What is Pump.fun? Memecoin for the masses

Iggy Azalea launched her own token on Pump.fun and over a million others have been created. But this could be bad news for investors… and the market at large.

There is one thing that always remains impressive about the frenetic world of cryptocurrencies: how a new project can emerge and quickly take the world by storm.

For our final showcase, let's turn our attention to Pump.fun, which basically allows anyone to create their own memecoin.

It launched in January of this year, and DefiLlama’s figures suggest the website is already on track to generate $265 million in revenue a year. $265 million!

Pump.fun now regularly pockets over $500,000 per day in commissions, a figure that accelerates to $1.5 million during periods of market madness. As of July 2, the project x.com/degeneratenews/status/1808098870351610140?s=61&t=Goh7F7TZjoAVMq_tusVLpw” data-type=”link” data-id=”https://x.com/degeneratenews/status/1808098870351610140?s=61&t=Goh7F7TZjoAVMq_tusVLpw” target=”_blank” rel=””>somersaults eth 24h inflows: $1.99M vs. $1.95M.

And if that wasn't crazy enough, data from Dune Analytics shows it has been behind the launch of over 1.16 million tokens on the Solana blockchain so far.

But how exactly does Pump.fun work? What has made it so successful? And is this frenzy sustainable?

Memecoins for the masses

For many years, it has been known that novel tokens suddenly appear in response to events that go viral.

A good example of this came in 2022, when an altcoin was quickly created after Will Smith slapped Chris Rock at the Oscars.

Will Smith Inu's imaginative name skyrocketed in value just hours after the ceremony concluded, but, like a fleeting flash, it lost a large portion of its market capitalization just as quickly.

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Pump.fun basically reduces this process to a couple of clicks, removing the barriers to entry for degenerates who lack the technical knowledge.

The website has a pretty elegant explanation of how it all works:

Lightning strikes

Even spending five minutes on Pump.fun is enough to give you a headache, with newly minted tokens bursting onto the page in a jittery yellow box.

Since this is the Internet, a lot of them seem to focus on pictures of cats.

But a big milestone for the startup came when Iggy Azalea released MOTHER, and the Australian rapper aggressively promoted it to her 7.7 million followers.

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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 to the party often end up being the ones who lose out. Prices have since fallen by around 75% from their recent highs, pushing MOTHER’s valuation back down to $58.8 million at the time of writing.

And that brings us straight to the dark side of Pump.fun.

Die-hard celebrity fans who know virtually nothing about cryptocurrencies may end up making speculative investments they bitterly regret.

There may also be very serious consequences for the stars themselves, something Azalea is either unaware of or quite willing to ignore.

Kim Kardashian has been banned from discussing cryptocurrency on social media for three years and fined $1.26 million after endorsing EthereumMax on instagram without disclosing that she had been paid.

If the SEC is willing to come down hard on someone who simply posted about a digital asset, how will it react to a celebrity who launched one of his own?

Meanwhile, despite security measures supposedly put in place to protect against rug pulls, Pump.fun has not been incident-free.

In May, a man who used to work for the protocol was arrested in London amid allegations that he exploited the project for nearly $2 million.

Jarett Dunn is now out on bail and is expected to appear in court in August.

Is Pump.fun sustainable?

We can't escape the fact that a huge bubble is starting to form in the world of memecoins.

It’s almost like history is repeating itself, isn’t it? Just three years ago we found ourselves in a crazy situation: non-fungible tokens were selling for $69.3 million. Inevitably, buyers saw the value of their investment vanish before their very eyes, while the creators laughed all the way to the bank.

Memecoin mania also has broader implications for whether the cryptocurrency bull market will continue. That uncontrolled greed and speculation has often served as a harbinger of the end of the good times, and as we’ve seen, there’s plenty of that right now.