Satisfying the deepest needs of human nature.

Written by: Yue Xiaoyu

Pumpfun is a meme coin issuance and trading platform on the Solana chain, focusing on fair issuance.

Pumpfun was launched in January 2024 and quickly became popular in the community, riding the wave of meme coins, or rather directly pushing the meme coin craze into a new phase.

The data from Pumpfun can be said to be very impressive, having accumulated over $200 million in revenue. During peak periods, Pump.fun's daily revenue can reach millions of dollars, once surpassing Uniswap Labs, becoming the fourth largest protocol across all blockchain networks.

If trading meme coins is like gambling, then pump is the most profitable casino. Better to run a casino than to gamble.

Pump is a phenomenal product in this cycle, making it very straightforward to study and learn.

01 Team Background

The pump team initially was not focused on being a launchpad; they initially worked on an NFT marketplace but shifted to their current direction after several attempts.

Pump is a European team, and the founding members are very young. Their CTO didn't even attend college, with the highest education being high school, but they are technically very strong. Their youth and technical prowess allow them to view problems differently and have keen intuitions about products.

Therefore, the success of the pump project hinges on the youth and innovative capabilities of their team. Many people have thought of this idea, but only the PUMPFUN team can truly realize it.

The road to success is not crowded, because most people cannot persist.

When you have an idea, there may be a thousand people in the world who already have it, but only a hundred can turn that idea into action and actually implement it, and only a few can continuously persist and solve one difficulty after another.

Not just in Web3, but in Web2 and across various industries, such cases have been very, very common throughout development history.

02 Operational Principles

Pump focuses on fair issuance, with no pre-sales and no team allocations. So how is this achieved?

Like the automated market makers (AMM) used in decentralized exchanges (DEX), a liquidity pool needs to be created and initial liquidity injected. However, the joint curve pricing model (Bonding Curve) used by Pump.fun directly uses a function curve to implement price changes.

In simple terms, in the joint curve pricing model, there is a positive exponential relationship between the token price and the number of tokens, meaning that as the token price increases, the number of tokens released also increases.

In other words, tokens will gradually enter circulation based on purchases. As users buy tokens, the tokens will be 'minted' or 'released'.

Joint curve functions will cause the price growth rate to accelerate with the increase in token supply.

This allows for the realization that during early purchases, the token price does not rise quickly, but the later purchases with the same amount of funds can raise the price more.

In the early purchasing stage, since the number of tokens in circulation is relatively small, each purchase has a relatively small impact on the price. That is to say, the price increase will not be too significant.

When the number of tokens in the market has a considerable base, the number of tokens that can be purchased for the same amount of funds (SOL or other currencies) will decrease. However, due to the characteristics of the price function, these purchasing actions will lead to more significant price increases.

What results will such functional characteristics bring?

First, it can encourage early investment. Early buyers can acquire tokens at a lower price, and as the price rises rapidly afterwards, the value of the tokens they hold will significantly increase.

Second, later-stage investments have a leverage effect. In later stages, the same amount of investment will have a greater impact on price due to the characteristics of the price curve, providing stronger incentives for later entrants, which aligns more with the characteristics of meme coins. Unlike some large market cap tokens, when the amount invested later is relatively small, it does not significantly impact the price, leading to a lack of participatory feel.

Of course, the rise in price is not without limits. The pump setting is that when a certain market value is reached, a liquidity pool will automatically be built on DEX for trading.

In other words, the fundraising phase for issuing tokens on pump uses a joint curve function, which provides a price discovery mechanism for the early stages of the tokens.

However, without external intervention, prices may rise indefinitely due to excessive speculation. By transferring to DEX and using AMM (automated market makers), a natural balancing mechanism can be introduced to avoid excessive price fluctuations.

Building a liquidity pool on DEX can provide a stable trading environment for tokens and alleviate extreme price fluctuations that may arise from a single curve model to some extent.

When the market value of the tokens is relatively large, a trading mechanism that can maintain price stability is needed, with better market liquidity to avoid very severe price fluctuations.

03 Overall Process

The overall process can be divided into two phases: the fundraising phase before listing and the trading phase after listing.

（1）Creating Tokens: First, users can create a token with one click, allowing users to create a token at a very low cost (0.02 SOL) without needing a technical background. The creation process only requires inputting the token name, symbol, description, and an image.

（2）Fundraising Phase: Creators attract other users to purchase tokens. All token models on pump.fun are the same, with a total supply fixed at 1 billion, an initial circulation of 0, and an initial 'virtual market value' set at 30 $SOL, releasing tokens through user purchases.

