Pump.fun issue coin controversy: Who is the ultimate winner?

Recently, the focus of the cryptocurrency market has been on the token issuance of Pump.fun. This event, which has been brewing since June of this year, finally came to fruition on July 12. Although there are doubts about its $4 billion valuation, the public offering was sold out in just 12 minutes, with some investors expressing dissatisfaction on social media for not being able to participate.

Currently, the performance of Pump.fun is relatively satisfactory. After its launch, the token price has shown a steady upward trend, and today it achieved its first token buyback using transaction fees. However, whether the coin price can remain stable in the long term is still a question in the minds of many.

Pump.fun is undoubtedly one of the most eye-catching applications in this round of the bull market. It has successfully pushed MEME coins to new heights, with its fair launch concept and easy operation completely breaking the high barriers of traditional issuance models. Even today, when the popularity of MEME has declined, the temptation to create a coin for just 3 dollars remains immense.

Mechanically, Pump.fun adopts full smart contract pricing without pre-sales or private placements, and even sets a graduation mechanism. When the market value reaches $69,000, the system will automatically create a liquidity pool on a decentralized exchange. This nearly fully automated listing process is very popular in the market, making Pump.fun the "money printer" in this round of the market.

Since its launch in January 2024, Pump.fun has reached a total issuance of 11.44 million tokens, with over 22 million unique addresses and a cumulative revenue of nearly $720 million. The daily highest transaction fee even reached $5.43 million, and the daily revenue peak soared to $15.88 million. It can be said that this round of MEME market profits has been almost entirely captured by Pump.fun, further promoting the development of the Solana ecosystem.

However, this project that started with MEME suddenly announced the issuance of coins, causing widespread discussion in the market. Rumors of Pump.fun issuing coins first appeared in February this year, when there were reports that it planned to issue coins on centralized exchanges and had even prepared complete coin issuance documents, but later it was put on hold due to market fluctuations. By June, rumors of coin issuance resurfaced, with reports stating that Pump.fun planned to raise $1 billion through a token sale, with a valuation of $4 billion.

On July 10, Pump.fun officially announced that it will launch the public sale of its native token PUMP at 22:00 on July 12. This sale will issue 150 billion coins at a unit price of 0.004 USDT, accounting for 15% of the total supply. At a valuation of 4 billion USD, the amount raised in this financing is 600 million USD. Due to compliance reasons, participants from the UK and the US are excluded from this sale.

In the economic model of the PUMP token, 33% is used for public sale, 24% for community and ecological incentives, 20% allocated to the team, 2.4% for the ecological fund, 2% owned by the foundation, 13% allocated to existing investors, 3% for live broadcast-related activities, and 2.6% for liquidity and exchanges.

However, compared to the previous expectations for issuing coins, the actual issuance of coins encountered a collective pessimism in the market. The controversy mainly centered around the $4 billion valuation. It is worth noting that the stablecoin company Circle, which went public in New York, had a valuation of only $7 billion. An on-chain casino claiming a valuation of $4 billion even surpasses most current DeFi blue-chip protocols, leading the market to question its excessive liquidity overextension.

More importantly, the current market environment has changed. Aside from a slight rebound in the last few days, most altcoins and MEME coins have shown a rather sluggish trend. This can be seen from the trading volume; Pump.fun reached a peak trading volume of 5.44 million USD on January 23, after which it has basically shown a cliff-like downward trend. Recent daily trading volumes have remained stable at under 700,000 USD, down 87.2% from the peak. In terms of the number of tokens created, daily token creation has dropped from a peak of 70,000 to 30,000, nearly halving. The token graduation rate is even more astonishingly low, dropping from a peak of 1.6% in January 2024 to now below 1%. These figures fully demonstrate that the MEME market is cooling down and user enthusiasm is rapidly waning.

On the other hand, the market is shrinking while competitors are rising. Pump.fun, which once held a dominant position, is now facing pressure. Its competitor letsbonk.fun, centered around BONK, has developed rapidly, often ranking first in the number of token launches and at one point surpassing Pump.fun to claim the top market share. Although Pump.fun has 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 come under severe scrutiny. After rumors of issuing coins in June, the market even saw a risk-averse sentiment, leading to a significant pullback in popular MEME coins within the Solana ecosystem and a rapid outflow of funds. Industry insiders have bluntly stated that this ICO resembles more of a liquidity exit than a long-term development plan.

