN, and hot events are repeatedly mentioned to the platform.Huge profits came.

After verified and constructed Dune Kanban comparison, we believe that the amplified data results can explain most of the phenomena of the new Memecoin business model established by PUMP.FUN.Among them, the Dune Data Kanban includes platform users, platform revenue, token creation status, and high-frequency trading activities. It can analyze the behavior, activity, growth trends and other aspects of the platform, users, and products in terms of behavior, activity, growth trends and other aspects on the data.Dune Kanban website: PUMP.FUN by Gryphsis Academy

(1) Platform revenue

According to the Dune data board, the PUMP.FUN platform ushered in its first wave of growth in mid-March. As a player who was not the first to occupy the ecological niche, users were gradually accepted during this period, and several Memecoin screened by the platform also createdI have had a lot of stories about making wealth, and the $SC launched on March 26 reached a market value of over 100 million in a few days.Memecoin created by other users has also had different degrees of wealth creation effects since it was in its early stages.The platform’s daily income reaches 1,000$SOL, and continues to grow.

PUMP.FUN ushered in an explosive period from April to early May, and $michi, which was launched on April 8, exceeded 200 million in market value, ignited market sentiment.Memecoin narratives are switched quickly, and imitation disks are emerging one after another. From the national currency brought by the Summer Olympics to religious currency, to Trump concept currency, about thousands of Memecoin are created and traded every day.The platform’s daily revenue exceeded 2,000 on average$SOL.

From mid-May to the end of May, while GME stock surged on May 13, the relevant Memecoin created by users on PUMP.FUN also created a revenue record for the platform, reaching the1.2 million US dollars.Later, after experiencing the attacks of former employees, PUMP.FUN’s brief decline in popularity ushered in a further breaking circle. The popularity brought by the celebrity-created Memecoin has increased the platform’s revenue to$1 million, after breaking the circle, the average daily income reached US$700,000, and the total revenue of the platform reached nearly US$37 million.

On May 16, the wallet account permissions of the PUMP.FUN platform created a transaction pair were stolen by former employees, resulting in a large number of Memecoin unable to go online after completing the fundraising, and the user’s loss amount reached 2 million US dollars. PUMP.FUN adopted the platform to save users.Income reduction measures.

(2) User growth

According to Dune data, the number of PUMP.FUN users has been in an upward period so far, with occasional twists and turns, but the popularity of users bringing to the platform has not diminished.Before April 16, the number of new users on the platform increased dramatically every day, with nearly 35,000 active users gathered in one month. The user habits cultivated by the platform’s products gradually laid the foundation for subsequent retention.

From late April to May, the number of new users on the platform slowed down. After the celebrity effect broke the circle, the number of active users on the platform reached its peak on May 30 to 64,378. The number of new users on the subsequent daily will continue to slow down.The platform is likely to usher in the first user growth bottleneck.

(3) Memecoin products

If Memecoin, which each user participates in issuing transactions on PUMP.FUN, is regarded as a platform product, and the data for the platform product can reflect the user’s behavior and facilitate corresponding problems to be improved.

The number of Memecoins created on PUMP.FUN varies with the number of active users. A total of 862,988 Memecoins have been created since the platform was launched, and an average of 15,000 new Memecoins have been added every day since May.

Only 10,707 of them can be launched on Raydium for larger transactions, which comprehensively shows that most of the platform’s revenue depends on transaction fees, and the creation of tokens and listing fees account for a small amount.

At present, PUMP.FUN has not disclosed financing information, and the platform is still in the rising period. Dune data shows that there are many high-frequency trading behavior addresses, and it is not ruled out that there may be volume-brushing behavior.

The platform has also added a live broadcast function, displaying the distribution and operation of emerging Memecoin in the form of live broadcast and video, providing a suitable way to break the circle of traffic and funds.

PUMP.FUN also cooperates with @bubblemaps. By generating traders’ association bubbles, you can view the association status of the token holding wallet and whether it will be sniped by Dev’s burning token wallet, which can reduce the possibility of rugs.The effects of the new functions of the platform still need to be verified by data, and the continuous changes and hype Memecoin narrative and new functions are launched, which also reflects the team’s ability to adjust in a timely manner.

Overall, the PUMP.FUN platform ignited the market after it was launched. Without institutional endorsement, the user’s needs were met through the Bonding Curve mechanism, and the platform also relies on the wealth effect brought by the user’s issuance of Memecoin to complete traffic and promotion.

The subsequent Meme narrative switch was swift, and the user’s PVP phenomenon was serious and it did not structurally affect the data growth. Instead, it continued to break the circle due to several hot events.In the future, external competition platforms may usher in growth bottlenecks, but for applications with dominant ecological niches, there are only a few more choices that can be made.

2.3 Competitive product comparison

Compared with other Memecoin Launchpad competitors, PUMP.FUN can better build the underlying value of Memecoin from community consensus and group trading sentiment. Memecoin launched by the platform has an absolute advantage in market performance. As of June 6, PUMP.FUNThere are 16 tokens with a market value of more than US$3 million, and the $SC token has a market value of up to US$300 million.

