Memecoin Factory Pump.Fun Rakes in Millions While Users Lose: A Tale of Two Realities

Pump.Fun, a platform notorious for churning out memecoins on the Solana blockchain, is on the cusp of a major milestone – $100 million in cumulative revenue. This astronomical figure, however, paints a starkly different picture compared to the experiences of its users and the memecoins themselves.

Data tells a grim story for Pump.Fun’s user base. A Dune dashboard created by on-chain analyst @Adam_Tehc reveals that over two-thirds of wallets interacting with Pump.Fun tokens are unprofitable. Analyst Andrew Hong of Dune Analytics acknowledges the dashboard’s limitations in calculating precise profit and loss for every wallet, but emphasizes its overall value as “great data work.”

The odds of success for tokens launched on Pump.Fun are equally dismal. Despite over 1.8 million tokens being created, only 32 have a fully diluted valuation (FDV) exceeding $1 million, according to GeckoTerminal data. The top performers include MICHI (cat-themed), DADDY (promoted by Andrew Tate), and MOTHER (backed by Iggy Azalea).

So, where’s the disconnect? Here’s how Pump.Fun generates its massive revenue:

• Transaction fees: A 1% bite is taken from every purchase and sale on the platform, rapidly accumulating given the high volume of token creation and trading.
• Platform update: A recent update eliminated the initial $2 fee for coin creators, placing the burden on the first buyer. This incentivizes creators to push their tokens to completion on the platform’s bonding curve, further fueling Pump.Fun’s revenue stream.

Meanwhile, the “graduation rate” for tokens remains abysmal. Only a tiny fraction, around 1% (136 out of 11,743 in the last 24 hours), successfully reach the $69,000 market cap threshold, resulting in their listing on the Raydium decentralized exchange.

This disparity highlights the inherent gamble of memecoin trading. As one X user aptly stated under the pseudonym @Sexxy_NFT, “most memecoin traders chase phantom gains, ending up empty-handed. The real profit lies not in playing, but in creating the game itself.”

Pump.Fun’s success story underscores the lucrative business model behind facilitating memecoin creation, even if the vast majority of users and tokens end up as losers in this high-risk game.