Memecoins
What is Pump.fun | Memecoin for the masses
Iggy Azalea launched her token on Pump.fun, and over a million have been created. But that could be bad news for investors… and the market as a whole.
There is one thing that remains forever impressive in the fast-paced world of Encrypt: How a new project can be born and quickly conquer the world.
For our final show, we turn our attention to Pump.fun, which essentially allows anyone to create their own electronic money.
It launched in January of this year and DefiLlama data suggests that the website is already on track to generate $265 million in revenue per year. $265 million!
Pump.fun Daily Revenue | Source: DefiLlama
Pump.fun now regularly rakes in more than $500,000 a day in commissions, accelerating to $1.5 million during periods of market mania. As of July 2, the project turns upside down ETH Revenue in 24 Hours: $1.99M vs. $1.95M.
And if that wasn’t enough, data from Dune Analytics shows that it was behind the launch of over 1.16 million tokens on the Solana Blockchain until now.
Tokens were launched on Pump.fun | Source: Dune Analytics
But how exactly does Pump.fun work, what made it so successful and is this frenzy sustainable?
Memecoin for the masses
It has been known for many years now that novelty tokens suddenly pop up in response to events that go viral.
A good example occurred in 2022, when an altcoin was quickly created after Will Smith slapped Chris Rock at the Oscars.
The value of the bag, imaginatively named Will Smith Inu, skyrocketed within hours of the ceremony, but, like a flash in the pan, lost a large chunk of its market capitalization just as quickly.
Pump.fun essentially reduces this process to a couple of clicks, eliminating the barriers to entry for newbies without technical skills.
The website provides a pretty elegant explanation of how it all works:
Source: Pump.fun
Lightning
Even spending five minutes on Pump.fun is enough to give you a headache, with freshly minted tokens bursting onto the page in a flickering yellow box.
Since this is the Internet, a lot of them seem to focus on pictures of cats.
But a huge milestone for the startup came when Iggy Azalea launched MOTHER, with the Australian rapper aggressively promoting it to her 7.7 million followers.
A week later, in early June, the memecoin had reached a dizzying market cap of $200 million, further fueling the frenzy.
But CoinGecko data shows that latecomers often end up holding the bag. Since then, prices have fallen about 75% from recent highs, leaving MOTHER valued at $58.8 million at the time of writing.
Source: CoinGecko
And this brings us directly to the dark side of Pump.fun.
Die-hard celebrity fans who know next to nothing about cryptocurrencies can end up making speculative investments that they later bitterly regret.
There could be some pretty serious consequences for the stars themselves, too, something Azalea is either unaware of or is rather willing to ignore.
Kim Kardashian has been banned from discussing cryptocurrencies on social media for three years and fined $1.26 million, after approving EthereumMax on Instagram without disclosing that she was paid.
If the Securities and Exchange Commission willing to pelt someone with bricks for simply posting on a digital resource, how will he react to a celebrity who has launched one of his own?
Meanwhile, despite the security measures supposedly imposed to protect against theft, Pump.fun has not been free from incidents.
In May, a man who worked for the protocol he was arrested in Londonamid allegations that he exploited the project for nearly $2 million.
Jarett Dunn is now out on bail and is scheduled to appear in court in August.
Is Pump.fun sustainable?
There is no escaping the fact that a huge bubble is starting to form in the world of memecoins.
It almost seems like history repeating itself, doesn’t it? It’s only been three years since we were in this crazy situation of non-fungible tokens for sale for $69.3 millionInevitably, buyers saw the value of their investment vanish before their eyes, with the creators laughing all the way to the bank.
The Memecoin craze also has broader implications for whether the bull run in cryptocurrency markets will continue. Such greed and unbridled speculation have often served as harbingers of the end of the good times, and as we’ve seen, there’s plenty of that right now.
Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.