（3）Meeting the listing threshold: When the market value reaches $100,000 (valued in SOL), that is, the fundraising amount reaches $17,000, at this time the token circulation is 800 million, Pumpfun will mint another 200 million tokens, forming trading pairs to be added to the decentralized exchange Raydium, ultimately launching a decentralized issued Memecoin with a market value of $69,000 and a total token supply of 1 billion.

（4）Successful listing: The price of each token when listed on Raydium was 0.00000041 $SOL, which is 14.64 times the initial virtual pool price. During the entire process, Pumpfun will charge a 1% trading fee during the fundraising phase, as well as a listing fee of 6 SOL when the token goes live on Raydium.

04 Highlight Feature: Live Streaming

Recently, the live streaming feature of pump has exploded in popularity. I browsed around, and it was simply shocking, with some doing porn live streams, some locking up their grandmothers until a certain market value is reached to release them, and some continuously squatting on the toilet to hype. They are simply using every possible means.

When it comes to live streaming for trading coins, I initially thought of someone live streaming how to specifically operate in trading, but I didn't expect it to turn into various abstract attention-grabbing tactics, like live streaming goods.

Attention is a scarce resource.

Meme coins themselves are tools for attracting attention.

Attracting people's attention through humor and elements of popular culture.

Live streaming further amplifies this attraction through real-time interaction, making viewers more willing to participate and pay attention.

In simple terms, meme tokens inherently carry an entertainment nature, and live streaming further amplifies this entertainment aspect. Users can participate in a market similar to a game through live streaming, which is both entertaining and engaging.

More critically, the model of 'Meme coins + live streaming = attention economy' creates a new type of economic model in the cryptocurrency ecosystem.

Through this combination, the creators of meme coins can quickly accumulate a large amount of attention, and live streaming provides an opportunity for direct interaction with the community, thus converting this attention into investment and trading in meme coins.

Live streaming provides meme coins with instant promotion and real-time marketing opportunities. Creators can directly communicate with users, sharing the token's concepts, market analysis, or real-time trading activities.

The live streaming feature of pump is not just a technological innovation; it changes the market dissemination method of meme tokens, making token issuance and trading more social and entertaining.

This not only increases user stickiness but also provides a platform for those creators who wish to promote meme tokens through social media influence.

Everything has both positive and negative sides.

In the live streaming of the Web2 industry, various streamers also try various ways to attract attention, ultimately profiting through tips or selling goods.

In the live streaming of pump in the Web3 industry, due to the platform's weak constraints and the closer financial aspect, streamers can directly issue and speculate on tokens, which may catalyze more abstract and boundary-less behaviors.

Typically, it gets involved in vice and illegal activities because vice and crime are rooted in human nature.

For example, there are already many porn streamers now.

I have to say that the porn industry has a very keen sense of smell and often adopts innovative technologies faster than other industries. For example, after AI became popular, porn videos featuring AI face-swapping quickly appeared, satisfying many people's sordid fantasies.

The live streaming feature of pump has indeed achieved significant effects in attracting attention and increasing user engagement, but the lack of a certain review mechanism may lead the platform to become a hotbed of unhealthy content, ultimately harming the platform itself.

Not all traffic is valuable; some is toxic traffic.

Currently, it seems that pump is enabling the proliferation of these undesirable contents. While it can help the platform achieve explosive breakout effects in the early stages, failing to impose restrictions later may lead to more severe negative incidents, prompting regulatory intervention.

Therefore, pump needs to find a balance between attracting user attention and maintaining a healthy and compliant platform ecosystem.

05 Summary

The pump team is very product-oriented, and the product mechanism design of pump is highly innovative, meeting the market's demand for meme coin issuance and speculation.

More importantly, the live streaming feature of pump further propelled its breakout, meme coins + live streaming = explosive attention economy.

Pump is no longer just a phenomenal product in the Crypto industry; it is continuously gaining popularity and breaking boundaries.

Although meme coins are gambling and pure speculation, this may also align with the most primitive desires and needs of human nature.

Meme coins are also a unique manifestation of crypto culture and decentralization culture.

The craze for meme coins actually tells the market: blockchain technology is so complex, and the threshold for Web3 applications is so high, so ordinary users should come to this big casino to experience the thrill of trading and satisfy their desire for quick wealth.

Meme coins are the most primitive and purest form of investment, and Pump meets the demand for everyone to create and speculate on coins.