Original author: Haotian (X: @tme l0 211 )
Seeing that Pump.fun is going to raise $1 billion by issuing tokens at a valuation of $4 billion, I feel mixed emotions. It is hard to imagine that a MEME launch platform has a valuation that exceeds most DeFi blue chip protocols. Is this sky-high valuation reasonable? Here are a few points of view:
1) The inflated and bubble-like market valuation is quite unreasonable
Judging from the data, Pump.fun is indeed the biggest beneficiary of this round of MEME super cycle, with its peak monthly revenue reaching tens of millions of dollars. This wealth-creating effect is phenomenal even in the traditional Internet.
However, Pump.funs attention economy business is an irrational product that relies on the short-term high Fomo of the market MEME coin. To put it bluntly, it is a traffic monetization driven by gambling. This means that the monetization ability of Pump.funs business model is completely a product of the short-term market spotlight effect, rather than a sustainable normalized profit logic.
Based on this, is the valuation of 4 B reasonable? This pricing is far higher than the pricing of most DeFi blue-chip protocols. It is hard to imagine that the valuation of a platform that is ridiculed for cutting leeks will crush the blue-chip innovative protocol. Once the MEME craze subsides or the market returns to rationality, Pump.funs revenue model will collapse instantly. So what exactly is Pump.fun pouring into the market by choosing to issue coins at this moment when the MEME craze is cold?
2) Fragile business moats are easily overtaken
The success of Pump.fun seems accidental but is actually inevitable. It has seized the technical dividend of Solanas high performance and low cost, as well as the dividend of the era when MEME culture has moved from a niche to the mainstream.
But how deep is the moat of this first-mover advantage? Technically, similar coin issuance platforms can be quickly copied; operationally, the MEME launch platform is essentially a traffic business. Once the hotspot shifts or the supervision is tightened, the cost of user migration is extremely low.
More importantly, Pump.fun is highly dependent on the Solana ecosystem. Once the Solana ecosystem undergoes major changes, the fragility of its business model will be exposed. This business model built on other peoples infrastructure is essentially a living under someone elses roof, not to mention that it is extremely unsustainable. How can it support an independent valuation of $4B?
3) Launchpad’s tool-based nature makes it difficult to form an ecosystem on its own
Pump.fun is currently just a coin issuance tool no matter how profitable it is. To support a market valuation of 4 B, it needs at least a huge MEME economic ecosystem. Knowing that it is impossible, but still doing it, it is hard to imagine what the purpose of raising 1 B USD is?
Little do people know that there is a paradox in transforming from a pure Launchpad into a complex MEME economic ecosystem: the core of MEME culture is simplicity, directness, and virality. Excessive function superposition will only make the platform lose its original wildness.
In fact, the balance between MEMEs short, flat and fast characteristics and the platforms long-term value accumulation is achieved. Products that attempt to evolve from tools to platforms often lose themselves in the pursuit of big and complete and eventually become something that is neither here nor there. Pump.fun, with $1 billion, is likely heading towards such a fate.
4) Super high valuations will subvert the original value innovation system
Pump.funs extremely high valuation is sending a dangerous signal to the entire industry: in the current Crypto ecosystem, the value of traffic aggregation + speculative monetization may exceed technological innovation + infrastructure. When it is more profitable to create gambling platforms than to promote technological innovation, who would still want to take on the tough task of infra? It is hard to imagine what kind of disastrous industry chain reaction this new value orientation will produce.
On the one hand, more capital and talent will flow into MEME-related infrastructure construction; on the other hand, it may also exacerbate the industrys entertainment trend and marginalize real technological innovation.
In general, the issuance of Pump.fun’s coin is both a sign of the maturity of the MEME economy and a signal of the collapse of industry values.
The key lies in whether it can truly build a sustainable business moat after obtaining huge capital. Otherwise, this distorted valuation will bring great innovation disasters to the entire industry, heralding a more utilitarian, short-sighted, and technologically geeky future for Crypto.
