Pump.fun, which once led memecoin market trends, is now facing challenges. The platform, which used to see thousands of new tokens daily, is now observing a drop in the number of memecoins reaching Raydium, a decentralized exchange.
How Pump.fun Operates
Pump.fun allows anyone to create a memecoin on its platform. Token prices increase as more people buy in. When a token’s total value reaches approximately $100,000, it 'graduates' and gets listed on Raydium. At this stage, Pump.fun adds $17,000 in liquidity to stabilize the tokens. For a while, this method caused a significant rise in activity. In January, on-chain data revealed that 71,735 tokens were launched on Pump.fun in a single day, following President Donald Trump unveiling his memecoin TRUMP after the presidential election in November 2024. Trading volumes for Pump.fun’s graduated tokens also rose to over $3 billion.
Token Decline on Raydium
Fewer people are creating tokens, and even fewer are reaching the graduation stage. In January, 24,008 tokens made it to Raydium. This number plummeted in February, with only 11,532 tokens reaching graduation. Last week alone, 2,184 tokens graduated, but that number has fallen to just 717 this week. The percentage of tokens making it through the full cycle has also declined. In June 2024, 2.1% of all created tokens graduated. By January, that number had already fallen to 1.6%. This week, it hit an all-time low of just 0.7%.
Legal Pressures on Pump.fun
Pump.fun’s drop in token launches coincides with legal troubles. Law firms have sued the platform on behalf of investors, who have allegedly suffered significant losses. The firm claims the platform exploited users and allowed harmful content to thrive while profiting from its fees. Recent lawsuits have also dragged the platform to court for memecoin impersonation. Adding to its woes, Pump.fun’s official X account was hacked, leading to fraudulent token promotion. At the same time, the platform faced backlash over testing its new Automated Market Maker (AMM) feature, which could replace Raydium, sparking concerns within the community.
Pump.fun, which had a significant impact on the memecoin market, is facing several challenges, including declining interest in memecoins, legal issues, and hacks. These events pose a challenge for the platform in its efforts to remain relevant and move forward.
