As someone who has been navigating the wild world of crypto for quite some time now, I can’t stress enough the importance of being cautious when it comes to platforms like Pump.fun. I’ve seen countless stories of people losing their hard-earned money due to scams and rug pulls, and it’s a heartbreaking sight.
Despite the controversies swirling around Solana’s ecosystem and doubts cast on its long-term viability, Pump.fun manages to maintain a leading position in Solana’s decentralized exchange (DEX) market. This is due to factors that set it apart from other platforms within this market.
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Pump.fun’s revenue takes a dip
In simpler terms, the world of cryptocurrencies isn’t new to dramatic fluctuations, but every now and then, something exceptionally engaging emerges to redefine the storyline. Meet Pump.fun — a platform established on the Solana (SOL) blockchain that simplifies the process of creating and trading meme coins to just a snap of your fingers.
In the month of November, Pump.fun experienced a significant boost, raking in a record-breaking revenue of $93.88 million. This represented a massive jump from $30.5 million in October and $14.5 million in September, indicating over 200% growth compared to the previous month and an astounding increase of nearly 550% compared to September’s earnings.
As Pump.fun reached new financial peaks, I started noticing some flaws within its infrastructure. By the end of November, the revenue stream displayed initial indications of stress.
During the week ending November 17, weekly earnings reached a high of $33.83 million. However, this amount dropped to $25.44 million by November 27. Unfortunately, things took a turn for the worse: by the week ending December 1, revenue had fallen drastically to only $6.05 million.
The drop in performance wasn’t due to ordinary market ups and downs, but instead was triggered by a major scandal that deeply affected the platform – the introduction of a live streaming service aimed at increasing user interaction.
As an analyst, I swiftly observed a concerning trend where users were misusing the platform to disseminate inappropriate and graphic content, encompassing violent imagery and disturbing materials that included sensitive subjects such as minors and animals.
Due to the outcry, Pump.fun decided to take down their livestream function, as it faced significant criticism across the cryptocurrency community.
Despite the ongoing debate, the excitement for Pump.fun’s meme coin platform remains undiminished. As of December 3, the cumulative market capitalization of these coins surpassed $6.5 billion, positioning them above more than 70% of the top 100 cryptocurrencies in terms of value.
Let’s delve into the journey of Pump.fun, Solana, and the wider crypto world as we examine the challenges they’ve encountered, the debates they’ve sparked, and speculate on their future trajectories.
The coins leading the Pump.fun wave
At present, Pump.fun serves as a vibrant platform where meme coins are blossoming, offering not only amusement but also surprising financial gains – for the moment.
In November, meme-based cryptocurrencies on the platform dominated decentralized trading on Solana, making up a remarkable 62.3% of all transactions on decentralized exchanges, as reported by Dune Analytics.
This figure has been steadily climbing, up from 60% in October and 57% in August.
On December 3rd, the combined trading volume for cryptocurrencies linked to the platform Pump.fun exceeded a staggering $5.5 billion within a single day, and multiple coins experienced growth of more than 100% during this period.
Over the last 30 days, some coins have delivered jaw-dropping returns of 30x to 35x, driven by social media buzz and a bullish market sentiment.
Act I: The AI Prophecy token is spearheading the achievements in the meme coin sector for Pump.fun. Over the last month, this token has shown astounding growth of 3,750%, currently trading at approximately $0.51. With a market capitalization edging towards half a billion dollars, it’s clearly making a significant impact.
As an analyst, I find myself drawn to ACT due to its enigmatic concept and elusive tagline: “Exploring emergent behavior from multi-AI, multi-human interaction.” With limited details available about the project, it’s the sense of mystery that has sparked my curiosity, along with the buzz of speculation, which seems to have hooked many traders.
One noteworthy example is Peanut (PNUT), a meme token that has experienced a staggering increase of more than 1,300% over the past month, currently trading at around $1.20 and boasting a market capitalization surpassing $1.2 billion.
PNUT was initially introduced as an homage to Peanut the Squirrel, a cherished internet icon with a dedicated following. Following Peanut’s unexpected passing, the coin capitalized on the surge of public nostalgia and empathy, transforming collective sorrow into a lucrative speculative opportunity.
In recent times, ChillGuy (CHILLGUY) has emerged as the most buzzworthy token in Pump.fun’s community. After hitting a record low of $0.006, CHILLGUY has experienced an astounding surge of over 8,300%, now trading at $0.4936. However, it reached a high of $0.65, then dipped approximately 22% since then.
