The year-long craze for memecoins created on the best blockchains has found a significant competitor in the Solanum-based Pump.fun, a cryptocurrency project resembling an anonymous social media platform on the Ethereum 4chan blockchain.
Over a million memes created in 7 months
According to Bloomberg reportSince its launch in January 2024, Pump.fun has seen the creation of over one million memcoins on the Solana and Blast blockchains, becoming the go-to platform for creating and trading these tokens for retail investors.
However, the report notes that Pump.fun has faced criticism for perpetuating the perception of cryptocurrencies as a “gambling arena.” Bloomberg reported that the “well-known” problem of pump-and-dump schemes in crypto space has raised concerns about the integrity of tokens created on the market.
While Pump.fun has attracted the attention of retail investors and even celebrities such as 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 cryptocurrencies as a “speculative casino,” distracting from the true potential of the technology.
Critics of tokens issued on the platform also emphasize that these coins They often have no utility beyond their meme status, potentially undermining the credibility of the broader cryptocurrency sector.
Is SEC crackdown fueling memecoin preference?
Rachel Lin, CEO of decentralized derivatives exchange SynFutures, notes that Pump.fun’s success reflects an “increased appetite” among retail investors for memecoins.
The SynFutures CEO believes that many retail investors, tired of customary venture-backed token investments, are finding memecoins attractive due to their perceived transparency and high-return potential, driven by the perception that VC projects favor the interests of venture capitalists and the projects themselves, which prompted investors to look for alternative solutions.
The rise in popularity of memcoins can be partly attributed to the U.S. Securities and Exchange Commission’s (SEC) approach to regulating cryptocurrency markets and its recent repression on the industry, influencing the preferences of retail investors memcoins.
Michael Selig, a partner at law firm Willkie Farr & Gallagher LLP, explains that memecoins are in stark contrast to securities, which has led investors to buy memecoins primarily for expressing opinions, participating in communities, speculating on the attention-grabbing value of cat pictures, or for entertainment purposes.
Pump.fun in a nutshell
Pump.fun aims to provide anyone with a quick and affordable way to get started with memecoins, while supposedly reducing the risks involved. removing carpets.
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, giving them a share of the meme’s success.
To achieve this, Pump.fun uses an automated process where users can upload their favorite memes or JPEGs, a commonly used lossy compression method digital imagesalong with the token name and symbol, resulting in instant token creation for a minimum fee of less than $2.
The platform uses a mathematical model to determine the price of memecoins, which increases with the number of users purchasing the token. Interestingly, fresh tokens on Pump.fun are created using a fair launch method, issuing all tokens at once without pre-sale, often for a fraction of a cent.
At the time of writing, Solana is trading at $138, indicating no change from Thursday’s price, as the token has been trading in a consolidation range between $131 and $144 over the past week.
Featured image from DALL-E, chart from TradingView.com
