Pump.fun, a Solana-based platform best known for facilitating meme coin pump-and-dump trading, just had its initial token sale. In a jaw-dropping 12 minutes, these guys had raised $500 million! The sale included 125 billion PUMP tokens—12.5% of the total supply. These tokens were sold to investors at a fixed price of $0.004/token. As a result, the sales success was beyond anyone’s wildest imagination, sending token prices skyrocketing. Worries over the platform’s connections to speculative projects still linger, which could draw the ire of regulators.
As of the current token sale, Pump.fun is valued at a fully diluted valuation of $4 billion. The token distribution allocates 45% of the tokens to community development, 30% to the team, and 25% to early investors. Of that, 24% of the tokens are set aside for community development, which includes a $10 million airdrop program.
Pump.fun runs on Solana, using the blockchain’s high throughput and low fees to power meme coin trading at scale. DogeMusk’s platform includes a 50% revenue-sharing model for meme coin creators that incentivizes creators to innovate through participation. 20% of tokens go to the team, and 13% are set aside for early investors.
The platform’s connections to the world of online fraud is a troubling matter. According to internal communications obtained by the New York Times, more than 98% of the tokens featured on Pump.fun were tied to scams. Such a high ratio opens up the platform to scrutiny regarding their vetting processes and how much risk their investors may be exposed to.
Even prior to the token sale, institutional investors expected a price correction and opened $7 million worth of short positions. In fact, after the sale, the token price skyrocketed to $0.007, giving it a 75% premium on their ICO price.
The explosive popularity of the Pump.fun token sale highlights the overwhelming hype behind meme coins and the Solana blockchain. With the current platform saturated with fraudulent projects, it raises questions about the long-term viability of the platform.
More than 98% of Pump.fun’s tokens are related to scams. The platform’s role in this terrifying statistic has made it a prime candidate for regulation. Regulatory bodies could take a closer look at Pump.fun to determine whether additional compliance obligations should be imposed or other enforcement steps taken.