PUMP.FUN’s excellent performance while other competitors are weak, except for the market reasons, which can be attributed to the products and their backing ecology.

(1) Unlike other competitors that bring users a peaceful and static feeling, click on the PUMP.FUN website, the most intuitive feeling is the beating numbers and dynamic pictures. The high saturation design stimulates the user’s senses, and the emotions are mobilized as if they are faced.Memecoin is as enthusiastic and magical as trading; the introduction of gameplay is only five simple sentences, which is in line with the characteristics of short, flat and fast Memecoin trading users, but other pages introduce token-related information very detailed, which facilitates new buyers to form a community consensus.The platform’s logo is a small green pill. It seems to be a pill that wants to express cure, but it is addictive. The platform’s users can no longer extricate themselves.

(2) Unlike PUMP.FUN, which is backed by the Solana ecosystem, meme.market / werich_ / rugdotfun / Momentum_v1 chooses to develop on the Base chain, while the funds and attention on the Base chain are transferred by FRIEND.TECH and Farcaster. Memecoin uses the Socialfi platform, the cold start problem has been solved, and the $DEGEN and $Friend tokens have a large market value, which can give the two platforms other Memecoin imagination space.The Memecoin Launchpad track of Base chain, users are already accustomed to the echo wall built by FRIEND.TECH and Farcaster through social mode, and funds and traffic have been divided up.

(3) During the attack on PUMP.FUN, DEGEN.FUND launched Solana. Similar Bonding Curve and attempts to use cheaper platform fees did not continue to attract the market, forming a sufficient scale. The $IYKYK token, which is a leading target, also passed the $IYKYK token that is hyped as a leading target.The players on the chain have become dull after short-term hype.

3. How to participate in PUMP.FUN

For the new sub-sector of Memecoin Launchpad, PUMP.FUN should be the object of investment research and in-depth participation.We divide the platform users into three roles, namelyMemecoin Creator, Memecoin Trader, Memecoin Opportunist.Roles can be mobile, and users will have different opportunity choices when facing the same Memecoin during role switching.

3.1Memecoin Creator

Memecoin Creator can be a crypto artist, an early preacher of Memecoin narrative, or a project party that uses the platform to promote and distribute. Now, after breaking the circle, you can even be a celebrity from all walks of life.As a role in the need to release/discover new Memecoin worth trading, they need to master a certain degree of communication knowledge and have a certain influence.

A good Memecoin Dev can cooperate with social media to screen out strong Tickers for the market.A Dev, which is not very sensitive to the market, can also reduce trial and error costs with the help of PUMP.FUN.And if you have special identities like Caitlyn Jenner and Iggy Azalea, the decentralized issuance platform PUMP.FUN can bring enough funds to your tokens in a very short time in the process of helping you save the middle links.Traffic support.

Crypto Native’s crypto artists and Memecoin enthusiasts can use PUMP.FUN to reduce the cost of token issuance after filtering out good Tickers.

Early discoverers use cognition and influence to form new Memecoin narratives for specific Memecoin platforms, and the communities established under the narrative have the opportunity to further break the circle.

Celebrities issue tokens on PUMP.FUN, interacting across the circle with crypto users to participate in the Memecoin craze. The last crypto concept that broke the circle was still an NFT asset.Compared with FRIEND.TECH, celebrity tokens and NFT assets can be used as one of the products of celebrity IP; social relationship tokenization will not attract people with certain influence because they have a lot of public social resources.Private social relationships meet your needs.

3.2Memecoin trader

As the most active player on the chain recently, Memecoin Trader needs to build its own trading strategy while tracking wallets, utilizing tools, and following social media to make a profit in high-risk and high-yield games.Compared with other risky assets, traders’ profits on Memecoin are more unstable, and their winning rate is generally not high. Due to the characteristics of the platform, the trading pace becomes faster and faster, and the change direction increases the probability of losses.

The Memecoin Trader experience on PUMP.FUN made the author realize that in addition to the need for a continuously improved trading system, the power from the team is very important. Even if the players on the chain face huge opportunities, they need the cooperation of community members, and are formed by transactions.The community tacit understanding can eventually return to the consensus of the transaction target.The following is the process of revisiting the $MOTHER of celebrity Iggy Azalea with community members.

3.3Memecoin Opportunist

Whether it is arbitrage target for scientists on-chain or high-frequency behavior robots looking for alpha opportunities, compared with the previous two platform roles, Memecoin Opportunist is the object that smart wallets should focus on research.And how to choose the right strategy to become Memecoin Opportunist in PUMP.FUN is worth pondering.

用德州扑克类比的话，在牌桌火热的时候应该进入底池，可以选择市场行情好流动性充足的狙击机器人抢开盘策略，提高参与度放大收益；在牌桌没那么火热的时候或者是市场相对When the bottom is at or when it is stable, you can choose the strategy of reverse sniping to maintain market sensitivity while generating income.

