No-threshold casino Pump.fun knows how to exploit human nature

Author: Jessy, Golden Finance

On August 13, the daily revenue of Pump.fun, the Memecoin launch platform on Solana, hit a new high of $5.33 million. In July, its cumulative protocol revenue reached $28.73 million, a monthly high. As of August 13, Pump.fun's cumulative revenue exceeded $94 million.

Pump.fun was launched in February 2024, and the number of users and usage began to soar in mid-March. In just half a year, it achieved the achievement of multiple daily revenues exceeding Ethereum.

This makes people sigh that in the currency circle, the most profitable business is still the "casino".

Recently, Pump.fun has launched an activity to create tokens on it without handling fees. In addition, most people lose money on it, and there are many imitations at present. There are more and more voices in the community that are bad-mouthing Pump.fun.

Will a pure casino disappear? And what is the significance of such a project for the industry?

A barrier-free token launch platform

Creating a Memecoin on Pump.fun is very simple. Just come up with an eye-catching name and an attractive picture, and then click the "Start Creating a Currency" button at the top of the homepage. Users can write a short description of the currency, as well as links to relevant social media channels, and then pay 0.02 Sol to deploy his memecoin.  

In the industry, innovation in the way tokens are issued has always been able to drive a wave of new narratives. For example, the Ordinary protocol, which became popular last year, innovated the way of issuing new assets on Bitcoin, which aroused everyone's attention to the Bitcoin ecosystem. Going back to an earlier time, it was the blockchain bull market in 2017 that was set off by ICO.

More fundamentally, an important innovation of blockchain itself is the issuance of tokens and the establishment of project economic models.

Pump.fun actually also integrates the issuance method of ICO. It adopts the pre-market fundraising method. For users, choosing the tokens they want to participate in and then entering the number of tokens they want to buy is equivalent to participating in the token issuance fundraising, and being able to sell the corresponding shares before the issuance. Pump.fun will charge a 1% fee.

Why is Pump.fun successful? The core reason may be that it simplifies the token issuance method and simplifies the process of users participating in projects and buying and selling. In essence, it has built a casino with rich projects and low participation barriers.

In terms of the operating mechanism, the tokens initially created on Pump.fun can only be traded within the platform, and when the tokens reach a certain market value (about $60,000), the pump.fun website will automatically close the transaction and migrate the tokens to Raydium, the DEX on Solana.

At this point, it is time for most people to sell their tokens. Once buyers rush in to buy tokens from Raydium, users who bought low-priced tokens at the low value stage of the Pump.fun token can make a huge profit by selling them at this time.

In the industry, the "graduation rate" is used to describe the success rate of Memecoin issued on Pump.fun to be listed on Dex.

Dune Analytics data shows that the success rate of tokens created on Pump.fun to successfully land on Raydium is 1.41%. Since May, the rate has fluctuated between 1.21% and 1.41%. As can be seen from the above, most of these Memecoins have not been listed on exchanges, and the probability of successful gambling is extremely low.

From the low "graduation rate" of projects on Pump.fun, it can be seen that although there are many projects on it and users can choose to participate in "gambling" with rich products, the "odds" are also very large. Choosing a good project depends entirely on luck. Memecoin itself has no fundamentals, and it relies purely on the attention economy and chasing hot spots.

However, like BRC-20, it also achieves fair legal shooting, which is one of the reasons why users are willing to play on it.

Cheaters are everywhere, but gamblers are constantly

Although Pump.fun is using the gimmick of fair legal shooting. But you never have absolute fairness. For project parties that issue coins on the Pump.fun project, there are still ways to "harvest" users. In a completely free market without any supervision or constraints, the implementation of the law of the jungle is more thorough.

Like any project in the cryptocurrency circle, the project owner or dealer can still hold a large number of tokens at a very low price. The method is very simple. Create a few new wallets, buy in early, raise the price of tokens by continuously buying in small amounts, and increase the popularity of the project through marketing such as buying fans on Twitter, attracting a large number of users to take over, and then the project owner can sell at the right time. This way of cutting leeks is also a common practice in the circle.

The problem with Pump.fun is that anyone can issue coins on Pump.fun, and the cost of issuing coins is extremely low. According to statistics, a total of more than 1.2 million projects have been issued on it. There are too many projects on the platform, and because the platform has a large number of users, the reachability of scam projects has been greatly improved.

And on August 9, the pump.fun team announced on the X platform that it would reduce the token issuance fee from US$2 to US$0, and would also give a reward of 0.5Solana to the Memecoin project that completed the "bonding curve" and was listed on Raydium.

The team hopes that such incentives can encourage creators to not sell their tokens completely to a certain extent. From the perspective of project management, the introduction of this "free" policy may be a move to deal with the current prosperity of imitations on various chains.

However, the actual impact of this move is to lower the threshold for issuing coins again, allowing more fraudulent projects. And Pump.fun itself has no screening mechanism for projects.

However, for users, coming to Pump.fun is to gamble, and hyping Meme is to hope to "turn a bicycle into a motorcycle" to win a big with a small investment.

Compared to playing Meme alone on the chain, the Pump.fun platform actually has a better user experience, especially because it has built-in social attributes into Meme transactions. When users operate Meme, they not only observe the K-line buying and selling to enjoy the thrill of adrenaline surge, but can also enjoy various funny pictures on the platform, and comment and reply behind the project. This is an innovation that increases the fun of gambling products and platforms.

Recently, there have been a lot of negative comments about Pump.fun, and some people call it a slaughterhouse-style harvest, and believe that after losing the money-making effect, users will withdraw and the project will die.

But most people who go to casinos lose money, and people still go to casinos in an endless stream. In this regard, Pump.fun will not only not disappear, but will become more prosperous, especially in this cycle when Memecoin has become an extremely important narrative.

And what is the significance of Pump.fun to the industry? You can see it directly-it has greatly increased the activity on the Solana chain. More? Which casino was founded to contribute to society!