Interestingly, in March 2024, one of the co-founders of Pump.fun stated on social media that every presale is a scam. Now, Pump.fun is precisely issuing coins in the form of a presale, staging a "slap in the face" drama. This token issuance raised 33% of the total supply, with 18% allocated to the private placement round for institutions and 15% for the public offering round, all coins will be fully unlocked on the first day of launch.

From the final results, although industry insiders are not optimistic, supporters and institutions seem to hold different views. The public offering was completed in just 12 minutes with a quota of 500 million dollars, and several major exchanges participated in the PUMP public offering. According to data, the number of wallet addresses that participated in the pre-sale on the Pump.fun official website and completed KYC is 23,959, while the number of wallet addresses that successfully purchased is 10,145, with an average subscription amount of 44,209 dollars. 89.7% of the PUMP token pre-sale was completed through the official website, while the total amount sold by exchanges accounted for only 10.3%. Among the pre-sale addresses on the official website, small-scale users are the main group, with 5,758 users subscribing for PUMP within 1,000 dollars, while the number of addresses with subscriptions exceeding 1 million dollars is 202, showing the enthusiasm of institutions.

This process perfectly illustrates the unique phenomenon of "口嫌体正直" in the crypto circle. Due to technical issues during the public sale on some exchanges, users found it difficult to complete their subscriptions, leading to multiple users expressing dissatisfaction on social media. Regarding the subsequent performance of Pump, there has been considerable controversy within the community. One side believes that the valuation is too high and will inevitably collapse after the spotlight effect ends, while the other side argues that Pump, as the most representative product in MEME, has a complete income logic and cognitive foundation, and will not easily decline.

At present, it seems that the latter has the upper hand for the time being. After its launch on July 15, Pump briefly fell from $0.0065 to $0.0042, but after some fluctuations, it started to rise again, currently reporting at $0.0066, which is a 55% increase compared to the fundraising price of $0.004. The fully diluted valuation has also risen from $4 billion to $6.6 billion, providing some returns to the subscribers.

Of course, this part of the increase is also influenced by human factors. According to on-chain analysis, as of 8 a.m. this morning, Pump.fun began to use the fee income to repurchase PUMP after issuing coins. In the past 7 hours, they have transferred 187,770 SOL of fee income to a designated address, purchased PUMP, and then transferred it to another address for storage. A total of 111,953 SOL (approximately 1.83 million USD) has been used to purchase 3.04 billion PUMP, with an average price of 0.006 USD. Repurchases can support the price, but there is also the suspicion of left hand selling to right hand. However, for holders, as long as the price can be raised, it is a good thing.

Whether it is to withdraw liquidity or simply to build the ecosystem, the valuation controversy surrounding Pump.fun reflects the current state of the market. The once liquidity-famous MEME is collectively falling into trouble, and the booming attention economy seems to gradually become a false proposition. Nowadays, even the most representative applications have to take the path of issue coin, subtly revealing signals that the narrative is approaching its end. Where MEME will ultimately head is uncertain, but the PUMP token serves as a weather vane; the market's bets on it will be an effective observation of the value judgment of the attention economy. An increase in the token price at least indicates that the market recognizes its pricing, while a decrease implies that the public needs to rethink the true value of the MEME market, which may trigger more selling sentiment. This might also be one of the reasons why Pump chose to buy back.

Returning to the title question, who is the winner of Pump.fun issuing coins? Undoubtedly, the project party is the winner, and currently, both public and private participants are also winners, as are short-term bullish investors. But how long they can earn, and to what extent the project party can maintain the coin price, remains an unknown. Some large holders have already begun to choose to cash out. According to monitoring, a certain investor spent 5 million USDC through 5 wallets to participate in the PUMP public sale, purchasing 1.25 billion PUMP, and sold all today at an average price of $0.0067, making a profit of $3.416 million.

On the other hand, from a realistic perspective, the current improvement in the macro market will also affect MEME to some extent. The Ethereum narrative is strong, and mainstream tokens continue to rise, directly driving the explosion of quality projects within the Ethereum ecosystem. Taking ENS as an example, it has risen over 18% today, reaching a new high since February of this year. In the long run, although there is currently a strong uncertainty in the market, foreseeable interest rate cuts are on the way, and the altcoin market may also expect a small surge. MEME may show a polarization trend, with quality MEME rising due to sector rotation, while other MEME may become neglected due to liquidity being withdrawn.

If we continue to develop along this path, although MEME, as a product similar to lipstick economy and lottery economy, will always exist, it will be difficult to stir up a funding storm in the market like in 2024.