XNTM566
How did the public chain's strategy of pulling up the market to lock in liquidity, represented by PumpFun, form a conspiracy of volume and liquidity? How should retail investors and project owners understand and judge this?
Yesterday, the APE FOMO effect triggered a wave of public chain pumpfun, which gave me some thoughts. I used my own words to understand the current situation of the pumpfun of various chains. Here are my three personal understandings of this phenomenon:
The currency must be in an upward trend
Let me start with what I think is the most important point. In fact, before $APE, many public chains or Layer2 have tried similar products with pumpfun characteristics, but except for $SUI, most of them were short-lived.
As for the reason? In my opinion, many people’s understanding is the inversion of cause and effect. It is not because pumpfun products are very popular and liquidity is locked before the market is pulled up, but because the coin is pulled up first, and the price rise encounters a bottleneck and cannot be pulled up, so the on-chain ecological effect is needed to help push up prices and lock liquidity.
therefore:
For retail investors, it is very important to judge whether there is a market on the chain.
First, observe whether the main currency of the chain is in an upward trend and whether there are opportunities for altcoins in CEX. Based on this funding trend, the overflow of the chain can be driven to create a wealth effect, rather than all public chains being able to pull up the market by launching a pumpfun.
For public chain projects
If you want to use pumpfun products to achieve a win-win situation of liquidity and popularity, you may need to first have the hardware conditions driven by funds before it will be easier to go with the flow. It is difficult for pumpfun products alone to pump up your coin price. Funding hardware is the core.
In addition, for Layer2 like Linea that uses ETH as the native token on the chain, or new public chains that have not yet issued coins, if the official does not intervene, it is not so meaningful for the project party to do pumpfun and retail speculators to play pumpfun on their chain, because there is no big money to drive the prosperity of the chain ecosystem. Of course, there may be expectations in reality - the order number of the Mao studio 5U can buy a bright world, and the millions of Mao army are 5M USD buying orders. Although it is a bit of a joke, the meme coin ecology on ZKsync and Starknet is almost like this in my understanding, and with the issuance of coins, the meme on the chain has never risen again after the outflow of cat-stroking funds. To some extent, there are some opportunities to eat small meat, but the magnitude of the opportunity may not be that big.
Strong market capabilities and understanding of hot spots
On the basis of the above capital drive, if the ecology on the chain wants to become popular, it still depends on market capabilities. This is not only limited to the public chain ecological project's ability to understand memes, but also tests the ability of the public chain itself to connect with large households and KOLs for distribution. Most public chain project parties can actually understand the needs of KOLs and large households, but many times due to different language systems, lack of communication bridges, and not knowing what is happening in the market, the response is delayed. Many times it may be because there is no degen in the team at all. Everyone wants to play a favorable game and be a free rider on the big brother's car like Musk. Therefore, whether it is retail investors or project parties, the most front-line demand is to catch hot spots. For outdated or not hot content, even if someone is willing to shout orders, it is difficult to see results.
The specific breakdown is the right time, right place and right people—— -
Right time: The project team needs to do things when the market is good and choose the right time to take advantage of the hot trend. Right location: The public chain’s native currency chip structure is good and can seize the opportunity of rising prices.
Harmony: The team has strong BD capabilities, can maintain good relationships with the community and KOLs, and is willing to let external partners profit to complete a conspiracy.
A positive example is this APE
Timing: Combined with ApeFest, we communicated with the community and big investors (I am not a holder, I just heard about it), and launched it when everyone was a little tired after playing with the AI hotspot of Sol for a few days;
Geographically: APE has been washing for a long time and is close to full circulation, with a low market value, small resistance to rising, and arbitrage air force as fuel;
Renheshang: There are many rich people in the Yuga community. It is well known that the holders who can still stay now are all rich and willful diamond hands. There are also various big KOLs who still have nostalgia for Monkey and are willing to rush in.
I won’t mention the negative examples, for example, the Pandora project was almost dead before they thought of issuing the 404 coin for entrepreneurship, and Launchpad was dead before they thought of building a launch pad... These were evaluated by group members as: eating up exhaust gas.
It is best to have a head effect
In the case of a head effect, hot money will gather more. I won’t directly prove this point, but I will give a few examples without a head. In the recent case, AAA on SUI plummeted, and other chain memes fell into a slump. In the distant past, all players withdrew after the FT head key was closed on this day last year. The chain ecosystem without a head effect is like a pile of loose sand, which will be scattered by the wind.
I think APE didn’t do well in this regard. The original 30M momentum of Curtis Longyi didn’t stabilize. At the same time, many big Vs of BAYC didn’t actually hold Longyi, so they each started their own coins and didn’t focus on the leader. In this case, I guess Longyi’s creation was also an accident created by retail investors. From the market value of retail fomo coins, 30M is a hurdle. It may be that the Foundation itself was not prepared or did not have this awareness.
Solana has done a great job in capital clustering and head effect. There is always a hot coin leading the narrative in every period of time. The more powerful the hot spot is, the more hot money gathers on the chain, the more prosperous the ecosystem is, and the louder the voice is.
Is dydx going to make the second ape? I saw others saying that dydx will also rush to meme after launching the prediction market. I remember the last time the v2 chain was hyped was more than a year ago. I saw others say:
The founder of dydx returned to serve as CEO on October 10 and is planning to launch the dydxchain pump platform. He has been quite active recently, having just launched a prediction market, and dYdX Unlimited will soon launch MegaVault (a permissionless market, reward program, and alliance program). The highlight is the dydx pump platform.
