Author: Justin Baba (@0xbaba23), Diligence Research Analyst; Translated by: Baishui, Golden Finance
Historically, with small-cap memecoins, investors have only been able to speculate on price increases, but have been unable to profit from price declines.
However, dumpy.fun, founded by Save (formerly Solend), is hoping to change that with its recently announced platform, which will allow users to short any memecoin with leverage.
Let’s take a look at how it works:
Users who are bullish on the token provide liquidity on squeeze.fun by depositing tokens to earn income from high lending rates.
Users who are bearish on the token deposit USDC or SOL as collateral to open a short position.
When a short position is opened, the protocol borrows the token being shorted and exchanges it for collateral tokens on Jupiter.
When a user closes a position, the protocol exchanges the collateralized tokens back to the original shorted tokens to repay the loan.
Short sellers will receive the remaining collateral assets as profit/loss.
In addition to the new platform, the project will also launch an experimental memecoin, DUMP, which is designed to "fall to zero." It is intended to demonstrate how dumpy.fun works and provide commentary on the game theory of market behavior.
Dumpy.fun is expected to launch in beta on July 30th and will add another layer to the PvP on-chain memecoin ecosystem on Solana. Once live, it will allow users to develop new strategies to profit from memecoin, thereby making the market more efficient.
