Memecoins
Solana-Based Pump.fun Emerges as Go-To Platform for Memecoin Creation, Report Says
The current frenzy over memecoins created on top blockchains over the past year has found a notable competitor in Solana-based marketplace Pump.fun, a crypto project reminiscent of the anonymous social media platform on the 4chan Ethereum blockchain.
Over a million memecoins created in 7 months
According to Bloomberg reportSince its launch in January 2024, Pump.fun has witnessed the creation of over 1 million memecoins on the Solana and Blast blockchains, establishing itself as the go-to platform for retail investors to create and trade these tokens.
However, the report notes that Pump.fun has been criticized for perpetuating the perception of crypto as a “gambling arena.” Bloomberg reported that the “well-known” problem of “pump and dump” schemes in the crypto space raised concerns about the integrity of tokens created on the market.
While Pump.fun has attracted the attention of retail investors and even celebrities like rapper Iggy Azalea, who launched her token called Mother Iggy (MOTHER) on the platform, the report suggests that skeptics argue that Pump.fun is allegedly reinforcing the perception of crypto as a “speculative casino,” distracting from the technology’s true potential.
Critics of the tokens issued on the platform also point out that these coins often lack utility beyond their meme status, potentially undermining the credibility of the broader crypto industry.
Is SEC Crackdown Fueling Memecoin Preference?
Rachel Lin, CEO of decentralized derivatives exchange SynFutures, observes that Pump.fun’s success reflects “increased appetite” from investors. individual investors for memecoins.
SynFutures CEO believes that many retail investors, tired of traditional venture-backed token investments, find memecoins attractive because of their perceived transparency and high return potential, stemming from the idea that venture projects promote the interests of venture capitalist and the projects themselves, leading investors to seek alternative avenues.
The rise of memecoins can also be attributed in part to the U.S. Securities and Exchange Commission’s (SEC) approach to regulating crypto markets and its recent repression on the industry, influencing retail investors’ preference for memecoins.
Michael Selig, a partner at law firm Willkie Farr & Gallagher LLP, said memecoins stand in stark contrast to securities, which has led investors to buy memecoins primarily to express their opinions, participate in communities, speculate on the attention value of cat pictures or for entertainment.
Pump.fun in brief
Pump.fun aims to provide a fast and cost-effective way for anyone to mint memecoins while allegedly mitigating the risks associated with carpet pulls.
The project’s anonymous co-founder, Alon, said in a podcast interview in March that Pump.fun allows users to financially share “funny content” with friends by giving them a stake in the meme’s success.
To achieve this, Pump.fun uses an automated process in which users can upload their favorite memes or JPEG files, a lossy compression method commonly used to digital imagesas well as a name and symbol for the token, resulting in the instant creation of a token for a minimum amount of less than $2.
The platform uses a mathematical model to determine the price of memecoins, which increases as more users buy the token. Notably, new tokens on Pump.fun are created using a fair launch method, issuing all tokens at once without a pre-sale, often for a fraction of a penny.
At the time of writing, Solana’s price stands at $138, indicating no change from Thursday’s price as the token has been in a consolidation range between $131 and $144 for the past week.
Featured image of DALL-E, chart from TradingView.com