jakiro
Source: Yue Xiaoyu
Pumpfun is an issuance and trading platform for meme coins on the Solana chain, focusing on fair issuance.
Pumpfun was launched in January 2024. After its launch, it quickly became popular in the community, catching up with the meme coin craze, or directly pushing the meme coin craze into a new stage.
Pumpfun’s data can be said to be very impressive. It has accumulated more than $200 million in revenue. At some peak periods, Pump.fun’s daily revenue can reach millions of dollars, once surpassing Uniswap Labs and becoming all blockchain networks.The fourth largest agreement.
If speculating on meme coins is like gambling, then pump is the most profitable casino.It is better to open a casino than to bet.
pump is a phenomenal product in this cycle, so it is very direct to research and study.
01 Team background
The pump team was not actually doing launchpad at the beginning. They initially made an NFT marketplace, but after several attempts, they turned to their current direction.
Pump is a European team, with all the founding members very young, their CTO did not even attend college, the highest education is middle school, but the technology is very strong.Their youth and technical strength allow them to look at problems differently and have a sharp intuition about products.
Therefore, the key to the success of the pump project lies in the youth and innovative ability of their team.Many people have actually thought about this idea, but only the PUMPFUN team can really do it.
The road to success is not crowded, because most people can’t stick to it.
When you have an idea, there may be a thousand people in the world who already have this idea, but only one hundred people can transform from ideas into actions and truly put in practice. Only a few people can continue to do it and solve one difficulty after another.Several people.
Not just Web3, but in the Web2 industry and in the development history of various industries, there are already many such cases.
02 Operating principle
Pump focuses on fair issuance, without pre-sales, and without team allocation. So how did it be achieved?
For example, the automatic market maker (AMM) used by decentralized exchanges (DEXs) also needs to create a liquidity pool to inject initial liquidity, but the joint curve pricing model (Bonding Curve) used by Pump.fun is directly used to use functions.curve to achieve price changes.
Simply put, in the joint curve pricing model, there is a positive correlation between the price of tokens and the number of tokens. The higher the price of tokens, the more tokens are released.
That is to say, the tokens will gradually enter circulation according to purchase.Only when users purchase tokens will the token be “minted” or “released”.
The joint curve function will cause the price growth to accelerate as the supply of tokens increases.
Because this way, when purchasing early, the token price does not rise quickly, but the later purchase, the same amount of funds can increase more prices.
In the early stage of purchasing, due to the relatively small number of tokens in circulation, each purchase has a relatively small impact on price.That is to say, the price will not rise too much.
When the number of tokens has a considerable base in the market, the number of tokens that can be purchased by the same amount of funds (SOL or other currencies) will decrease, but due to the characteristics of the price function, these purchasing behaviors will lead to a more significant price increase.
What will the result of such a function feature?
First, early investment can be encouraged.Early buyers can acquire tokens at lower prices, and then as the price rises rapidly, the value of the tokens they hold will increase significantly.
Second, later investment has a leverage effect.In the later stage, the same investment amount will have a greater impact on the price due to the characteristics of the price curve, which will have a stronger incentive effect on later entrants and will be more in line with the characteristics of meme coins.Unlike some large-cap tokens, when the investment in the later stage is relatively small, there will be no impact on the price, which means there is no sense of participation.
Of course, there is no limit on the price increase. The pump setting is:When a certain market value is reached, a liquidity pool will be automatically built in DEX and transferred to DEX for trading.
In other words, the fundraising phase of issuing tokens on pump uses a joint curve function, which provides a price discovery mechanism for the early stages of tokens.
But without external intervention, prices may rise unlimitedly due to excessive speculation.By transferring to DEX and using AMM (automatic market makers), a natural balance mechanism of the market can be introduced to avoid excessive price fluctuations.
Building a liquidity pool on DEX can provide a stable trading environment for tokens, mitigating the extreme price fluctuations that may be brought about by a single curve model to a certain extent.
When the market value of tokens is relatively large, it is necessary to maintain a trading mechanism that can maintain a stable price, with better market liquidity depth and avoid very severe price fluctuations.
03 Overall process
The overall process can be divided into two stages: the fundraising stage before listing and the trading stage after listing.
(1) Create tokens:First of all, users can issue coins with one click, and users can create a token at an extremely low cost (0.02 SOL), without technical background.The creation process requires only entering the token name, code name, introduction and a picture.
(2) Fundraising stage:The creator attracts other users to buy tokens. All token models on pump.fun are the same, with a total volume constant of 1 billion, an initial circulation volume of 0, and an initial “virtual market value” set to 30 $SOL, through the userPurchase behavior to release tokens.
