What makes Pump.fun dominate Solana’s DEX market, even as scandals rock its ecosystem and raise questions about its sustainability?

Pump.fun’s revenue takes a dip

The crypto world is no stranger to wild trends, but every so often, something truly captivating comes along to reshape the narrative. Enter Pump.fun — a platform built on the Solana (SOL) blockchain that makes creating and trading meme coins as effortless as snapping your fingers. 

In November alone, Pump.fun hit its stride, recording its highest-ever monthly revenue at a staggering $93.88 million. This marked a jaw-dropping leap from $30.5 million in October and $14.5 million in September, reflecting over 200% month-on-month growth from October and an incredible 548% surge compared to September.

Yet, as Pump.fun soared to financial heights, cracks in its ecosystem began to surface. By late November, revenues showed early signs of strain. 

Weekly revenue, which had peaked at $33.83 million for the week ending Nov. 17, slid to $25.44 million by Nov. 27. Then came the crash: by the week ending Dec. 1, revenue had plummeted to just $6.05 million.

The decline wasn’t caused by typical market fluctuations but rather by a scandal that shook the platform to its core — a livestream feature introduced to boost user engagement.

Reports quickly emerged of users exploiting the feature to broadcast disturbing and explicit content, including violence and horrifying material involving minors and animals. 

The uproar forced Pump.fun to remove the livestream feature amid widespread condemnation from the crypto community.

Surprisingly, the controversy hasn’t quelled enthusiasm for Pump.fun’s meme coin ecosystem. As of Dec. 3, the combined market cap of these coins has exceeded $6.5 billion — placing them ahead of more than 70% of the top 100 cryptocurrencies.

Let’s explore the coins riding this wave, the controversies it has faced, and what the road ahead might hold for Pump.fun, Solana, and the crypto world at large.

The coins leading the Pump.fun wave

Pump.fun has become a fertile ground for meme coins that are not just quirky but also astonishingly profitable — at least for now.

The platform’s meme coins have taken the decentralized exchange activity on Solana by storm, accounting for an impressive 62.3% of all DEX transactions in November, according to Dune Analytics. 

This figure has been steadily climbing, up from 60% in October and 57% in August.

As of Dec. 3, the total trading volume for Pump.fun-linked coins surpassed $5.5 billion in the past 24 hours, with several tokens recording gains of over 100%. 

Over the last 30 days, some coins have delivered jaw-dropping returns of 30x to 35x, driven by social media buzz and a bullish market sentiment.

Leading the charge in Pump.fun’s meme coin success is Act I: The AI Prophecy (ACT). This token has posted astronomical returns of 3,750% over the past month, now trading at $0.51 with a market cap nearing $500 million. 

ACT’s allure lies in its mysterious premise and cryptic tagline: “Exploring emergent behavior from multi-AI, multi-human interaction.” Little else is known about the project, but its air of intrigue, coupled with speculative hype, has captivated traders.

Another standout is Peanut (PNUT), a meme coin that has soared by over 1,300% in the last 30 days, trading at $1.20 with a market cap exceeding $1.2 billion. 

PNUT was launched as a tribute to Peanut the Squirrel, a beloved internet mascot with a devoted fanbase. After Peanut’s untimely death, the coin tapped into waves of public nostalgia and sympathy, turning collective grief into a speculative goldmine.

Meanwhile, Just a Chill Guy (CHILLGUY) has arguably been the most viral token in Pump.fun’s ecosystem. Since hitting an all-time low of $0.006, CHILLGUY has skyrocketed by over 8,300%, currently trading at $0.4936. Although it peaked at $0.65, the token has since retraced by about 22%. 

The success of these tokens isn’t just reshaping the meme coin narrative—it’s also deeply influencing the Solana ecosystem. Critics argue that such reliance on a speculative, meme-driven economy could be risky. 

“An economy built on this will not make it,” wrote Millie, Project Lead at Ethereum (ETH) news protocol TrueMarkets, on Twitter. 

You can call it edgy or unhinged comedy, but this is why we all know deep down that the solano community is not serious.

An economy built on this will not make it.

It doesn’t matter how hard all the solano brands lean into it, this is a house of cards which only ends one way. pic.twitter.com/XGgPWldkQT

— MilliΞ (@llamaonthebrink) November 22, 2024

The fear is that Solana’s broader adoption could be undermined if its growth hinges on Pump.fun’s meme coins, which, while lucrative now, remain highly speculative and prone to rapid declines.

The dark underbelly of Pump.fun

Beneath the glittering gains and soaring hype of Pump.fun lies a shadowy underbelly shaped by manipulation, bots, and questionable tactics that cast a long shadow over its ecosystem.

Social media threads and forums are rife with accounts detailing how traders, developers, and automated systems exploit the platform’s structure to create artificial hype, inflate volumes, and engineer unsustainable gains. 

One of the most commonly discussed tactics involves volume manipulation. Pump.fun’s algorithm prioritizes tokens with high trading activity, propelling them to the platform’s front page. 

This visibility mechanism is routinely exploited through “bump trades,” where coordinated groups of individuals or bots execute micro-transactions — sometimes for as little as $1 — solely to boost a token’s perceived popularity.

According to one user, even a modestly organized group can manipulate a token’s visibility and rake in short-term gains of 100% to 200%, often cashing out before the wider community catches on.

Bots have become the weapon of choice in this ecosystem. Many users openly share strategies for programming or acquiring volume bots that can automate hundreds of transactions per second. 