The triumph of these tokens isn’t merely altering the storyline around meme coins; it’s also significantly impacting the Solana environment. Some skeptics claim that relying heavily on a speculative and meme-based economy might be potentially hazardous.
Millie, the Project Lead at TrueMarkets, stated on Twitter that an economy based on such a structure is unlikely to succeed,” or
You can call it edgy or unhinged comedy, but this is why we all know deep down that the solano community is not serious.
An economy built on this will not make it.
It doesn’t matter how hard all the solano brands lean into it, this is a house of cards which only ends one way.
— MilliΞ (@llamaonthebrink) November 22, 2024
The fear is that Solana’s broader adoption could be undermined if its growth hinges on Pump.fun’s meme coins, which, while lucrative now, remain highly speculative and prone to rapid declines.
The dark underbelly of Pump.fun
Underneath the dazzling profits and enthusiastic buzz surrounding Pump.fun, there’s a murky side to it, fueled by manipulation, automated programs (bots), and doubtful strategies. This unsavory aspect raises concerns about the integrity of its entire system.
Many social media discussions and online forums often highlight instances where individuals like traders, developers, and automated systems manipulate the platform’s framework to generate false excitement, increase transaction volumes, and construct unrealistic profits that eventually prove unsustainable.
One frequent topic in discussions revolves around a strategy known as manipulating volume. The algorithm at Pump.fun emphasizes tokens that are actively traded, placing them prominently on its homepage.
This transparency system is frequently manipulated by performing “coordinated bump trades.” In these trades, organized groups of people or automated bots carry out tiny transactions – even just a dollar’s worth – solely to create the illusion that a particular token is popular among many users.
A single user claims that even a moderately structured group can temporarily adjust a token’s visibility, potentially earning profits as high as 100% to 200%. Typically, they withdraw these earnings before the broader public becomes aware of it.
In this environment, bots are now frequently employed as a preferred tool by many users. There’s an open exchange of ideas about coding techniques and methods to obtain volume bots, which can execute numerous trades at a speed of hundreds per second without human intervention.
These automated systems imitate real market behavior so closely that it becomes challenging for ordinary investors to tell the difference between genuine investments and manipulated “buy-and-sell” scams.
Instead of just adjusting the amount, sophisticated bots come equipped with additional capabilities such as wallet creation, token acquisition at rapid speeds, and managing liquidity pools. This empowers developers and investors to maximize their use of Pump.fun’s mechanics in a highly effective manner.
A particularly damning practice, detailed in forum discussions, involves developers using bots to buy up their own tokens, inflate prices, and then offload their holdings onto unsuspecting traders. This tactic, known as “rug pulling,” leaves latecomers bearing the brunt of the losses while developers walk away with massive profits.
The impact of these practices stretches much further than just single tokens. Discussions among various online communities indicate that only about 1% of the tokens minted on Pump.fun reach well-established platforms such as Raydium.
As an analyst, I can express this in a more natural and easy-to-read first-person perspective as follows: When our token’s market capitalization surpasses the threshold of $63,000, the bonding curve mechanism ensures that liquidity is provided for it. This paves the way for a successful launch on Raydium, the platform where RAY resides.
Yet, despite some tokens reaching this significant threshold, a large number of them experience swift drops in value once speculative bots and initial investors start selling, which often results in substantial losses for later entrants.
Critics label Pump.fun as a “heaven for scammers,” where creators and those in-the-know exploit the platform’s ease and popularity to their advantage, often leaving unsuspecting users at a disadvantage.
The problem is worsened by Pump.fun’s low threshold for participation, leading to a highly congested market due to inexperienced developers overwhelming the platform with tokens. These tokens frequently lack a defined purpose or development plan, instead relying on forceful promotion and manipulated statistics to entice purchasers.
Initially, the interest in using meme coins for gambling surpassed the number of meme coins being produced. However, now the situation has reversed, with more meme coins being created than there are buyers available to sustain all the activity.
An excess of supply has led to a repetitive pattern of scams, known as “rug pulls,” in which project creators exit the scene with investors’ money, thus diminishing trust within the system.
One user recounted losing their entire savings across multiple tokens, blaming rampant manipulation and the platform’s lack of safeguards.
It was pointed out that the environment of Pump.fun takes a psychological toll, with the observation that it often targets the inexperienced and individuals seeking instant wealth. This setup provides an opportunity for exploitation to thrive.
