Iggy Azalea’s launched her own token on Pump.fun, and over a million others have been created too. But this could be bad news for investors… and the market overall. 

There’s one thing that forever remains impressive about the manic world of crypto: how a new project can pop up and quickly take the world by storm.

For our latest exhibit, let’s turn our attention to Pump.fun, which basically allows anyone to create their very own memecoin. 

It launched back in January of this year — and figures from DefiLlama suggest the website’s already on track to make $265 million in revenue a year. $265 million!

Pump.fun is now regularly pocketing more than $500,000 a day in fees, accelerating to $1.5 million during times of market mania. As of July 2, the project flips ETH in 24-hour revenue: $1.99 m. v $1.95 m.

And if that wasn’t crazy enough, Dune Analytics data shows it’s been behind the launch of over 1.16 million tokens on the Solana blockchain so far.

But how exactly does Pump.fun work, what’s made it so successful, and is the frenzy sustainable?

Memecoins for the masses

For many years now, novelty tokens have been known to pop up suddenly in response to events going viral.

A good example of this came in 2022, when an altcoin was rapidly created after Will Smith slapped Chris Rock at the Oscars.

The imaginatively named Will Smith Inu skyrocketed in value mere hours after the ceremony concluded — but like a flash in the pan, lost a large chunk of its market cap just as quickly.

Pump.fun essentially boils down this process into a couple of clicks, removing barriers to entry for degens who lack the technical knowhow.

The website has a pretty elegant explanation of how it all works:

Lightning strikes

Even spending five minutes on Pump.fun is enough to give you a headache — with newly minted tokens bursting onto the page in a shaking yellow box.

Given it’s the internet, many of them seem to center on pictures of cats.

But a huge milestone for the startup came when Iggy Azalea launched MOTHER, with the Australian rapper aggressively shilling it to her 7.7 million followers.

One week later, in early June, the memecoin had surged to a dizzying market capitalization of $200 million — further feeding the frenzy.

But CoinGecko data shows that those who are late to the party often end up holding the bag. Prices have since fallen by about 75% from their recent highs, taking MOTHER’s valuation back down to $58.8 million at the time of writing.

And that brings us neatly to the dark side of Pump.fun.

Diehard fans of celebrities who know next to nothing about crypto can end up making speculative investments they bitterly regret.

There can also be pretty severe consequences for the stars themselves — something that Azalea’s either unaware of, or pretty willing to ignore.

Kim Kardashian was banned from discussing crypto on social media for three years, and fined $1.26 million, after endorsing EthereumMax on Instagram without revealing she was paid.

If the Securities and Exchange Commission’s willing to come down like a ton of bricks on someone who simply posted about a digital asset, how will it react to a celebrity who’s launched one of their own? 

Meanwhile, despite the safeguards supposedly imposed to protect against rug pulls, Pump.fun hasn’t been without incident.

Back in May, a man who used to work for the protocol was detained in London, amid allegations that he exploited the project for almost $2 million.

Jarett Dunn is now on bail and is expected to appear in court in August.

Is Pump.fun sustainable?

There’s no escaping the fact that a huge bubble is beginning to form in the world of memecoins.

It’s almost like history is repeating itself, isn’t it? It was just three short years ago where we were in the crazy situation of non-fungible tokens selling for $69.3 million. Inevitably, buyers saw the value of their investment vanish before their very eyes, with creators laughing all the way to the bank. 

Memecoin mania also has wider implications for whether the bull run in the crypto markets will continue. Such greed and wild speculation has often served as a harbinger for the good times to end — and as we’ve seen, there’s a lot of that right now.