These bots mimic organic market activity, making it nearly impossible for casual investors to distinguish legitimate projects from orchestrated pump-and-dump schemes. 

Beyond volume manipulation, more advanced bots offer features like wallet generation, token sniping, and liquidity pooling, allowing developers and traders to exploit Pump.fun’s mechanics with ruthless efficiency.

A particularly damning practice, detailed in forum discussions, involves developers using bots to buy up their own tokens, inflate prices, and then offload their holdings onto unsuspecting traders. This tactic, known as “rug pulling,” leaves latecomers bearing the brunt of the losses while developers walk away with massive profits.

The consequences of these practices ripple far beyond individual tokens. Conversations across forums suggest that less than 1% of the tokens created on Pump.fun ever make it to established exchanges like Raydium. 

The platform’s bonding curve mechanism guarantees liquidity once a token reaches a $63,000 market cap, enabling its launch on Raydium (RAY). 

However, even for the few tokens that achieve this milestone, many suffer rapid price collapses as bots and early investors cash out, leaving latecomers with heavy losses.

Critics have dubbed Pump.fun a “scammer’s paradise,” where developers and insiders profit at the expense of uninformed participants lured by the platform’s simplicity and hype. 

Compounding the issue is Pump.fun’s low barrier to entry, which has resulted in an oversaturated market. Inexperienced developers flood the platform with tokens, often lacking any clear purpose or roadmap, relying instead on aggressive shilling and manipulated metrics to attract buyers.

As one user mentioned, “The demand for meme coins to gamble on used to be higher than the actual meme coins being created. Now it’s the opposite, and there aren’t enough buyers to support all this activity.” 

This oversupply has fueled a cycle of rug pulls, where developers abandon projects and pocket investor funds, further eroding trust in the ecosystem.

One user recounted losing their entire savings across multiple tokens, blaming rampant manipulation and the platform’s lack of safeguards. 

Another noted the psychological toll of the space, describing how Pump.fun preys on the inexperienced and those chasing quick riches, creating a fertile ground for exploitation.

Despite these risks, Pump.fun remains wildly popular, particularly among younger traders who embrace its fast-paced and anarchic nature. Some argue that the platform reflects the ethos of DeFi — a space where individual responsibility reigns supreme. 

Yet this freedom comes at a cost. The widespread manipulation and scams not only harm individual participants but also risk tarnishing the broader perception of Solana as a blockchain. 

Staying safe on Pump.fun

“Even the best degens can lose their deposit,” warns Hades Web3, a web3 expert shedding light on the risky undercurrents of platforms like Pump.fun. 

https://twitter.com/0xHvdes/status/1849940008570060903

The first rule of staying safe is to approach every token with skepticism, regardless of how promising it may seem. As Hades points out, “Everything starts with creating a new wallet and depositing it from CEX or a crypto-mixer to make it look disconnected from the creator.” 

Scam tokens often go to great lengths to appear legitimate, setting up clean wallet histories and leveraging bots to create the illusion of activity. 

To counter this, tools like RugCheck and BubbleMaps can be used to analyze wallet interactions and detect signs of manipulation. However, remember that even advanced tools aren’t infallible — always combine them with your own observations.

Community analysis is another crucial step. Hades stressed the importance of looking at a token’s comments section across platforms like Pump.fun, DexScreener, and Twitter. 

Genuine community feedback tends to be diverse and conversational, while bot-generated comments are often overly formal and repetitive. 

Searching for the token’s contract address on Twitter can also provide valuable insights, as experienced traders often share red flags or anomalies that may not be immediately visible.

One of the biggest traps is blind trust in influencers or Key Opinion Leaders. While they may lend credibility to a token, Hades advises against relying on their endorsements alone. 

Instead of focusing on promotional posts, look for organic discussions among retail traders and “degens” who are more likely to share authentic opinions. 

KOLs are often paid in tokens for promotion, meaning their interests may not align with yours. Hades cautions, “Don’t consider KOLs as a good sign; look for degens.”

Timing is equally critical in avoiding losses. Tokens that have already experienced strong gains may seem tempting, but they are often at high risk of sudden collapses. 

As Hades warns, “Your Twitter ‘Explore’ page is overfilled with KOLs shilling the token that’s already pumped up by 200%. But in a couple of seconds, it’ll instantly go to zero.” 

Avoid jumping into tokens that have already seen exponential growth, as the likelihood of a rug pull increases with each passing wave of new buyers.

For those new to platforms like Pump.fun, starting small is a wise approach. Allocating only what you can afford to lose ensures that even in the worst-case scenario, your overall financial health remains intact. 

Diversification is another key strategy — spreading your investments across multiple tokens and platforms reduces the risk of being wiped out by a single scam or market downturn.

Finally, be wary of too-good-to-be-true claims. Projects offering guaranteed returns or promising revolutionary use cases without clear roadmaps should be met with caution. 

Transparency is a hallmark of trustworthy projects, so take the time to review whitepapers, team information, and tokenomics before committing your funds.

As Pump.fun and similar platforms continue to evolve, their impact on the crypto space will likely grow. While they democratize access to token creation and trading, they also amplify risks for those who dive in unprepared. 

By arming yourself with the right tools, cultivating a healthy sense of skepticism, and making informed decisions, you can participate in the meme coin trend without falling victim to its darker side.

After all, in a market driven by speculation and chaos, your best defence is knowledge and caution.