(3) Meeting the listing threshold:When the market value reaches US$100,000 (priced in SOL), the amount of funds raised is US$17,000. The circulation of this era coins is 800 million, and Pumpfun minted another 200 million tokens, which combined with the formation of a transaction pair, was added toThe decentralized exchange Raydium finally launched a decentralized issuance Memecoin with a market value of US$69,000 and a total of 1 billion tokens.
(4) Successful listing:The price of each token on the online Raydium is $0.00000041 $SOL, which is 14.64 times the price of the initial virtual pool.During the entire process, Pumpfun will charge a 1% transaction fee during the fundraising phase, and will also charge a 6SOL listing fee when the token is launched on Raydium.
04 Highlights: Live broadcast
Recently, the live broadcast function of pump has become popular. I went up and browsed it. It was shocking. Some people engaged in pornographic live broadcasts, some people locked up their grandma to reach a certain market value before they could release it, and some people kept squatting on the toilet to hype it.It is to do everything possible.
When talking about live streaming cryptocurrency speculation, the first thing I thought of before was how someone actually operates cryptocurrency speculation in live streaming, but what I didn’t expect was that now it has become a variety of abstract plays to attract attention, like live streaming cryptocurrency selling.
Attention is a scarce resource.
Meme coins themselves are a tool to attract attention.
Humor and pop culture elements have attracted people’s attention.
Live broadcast further amplifies this attraction through real-time interaction, making viewers more willing to participate and pay attention.
Simply put, Meme tokens are already entertaining, and live broadcasts further amplify this entertainment.Users can participate in a market similar to games through live broadcasts, both entertaining and participating.
More importantly, the “Meme + Live = Attention Economy” model has created a new economic model in the cryptocurrency ecosystem.
Through this combination, Meme Coin creators can quickly accumulate a lot of attention, and live streaming provides opportunities to interact directly with the community, thus converting this attention into investment and transactions in Meme Coin.
Live streaming provides Meme coins with opportunities for instant promotion and real-time marketing.Creators can communicate directly with users and share token concepts, market analysis or real-time trading activities.
The live broadcast function of pump is not just a technological innovation, it has changed the market transmission method of Meme tokens, making the issuance and trading of tokens more social and entertaining.
This not only increases user stickiness, but also provides a platform for creators who want to promote Meme tokens through their social media influence.
Everything has both positive and negative aspects.
In the live broadcast in the Web2 industry, various anchors also find ways to attract attention, and finally make profits by rewarding or bringing goods.
In the live broadcast of pump in the Web3 industry, because the platform’s control is very weak and closer to money, anchors can directly issue coins and speculate on coins, which may catalyze more abstract and less bottom-line behavior.
Typically, they will get involved in pornography, gambling, because behind pornography, gambling, drugs is human nature.
For example, there are already many pornographic anchors now.
I have to say that the porn industry has a very keen sense of smell. It is often the fastest way for some porn industries to use innovative technologies. For example, after AI became popular, pornographic videos of AI changing faces soon appeared, changing celebrity faces to pornographic videos.It satisfies many people’s dirty fantasies.
The live broadcast function of pump has indeed achieved significant results in attracting attention and increasing user participation, but the lack of a certain review mechanism will lead to the platform becoming a breeding ground for unhealthy content, which will eventually backfire on the platform itself.
Not all traffic is valuable, some are toxic traffic.
At present, pump is condoning the proliferation of these bad content. Although it can help the platform achieve the effect of becoming popular in the early stage, there is no restriction in the future, which may lead to more vicious negative events, and supervision may have to intervene.
Therefore, pump needs to find a balance between attracting user attention and maintaining a healthy and compliant platform ecosystem.
05 Summary
The pump team is very productive. Pump is very innovative in product mechanism design, meeting the market’s demand for meme coin issuance and hype.
More importantly, the live broadcast function of pump further promotes its out-of-the-box, memecoin + live broadcast = attention economy explosion.
Pump is no longer just a phenomenal product in the Crypto industry, but is constantly booming.
Although meme coins are gambling and pure hype, this may also conform to the most primitive desires and needs of human nature.
Meme coins are also a unique embodiment of crypto culture and decentralized culture.
The Meme coin craze is actually to tell the market: blockchain technology is so complex and the threshold for Web3 application is so high, so ordinary users can come to this big casino to experience the pleasure of transactions and satisfy their desire to get rich quickly.
Meme coins are the most primitive and purest capital plate, and Pump meets the need for everyone to issue coins and everyone to speculate on coins.