(1) Memecoin Opportunist sniping strategy

PUMP.FUN Every time a new Memecoin is launched, snipe bot will complete the first few buying transactions in a few seconds after being filtered by the indicator.Because the entry position is low enough, the early pricing curve is relatively steep, and the overall market popularity of Memecoin continues. This strategy has been able to seize several targets with huge increases in the past few months.

From left to right, the highest market value of $DONALDCAT is $15 million, the highest market value of $Japan is $5 million, and the highest market value of $Nigi is $12 million.

The strategy of sniper robots to snatch the opening market needs to be sensitive to market sentiment. Unlike the Solana Sniper Bot that ordinary users may use, there is no contract for sniping in PUMP.FUN, but the act of sniping issuing coins. It requires the Solana chainThere is clear monitoring of the interaction between users and the platform, and it can isolate the tokens issued by Dev with Rug behavior; after the sniping is completed, set parameters that can adjust the stop loss or take profit in time, and the data to be backtested to adjust the sniper occupationfunds.

(2) Memecoin Opportunist Counter-sniping strategy

狙击机器人抢开盘策略较为依赖整体的行情，广撒网的模式在机会变多的同时对资金也有要求，同样策略的竞争对手会不断涌现，进一步压缩利润空间，相互博弈的过程中能够跑出来的Memecoin is gradually becoming less and the Memecoin Opportunist anti-sniper strategy emerges to deal with this change in the market.The specific implementation is as follows:

1. Regularly summarize market hotspots and establish a material library for issuing coins

2. Snipe bot’s sniping behavior test, sort out the bot’s strategy (ticker, amount, time…)

3. Automate the coin issuance process and build the anti-sniper process

4. Adjust parameters to improve capital utilization

Reverse sniping takes advantage of the low-cost coin issuance characteristics of PUMP.FUN. The reverse sniping strategy that adjusts parameters in the actual process can bring a single profit ranging from 2% to 20% in a very short period of time.

参数的构建需要对狙击 Bot 地址行为进行分析，市场上短期热点的仿盘会持续不断的触发策略的信号，能够自动化整个反狙击策略的流程是提高资金使用效率，扩大收益的关键。While the reverse sniping strategy can achieve low-risk arbitrage, it can not only screen out good Memecoin narratives at low cost, but also gain potential airdrops in the future.

BSC 链通过 Meme-Innovation-Program 活动吸引流量和资金完成 Meme 赛道的初始布局；Base 链目前也在创始人的带领下开启 Base Onchain Summer 活动，Base 的 Memecoin 必将获得流量倾斜。The public chain layouts Memecoin and related tracks through the organization Campaign, while PUMP.FUN, as a unicorn application for emerging tracks, is currently only running on Solana.While believing in the PUMP.FUN team and products, track participation strategies should also consider hotspot cycles.

在作者看来，现在机构入场的方式几乎已经确定，不论是在低点强势收购，还是作为投资方参与建设，赛道龙头不管在一级还是二级市场都将回归应有价值，所以作者It is believed that adopting the Memecoin Opportunist counter-sniper strategy is the best way to layout the entire track in advance through PUMP.FUN.

4. Summary

从Ethereum 到Solana，从柴犬到青蛙，从加密爱好者到破圈名人效应，人们对于流量热点的追求永不停歇，从树懒烧掉池子到PUMP.FUN 发行交易的创新，人们在Memecoin 对于去Continuous exploration of centralization and fair mechanisms.

As the leader of the emerging track, PUMP.FUN’s extremely low-cost issuance model has completely changed the ecosystem of Memecoin. The application ecosystem built meets the needs of users and is a unicorn project in the field of encryption.As the most Crypto Native narrative application has not even released its own platform tokens. What kind of economic flywheel can be formed ultimately requires track pioneers to continue to explore.

According to Defilama, the PUMP.FUN protocol, as the Memecoin issuing platform on Solana, has achieved monthly revenue exceeding Uniswap Labs, becoming the fourth largest protocol in all blockchain networks.而面对这个没有额外信息披露的独角兽应用，我们需要弄清楚他究竟是什么，有人会觉得是一个大型的赌场，有人会认为是加密世界流动性枯竭PVP 的又一个平台，作者认为除了以上的特性以外，他更应该是加密新资产的革命性产品，将去中心化精神以成本极低的方式体现到了极致，正如比特币奖励了早期矿工和布道者，构建在社区共识和交易情绪Why can’t Memecoin on the game reward users who find their value through the game process? It’s just because Bitcoin consumes electricity, and PUMP.FUN consumes brain and physical strength.

“Before learning to construct, don’t treat the deconstructed things as the final answer to the problem.”Faced with the surging Memecoin reform wave in the world of encryption MATRIX, the author will take the green pill of PUMP.FUN with a peaceful mind.

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