Pump.fun Back in the Spotlight: Token Rumors Denied Amid Trading Volume Plunge

[TL;DR]

In the current bull market, Solana has become a popular blockchain for the memecoin market due to its low transaction fees and seamless user experience. Token issuance platform Pump.fun has quickly risen to prominence riding this wave. Recently, rumors surfaced that Pump.fun plans to launch a token and may adopt a Dutch auction model for its public sale. Controversy over the issuance method ensued, prompting its co-founder to urgently deny the rumors. Meanwhile, the memecoin market within the Solana eco is cooling down, and Pump.fun has been affected, with trading volume plunging by 82%. The weakening speculative sentiment casts uncertainty on the future of the memecoin market.

Introduction

In the current bull market, the veteran blockchain Solana has emerged as one of the best platforms for incubating memecoins due to its low transaction fees and smooth user experience. The token issuance platform Pump.fun has also gained significant traction during this wave. Recently, rumors that Pump.fun might launch a token have once again sparked heated discussions in the market.

Dutch Auction Model Sparks Debate

Recently, some media outlets reported that Pump.fun is preparing to issue a token and plans to conduct a public sale, potentially adopting a Dutch auction model. It is also reported that the platform is already collaborating on developing the necessary .

The so-called Dutch auction, also known as a “descending price auction,” starts at a high price and gradually decreases at a fixed rate. Participants can bid at a price they find acceptable. Reportedly, 50% of the tokens in this issuance plan will be sold via the Dutch auction, with no plans for an airdrop at this time.

This news has sparked discussions in the market. As a well-known memecoin issuance platform in the Solana eco, Pump.fun launching a token naturally garnered widespread attention. However, some investors believe that the Dutch auction model could undermine investment returns. Retail investors participating in the highly competitive auction process may face increased investment costs.

In fact, the Dutch auction model was highly popular during the NFT boom, with many top projects choosing this method for minting. Its core lies in maximizing sales revenue—even if initial sales fall short, the gradually decreasing price ensures the project is eventually sold out. However, for investors, this model presents challenges: they must not only consider capital costs but also weigh fluctuations in transaction fees to successfully make a purchase.

Pump.fun Denies Token Rumors

As the token rumors intensified, Pump.fun co-founder Alon took to social media to clarify, stating: “The rumors about Pump.fun planning to launch a token are entirely false. Please do not trust any information from unofficial sources. Over the past year, the Pump.fun team has remained focused on product improvements and is committed to creating true value for users. Good things take time.”

Despite this, some netizens speculate that Pump.fun’s recent legal troubles in the United States may influence whether it ultimately decides to launch a token. Some believe Pump.fun might wait for a more opportune time to issue a token or adjust its tokenomics under market pressure, potentially allocating a portion for an airdrop to quell disputes.

Currently, Pump.fun is facing formal charges from Burwick Law and Wolf Popper, alleging that its platform allowed third-party actors to create tokens infringing on intellectual property rights. According to Max Burwick, managing partner at Burwick Law, this infringement began after the two firms filed a class-action lawsuit against Pump.fun on January 30. The law firms claim that Pump.fun has the ability to remove these tokens but chose not to take action, thereby exacerbating risks of misleading investors and interfering with legal proceedings.

Pump.fun’s Daily Trading Volume Plummets 82%

Meanwhile, Pump.fun’s daily trading volume has seen a significant drop in recent weeks.

Since February 6, the daily trading volume of memecoins listed on one of the decentralized exchanges via Pump.fun has fallen to $560 million. This figure marks the lowest level since Christmas 2024, representing a staggering 82% decline from the $3.13 billion peak three weeks ago.

Additionally, Pump.fun’s “token graduation rate” (the probability of successfully launching tokens) has also decreased. Last week, only 1.04% of tokens successfully launched, compared to 1.54% and 1.59% in the previous two weeks.

The daily tip revenue (tips) of Jito validators in the Solana eco has also experienced a sharp decline. Last week’s total tips fell to 23,800 SOL (approximately $4.8 million), compared to 42,000 SOL ($9.9 million) and 68,500 SOL ($17.5 million) in the previous two weeks.

According to analysis by The Block, the Solana memecoin market is undergoing a downturn. This trend is characterized by sharp initial surges, followed by progressively lower peaks in subsequent market cycles.

This phenomenon can be traced back to the TRUMP token issued on January 18, which achieved a fully diluted valuation (FDV) of $75 billion at its peak. The MELANIA token, launched shortly after, reached a market cap of $13 billion.

Subsequent tokens have seen lower peaks: the VINE token, launched by Vine’s founder, peaked at nearly $500 million; a few days later, the jellyjelly token issued by Venmo’s co-founder reached $250 million; and the recently launched JAILSTOOL token, promoted by Barstool Sports founder Dave Portnoy, hit a peak market cap of approximately $220 million.

These memecoins’ declining market cap peaks over time reflect the waning enthusiasm in the Solana memecoin market, with speculative sentiment gradually cooling. For investors, the most important takeaway is that every move should be carefully considered and well thought out.