The first layer is a room made of iron sheets with an elephant inside, the second layer hides under the elephant, and when the window is broken, the elephant will fly into the sky.
Author: Zuo Ye, Crooked Neck Mountain
Secret to getting rich = Innovative asset types + Enhanced capital efficiency
In the entire process of $PUMP issuing tokens and creating hype, the biggest beneficiary has emerged: MemeCore. Its token $M not only occupies the hot list on CT but also successfully secured Binance Alpha, followed closely by Bonk, which is targeting Chinese users.
The English project team speaks Chinese, reminding me of the era of SBF, when the world was still a big community.
Image description: Bonkfun speaks Chinese
Image source: @SolportTom
But don’t be nervous, today is not about analyzing the price trends of PUMP tokens, but rather discussing why Meme platforms issue tokens, and how, even after the Meme cycle ends, issuing tokens can still create waves.
Taking the last penny
PumpFun issuing tokens maximizes its value as a Meme platform.
A normal Meme platform should have died when CZ entered with FourMeme, please note that I am referring to the end of the Meme platform as a consensus across the industry, as a mainstream asset issuance platform. If we consider the Meme itself, we must trace back to the emergence of $TRUMP in January.
Previous review: Meme Comes from the Sea and Goes Back to the Sea
The subsequent breakup between PumpFun and Raydium, where you build AMM pools and I build Meme launchpads, is clear evidence of a split in consensus.
Image description: PumpFun profit trend
Image source: @jphackworth42
It’s increasingly strange how, even after nearly half a year, not only has the Pump Fun platform token become the focus of the entire scene, but it has also attracted many similar projects like Bonk and $M to share liquidity. Referring to DePIN, NFT, BTCFi, and L2 tracks, they generally do not maintain the explosive traffic seen during token issuance after the main narrative ends.
The normal rhythm would be to directly issue tokens and drain market liquidity when the industry consensus is most focused.
• For example, the "positive case" of NFTs is Blur, while the negative case is OpenSea;
• DePIN's Filecoin and Helium (Mobile), with Starpower as the negative case;
• BTCFi's Babylon, with a host of BTC L2s as the negative cases.
However, the normal liquidity of Meme has been absorbed by $TRUMP. Theoretically, the emergence of FourMeme should have marked the end of PumpFun, yet the PUMP token can still stir up the winds.
PumpFun has provided the most perfect exit strategy for a dying track, taking the last penny accumulated in the market.
The creation and expression of crypto assets can be efficiency-oriented, allowing information flow (Kaito) or capital flow (Aave) to move faster and leverage higher, or it can be an innovative expression, developing along the lines of token—NFT—Meme—stablecoin.
To answer how PumpFun achieved this, we must first review the successes and failures of NFTs. Unlike inscriptions and BTCFi, which were ultimately disproven, NFTs found their place in the project field.
Genesis NFTs represent options for projects, or even something akin to Coinlist, depending on how the project is designed. NFTs that fail as fashion symbols and tickets have given way to the success of asset symbols.
The NFT trend will certainly not return; my understanding is that Meme, as an asset sector, will endure.
Just like the era of copycats will not return, it does not prevent everyone from continuing to create copycats and earn Alpha points.
Meme is the same; people's valuation systems will change. PumpFun will not be Binance, nor will it be Hyperliquid, but isn’t Uniswap still alive?
Between complete failure and success, there is also the option of a safe landing, with right and wrong left for the world to judge.
The next scene that can land
Previously, the crypto industry believed that landing meant moving towards Mass Adoption;
Now, the crypto industry believes that landing means completing the final token issuance;
Image description: Asset issuance and creation paths
Image source: @zuoyeweb3
Not everyone will be intoxicated by Meme, but as long as there are people willing to participate, it can maintain basic survival as an asset type and launch platform. There must be a place for people to buy on-chain Moutai and virtual $LABUBU.
From blue-chip NFTs to Genesis NFTs, from $TRUMP to $PUMP, an era has come to an end. In the small cycle of crypto, Meme has run for 6 months, longer than many technical narratives that last only 2-3 months.
The only remaining mystery is the unresolved riddle of the Bonding Curve. We know the x*y=k of AMM DEX, but we still do not know how the specific parameters of the Bonding Curve are derived.
A little-known fact is that FriendTech also uses a Bonding Curve. Earlier, during the 2020 DeFi Summer, it was actually a three-way battle of AMM, order books, and Bonding Curves. Uniswap took AMM, dYdX took the order book, and the Bonding Curve only shone when it encountered PumpFun.
Another secret left by PumpFun is that the Bonding Curve enhances capital efficiency. Meme has never been a purely new type of asset; PumpFun's capital efficiency orientation as a platform is also the decisive factor in product design.
Referring to @CuntouErjiu's algorithm, the Pump Fun algorithm is a super modification of x*y=k, with the Bonding Curve equation:
Quantity Quantity
Where the parameter values are:
Other Meme launch platforms can reverse-engineer and reference the specific parameters of PumpFun, but how this formula itself is derived has become an unsolved mystery in the crypto circle, just like AI large models; open-source code is meaningless, only open-source training methods and datasets are truly open-source.
Unfortunately, no one has really reverse-engineered PumpFun's original formula to date. Based on this, PumpFun's moat for enhancing capital (Meme) efficiency remains solid. Even if Meme is no longer popular, the residual traffic can still serve as the value foundation for $PUMP.
In this regard, PumpFun is much more reliable than many ghost chains. The exit of USDT from Algorand/EOS indicates that what is forgotten is not Meme.
However, it must be acknowledged that Meme, as a representative of an era, has completely ended. It was once glorious, and only BTC and ETH can remain long-lasting. SOL still needs to go through many tests to enter the game.
At least SOL is not recognized by PumpFun, and all the SOL earned is converted into U-based capital. EOS has held onto the BTC it raised until now; which category does the Ethereum Foundation selling ETH belong to?
Conclusion
The current hot topics are RWA and stablecoins. Focusing on PumpFun is no longer meaningful, but PumpFun will perform better than single products like FriendTech and Blur, and Meme will outlive NFT and BTCFi. The ideas of PumpFun are worth referencing.
Starting with the end, founders must design an exit path from the beginning, not just issuing tokens on exchanges, but answering whether, after the explosive breakout in the crypto grand stage, they can still find a suitable position behind the scenes.
It can be predicted that Perp DEX will also be like this, as we find it difficult to discover the off-chain matching algorithms of order books.
Similar to this, there are:
Routing algorithms of DEX aggregators
Trading matching algorithms of dark pool DEX
Liquidity "detonation" algorithms for on-chain options products
Especially for on-chain options, it is currently facing the same dilemma as Meme trading during the previous PumpFun era, with liquidity being too low. The common LP Token subsidy model used by DEXs seems ineffective.
To add, the model of on-chain options products also needs to be reinvented, either as original crypto products like Meme or as a transformation of perpetual contracts in the crypto circle. Perhaps VIX is a good idea?
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