- New Fee Structure and Incentives
- The Bonding Curve Mechanism
- Pump.fun's Popularity Amid the Meme Coin Boom
Popular platform for creating meme coins, Pump.fun, has made creating tokens free. Additionally, new incentives for creators have been introduced as part of a strategy to attract more users.
New Fee Structure and Incentives
Pump.fun removed the $2 fee for creating tokens. This cost is now transferred to the first buyer of a new token. Additionally, the platform offers 0.50 SOL ($80) to creators if their tokens are listed on the decentralized exchange Raydium, based on the Solana blockchain. These measures aim to simplify the process of launching new tokens and attract more users.
The Bonding Curve Mechanism
Pump.fun uses 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. The price of a token starts at a base and increases as more people buy it, ensuring liquidity and guaranteeing a market for the token. Once a token reaches a $69,000 market cap, it qualifies for listing on Raydium, where a liquidity pool is created, allowing the token to trade on a wider market. The platform also burns liquidity provider tokens after the token goes live on Raydium, effectively locking the liquidity and ensuring tokens cannot become entirely illiquid even if their prices drop significantly.
Pump.fun's Popularity Amid the Meme Coin Boom
Pump.fun has gained significant traction during the recent meme coin boom due to its user-friendly interface and Solana's low transaction fees. 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 highest revenue generator of any blockchain, according to DefiLlama.
Pump.fun continues to attract attention with its strategy of removing fees and implementing incentives. Despite the low success rate of launched tokens, the platform shows high revenues and remains a significant player in the meme coin market.
