Pump.Fun: Are You Ready to Pump?

Pump.Fun

TLDR: Pump.Fun is a low-threshold, low-cost way of launching your own meme coin. The platform works without pre-sales or pre-allocation. For a few dollars’ worth of SOL everyone can upload a picture, create a ticker and start shilling their coin to the community. Of course, most of the thousands of coins launched fail. But some have made it to a multi-million dollar market cap and have a listing on dexes.

Only when a new coin reaches the 70k market cap threshold, a liquidity pool is created and the coin starts trading on dexes like Jupiter. So, before that threshold, you can only buy and sell on Pump.Fun. After that, your coin can be traded publicly.

Since late March 2024, Pump dot fun’s popularity has taken off and is still on the rise.

Pump.Fun: Are You Ready to Pump? - - 2024

How Does Pump.Fun Work?

Entering the Pump.Fun website, one is overwhelmed by flashing lights and flickering buttons. Everything screams you’re in a casino now. If you want to avoid developing an epileptic seizure, there are some toggles you can switch to cool down the hot mess. 

We all want things to pump and we all want a bit of fun. So why not indulge, especially while we can do more than just trading here and can be creative: we can deploy our own coin. 

  • You connect your Solana wallet, for example Phantom
  • You upload a picture
  • You create a description
  • You decide on a ticker
  • Optional: adding links to the relevant social channels of the new coin         
  • You buy a few of your own coins (optional)
  • You can start shilling your coin, on the platform or outside

They got support from Solana, Blast and Base, the top chains for memecoins.

Creating a Coin on Pump.Fun

I created my own coin. I called it Spelling Error and gave it the ticker: WERE. Description:

‘For those who cherish the odd misspelling and are not ashemed.’

Pump.Fun: Are You Ready to Pump? - - 2024

I bought 0.05 SOL of my own coin and then just waited. A newly created coin gets assigned a market cap of 5.000 dollars and anyone can start buying your coins.

My coin got a chart!

Pump.Fun: Are You Ready to Pump? - - 2024

Lo and behold, in the first hour after I created WERE, two people (two addresses at least) each bought more than 1 SOL of WERE. You can see that in the Trades section.

Pump.Fun: Are You Ready to Pump? - - 2024

As you can see, these first buyers quickly dumped their coins again, lol. Still, I felt honored. I guess they just took a position in case my hasty creation would take off.

But wait, how could they even buy and sell in a market that has basically no liquidity? After all, no one knows my coin, it’s a grain of sand in a desert. That’s were where the bonding curve comes in.

Bonding Curve: Fairness for the Plebs

A bonding curve lets people buy and sell coins outside an exchange, and without an order book. But also, without a pre-sale to whales, and without an allocation to the team. A bonding curve makes constant trading possible, without needing the usual hassle and heavy trading volumes that come with traditional order books.

A bonding curve is a token issuance smart contract. Whereas on traditional platforms, prices are set by supply and demand between sellers and buyers, in the case of a bonding curve a predefined formula sets the price.

The idea behind a bonding curve is that when someone buys an asset available in a limited quantity, each subsequent participant will have to pay slightly more for it. This is because the number of available units decreases with each buy, making it more valuable.

This mechanism of course benefits early participants. On Pump.Fun retail can get in under a market cap of 70k for new tokens. You and your friends can literally be the first to buy your own coins, as well as any non-privileged plebs.

YouTuber Dave.crypto fleshed out what the bonding curve is for Pump.Fun coins. Pump.Fun puts 800 million coins in the bonding curve when you launch a coin. When all 800M are sold, your coin gets listed on Raydium. This will cost all the buyers combined roughly 85 SOL, so not an easy feat. The price of the coins climbs exponentially according to a formula.

Pump.Fun: Are You Ready to Pump? - - 2024

Around a market cap of 60k, the coin goes to the Raydium decentralized exchange. If you would manage to buy the first coins at 0.3 SOL for 10 M coins, and the final 10M coins for 8 SOL. That’s a solid 25x IF you manage to pull it off.

How to play Pump.Fun

Below are some random coins created by other users minutes before I took this screenshot on Pump.Fun. Obviously, the vast majority of those will never gain any traction. But, consider these like lottery tickets. The difference between these coins and lottery tickets is that every lottery ticket is the same and these coins not. While a lottery ticket is a stab in the dark, with new coins you have some information to work with about their future potential success.

Pump.Fun: Are You Ready to Pump? - - 2024

As you can see in the image, I filtered with the creation time variable. So newest coins are on top. They all have a market cap of around 5k, this is just a default setting from the platform.

What are some of the criteria you could use to assess if a coin could make it?

  • First of all: does it make you laugh or at least pause? The umpteenth cat with a hat won’t make you laugh, probably. You’re looking for an emotional reaction inside yourself. If you giggle, more people probably will and the coin just might catch on, as Satoshi would say.
  • Is the distribution rather even? Do a rather large number of wallets (dozens) each hold no more than 5% of the price? this reduces the risk of someone dumping on you.
  • Does it have a community? Is there a comment section with some comments, does it even have a social channel with some activity going on?
  • Spot trends. A few weeks ago, coins with the Ansem theme were being launched en masse. Ansem is a crypto influencer, apparently.
  • Just have fun with it. Don’t use a lot of money obviously. Take some profits if you get lucky.

Conclusion

Pump.Fun is a platform that is light-hearted and unapologetic about shilling and pumping coins. It’s like a creativity contest and a trading contest merged into one: who can create successful narratives and jump quickly on narratives that rocket? Those people are rewarded. Zooming out, it’s another sign that we should not fade meme coins this cycle. Also, it reinforces the prominence of Solana in the meme coin ecosystem. Welcome to a brave new world where you can be a cool kid who also makes money from being a cool kid. Love it or hate it, it’s the world we’re in.

Pump.Fun: Are You Ready to Pump? - - 2024

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