Solana based memecoin launch platform Pump.fun is at it again with a report of an exciting new move. They plan to share PUMP revenue straight with token holders. The team is going after a $1B public token offering for its upcoming PUMP token. In turn, this gives the project a FDV of $4B.
Since going live in January 2024, Pump.fun has brought in $677 million in revenue from its 0.1% minting fee on over 3.85 million token sales. At one point, daily revenues hit $7 million. But now, they average $1 million per day. This, in turn, has solidified Pump(fun)’s place as a very profitable protocol in the space. It is right up there with Tether and Circle in terms of what they generate in fees. This showcases how PUMP revenue boosts profitability.
PUMP’s Focus On Buybacks And Staking Rewards
The PUMP which is our revenue sharing model puts in place a buyback powered utility structure. We have that which goes as follows:.
- In the market we will buy back 50% of the PUMP token.
- For 30% of staking rewards which go to liquidity providers.
- 20% for ecosystem development and upgrades
At present, about $182.5 million goes back into the market each year. That is to say, around 4.5% of what is projected to be a $4B market cap.
While in the equity markets, buybacks which Apple carried out at a rate of 3.2% in 2024, at Pump.fun we report the first instance of a memecoin focused launchpad also using this strategy. We did this to stabilize token value and encourage long-term holding. This is part of the PUMP revenue strategy.
PUMP Revenue Plan At Risk Of Regulation And Centralisation
Despite the hubbub, PUMP revenue sharing is raised by the US regulators as a great cause for concern. This model may, in fact, fall under the SEC’s Howey Test. The test defines a security to include expectation of profit, central control of buyback actions. It also considers marketing that puts out the message of creating something larger than Binance.
There are issues of internal governance that come to light. The token distribution grants out 40% to the team and 25% to the ecosystem fund. This, in turn, gives 65% of voting power for the inside players. The fact that 94% of revenue is brought in by these coins is concerning. However, only 6% of the users’ base is responsible for that. This is a cause of concern for potential manipulation, impacting how PUMP revenue is perceived.
At the start, private investors do not have to wait out a lock-up period. This is creating worry of large scale sell off at the go of Token Generation Event.
The Growth Of The Solana Ecosystem
Despite the risks, PUMP is still a key element in Solana’s post-FTX recovery. Utilizing PUMP revenue can bolster ecosystem growth. Pump.fun plays a role in 22% of Solana’s $4.5M daily network fees. It has also seen growth of SPL token issue by 38% quarter-over-quarter.
Its integrated DEX, PumpSwap, reports at number 7 on Solana by TVL. This stands at $120M. We also saw a 47% increase in trading volume post ICO news. This is a tell of strong interest, although it comes at a time of wider memecoin market doubt.