Although it carries certain risks, Pump.fun continues to be hugely favored, especially by younger investors who appreciate its speedy and rebellious atmosphere. Some contend that the platform embodies the spirit of Decentralized Finance (DeFi) – a realm where self-reliance is paramount.
As a Solana investor, I’ve experienced the liberation that comes with this platform. However, it’s undeniable that this freedom has its price. The rampant manipulation and fraudulent activities not only inflict damage on individual investors like myself but also pose a threat to Solana’s reputation as a reliable blockchain in the broader community.
Staying safe on Pump.fun
As a seasoned analyst delving into the realm of Web3, I cannot stress enough the inherent risks associated with platforms such as Pump.fun. Despite being skilled and experienced in this space, it’s crucial to remember that even the most adept among us can potentially lose our initial investment.
PumpFun traders lose $300k every minute!
I just exposed their scam scheme—you’re safe now.
Read this to avoid falling into this trap 🧵👇
— Hades Web3 (@0xHvdes) October 25, 2024
The first rule of staying safe is to approach every token with skepticism, regardless of how promising it may seem. As Hades points out, “Everything starts with creating a new wallet and depositing it from CEX or a crypto-mixer to make it look disconnected from the creator.”
Deceptive digital coins can put significant effort into looking authentic, creating unblemished transaction records and employing automated programs to simulate busy interactions as a disguise.
Instead of relying solely on tools such as RugCheck and BubbleMaps for analyzing wallet transactions and identifying potential manipulation, it’s crucial to also incorporate your own judgement. Keep in mind that these sophisticated tools are not foolproof; therefore, a combination of automated analysis and personal insights will yield the most accurate results.
Analyzing the community is also an essential part. Hades emphasized the significance of examining a token’s comment sections on various platforms such as Pump.fun, DexScreener, and Twitter.
Genuine community feedback tends to be diverse and conversational, while bot-generated comments are often overly formal and repetitive.
Looking up a token’s contract address on Twitter can yield helpful information too, since seasoned traders frequently post warnings about potential issues or irregularities that might not initially catch the eye.
As a crypto investor myself, I’ve learned that one of the biggest pitfalls is placing unwavering faith in influencers or Key Opinion Leaders. Even though they might boost the credibility of a particular token, my personal advice would be to not solely rely on their endorsements. It’s crucial to do thorough research and make informed decisions based on your own understanding and analysis.
Rather than zeroing in on advertisements, seek out genuine conversations between retail traders and “degens” as they tend to offer unbiased perspectives.
In many cases, Key Opinion Leaders (KOLs) receive payment in the form of tokens when they promote something, which might lead to their objectives conflicting with yours. Hades advises, “Do not view KOLs as a positive indicator; instead, seek out genuine enthusiasts or ‘degens’.
Timing is equally critical in avoiding losses. Tokens that have already experienced strong gains may seem tempting, but they are often at high risk of sudden collapses.
According to Hades, your “Explore” page on Twitter is excessively filled with Key Opinion Leaders promoting a cryptocurrency that has already seen a 200% surge. In just a matter of moments, this token could plummet back down to nothing.
It’s wise to steer clear of assets that have experienced rapid growth, as the risk of a sudden collapse (also known as a “rug pull”) becomes more probable with every new group of investors joining in.
If you’re just getting started with platforms such as Pump.fun, it would be prudent to begin with modest investments. By committing only funds you are comfortable losing, you can safeguard your overall financial wellbeing, even in the event of less favorable outcomes.
A smart move when investing is to diversify, meaning you should distribute your funds among numerous digital assets and platforms. This way, you minimize the chance of losing everything due to one fraudulent activity or a market crash on a particular platform.
In the end, always be cautious about deals that seem almost perfect. Any project boasting fixed returns or presenting groundbreaking applications without a well-defined plan deserves careful consideration.
To ensure a project’s credibility, it’s essential to examine their whitepapers, team background, and economic structure (tokenomics) carefully before investing your money.
With services like Pump.fun and their peers expanding, it’s expected that their influence within the cryptocurrency market will expand as well. These platforms make it easier for people to create and trade tokens, but they also increase the risks for those who jump in without proper preparation.
To successfully engage in the meme coin craze while avoiding potential pitfalls, equip yourself with suitable resources, foster a critical mindset, and base your choices on accurate information.
After all, in a market driven by speculation and chaos, your best defence is knowledge and caution.
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2024-12-04 19:24