- New Payment Structure
- Bonding Curve Mechanism
- Pump.fun's Popularity
Pump.fun, a popular platform for meme coins, announced changes in its policies, making token creation free for users. The previously applicable $2 fee has been removed, and now the cost will be borne by the first buyer of the new tokens.
New Payment Structure
In addition to removing the token creation fee, Pump.fun has introduced new incentives for developers. Creators can now receive 0.50 SOL ($80) if their tokens are listed on Raydium, a decentralized exchange based on the Solana blockchain. These measures aim to attract more users and increase the number of successful token launches. According to Pump.fun, the new fee structure and incentives 'unlock the use case of someone creating a coin without buying any of its supply,' making it easier for developers to launch projects without initial investments.
Bonding Curve Mechanism
Pump.fun employs a unique bonding curve mechanism for launching and trading tokens. This model ensures fair access to new coins, preventing the pre-sale advantages often seen in other crypto projects. In this system, a token starts at a base price, and as more people buy it, the price increases predictably. This approach guarantees liquidity and ensures there is always a market for the coin. Once a token reaches a market cap of $69,000, it qualifies for listing on Raydium, where a liquidity pool is created, allowing for wider trading. The platform also burns liquidity provider (LP) tokens after the token goes live on Raydium, ensuring that tokens can't become entirely illiquid, even if their prices drop significantly.
Pump.fun's Popularity
Pump.fun has gained significant traction during the recent meme coin boom, thanks to its user-friendly interface and Solana's low transaction fees. The platform has seen a surge in the creation of political-themed cryptocurrencies, celebrity tokens, and other meme coins. However, data shows that only a small percentage of tokens launched on Pump.fun make it to Raydium. According to Dune Analytics, the success rate of Pump.fun tokens reaching Raydium has fluctuated between 1.21% and 1.41% since May, with an all-time high of 2.56% in February. Despite the low success rate, the platform's revenue has soared. Last July, Pump.fun generated $2 million in daily revenue, surpassing Ethereum's $1.91 million and becoming the largest revenue generator of any blockchain, according to DefiLlama.
The measures taken by Pump.fun make it more attractive to developers looking to launch tokens without initial investments and contribute to an increase in the number of successful projects on the platform.
