What is Pump.fun?

Neither the concept nor the popularity of memecoins is new. In fact, one of the oldest cryptocurrencies is the “original” memecoin: Dogecoin (DOGE). Introduced in 2013, Dogecoin was created as a joke, and it was a great surprise to the creators—and even many in the crypto community—when the market embraced it, driving the price higher and higher. However, in the subsequent years, other tokens have followed DOGE’s paw-steps, including Shiba Inu, Pepe, BONK, and more. Many of these can claim positions in the top 100 cryptocurrencies by market cap.

While a major criticism of memecoins is their inherent price volatility, memecoin traders are drawn to the niche market because of the volatility. This environment creates opportunities for greater profit, greater loss, and, for some, entertainment. In this way, Pump.fun takes the fundamental attributes of memecoins to an extreme. It allows users to create their own memecoins with customizable names, ticker symbols, and accompanying picture. Those tokens become immediately tradable on the platform. Through social media interactions and market forces, traders can buy and sell thousands of community-sourced memecoins, trying to make a profit on tiny-cap crypto.

Through this model, Pump.fun has become a breeding ground for flash-in-the-pan memecoins. As the tokens are issued along a bonding curve, early adopters (*i.e., *buyers) benefit most from trading these short-lived assets. The most successful memecoins created on Pump.fun are added to Raydium, a Solana-based decentralized exchange (DEX).However, most are traded on Pump.fun until all are issued, and many tokens stop trading—put another way, “die”—after a short period of frenzied buying and selling.

How was Pump.fun created?

Pump.fun was created by a developer who goes by Alon. He announced that his intention for the memecoin platform launched in January 2024 was to create “the most fun place on the internet.” Later, it was revealed that “Alon” was Alon Cohen, and he co-created Pump.fun with collaborators Dylan Kerler and Noah Tweedale.

By July 2024—only six months after launching—Pump.fun had made more than $50 million in revenue from fees. In November, over $4 million in fees and more than 50,000 tokens were being generated per day. Revenue reached nearly $400 million by December 2024, at which time over 5 million memecoins had been created on the platform. Pump.fun thrived on the growth of the volatile memecoin niche and the social media aspects of its platform. However, those same features would become reasons for backlash.

Controversies

One of the elements that initially drew attention to the Pump.fun site was a livestreaming feature. This was conceived as a way for the creators of new memecoins to appeal to the community and attract traders. However, the antics quickly entered questionable territories. There were some usual themes involving human excrement and “toilet humor”, but some users veered into threatening violence, invoking self-harm, promoting nudity, and displaying other less acceptable behavior.

In addition to the concerning subject matter livestreamed on the site, there were a significant number of children creating and trading tokens. The legality of this is not entirely clear, and given the other material livestreamed on the site, the presence of minors concerned many outside observers and community members alike. One young teen famously created a memecoin called “Gen Z Quant” and executed a soft rug pull after the price pumped. This drew the ire of traders on the site and resulted in real-world backlash for the teen and his family.

Because of issues associated with the livestreaming feature, Pump.fun removed the feature in late November 2024. Furthermore, in light of accusations of unregulated gambling, the United Kingdom issued a warning against the site, which then restricted UK users in December 2024.

How Pump.fun works

Pump.fun operates on the Solana blockchain, where it was initially launched. Solana suits the platform because the blockchain—unlike Ethereum—was designed specifically to support extremely fast and cheap transactions. These are the types of transactions necessary for quickly exchanging memecoins in an effort to create profits through rapid-fire or high-frequency trades.

When a new token is minted, the creator chooses a name (“token”), a ticker (“TOKN”), a description (“this is a generic memecoin”), and they can upload an image or video associated with their new digital asset. One billion tokens are created with a set baseline market cap, and they become immediately tradable. The price of the tokens is determined algorithmically by a bonding curve, which is a stable way of adjusting price based on supply and demand. The site lists new and popular tokens, and traders can decide which to buy or sell. There is a running chat associated with each token, allowing users to discuss the asset.

Successful memecoins that attract many buyers and reach a pre-determined market cap (generally between $75,000-$100,000) “graduate” to the Raydium DEX, with a portion of their liquidity deposited to the DEX’s liquidity pool. Pump.fun collects a 1% fee of all trades on the platform.

Pump.fun essentials

• Pump.fun is a memecoin marketplace launched in January 2024 that focuses on high-volume, low-cap assets based on the Solana blockchain.

• There has been significant controversy surrounding Pump.fun, especially related to its now-defunct livestreaming feature and questions of unregulated gambling.

• Pump.fun allows users to create new memecoins easily and trade them immediately, using large pools of liquidity. The platform collects a 1% fee on all trades.