Pumpfun, a meme coin issuance platform built on the Solana blockchain, is rapidly tipping the scales of the crypto market. Since launching in January 2024, it has drawn intense attention from investors and users alike, thanks to a uniquely designed bonding curve pricing model and decentralized token issuance mechanism.

Pumpfun’s total revenue has surpassed 1.52 million SOL, and in the past month alone, it accounted for a staggering 70% of all meme coin issuances on the Solana chain. It has outpaced most DeFi projects to become one of the fastest-growing platforms in crypto history.

However, just when everything seemed to be going smoothly, Pumpfun’s recent actions of offloading SOL raised eyebrows in the market—could these sustained sales signal a deeper strategic move? Moreover, what does it mean when the SecondLane platform lists 1% of Pumpfun’s equity at a $1.5 billion valuation?

These questions may point to a major turning point ahead for Pumpfun. In this article, we’ll dive into the data and analysis to uncover the secrets behind Pumpfun’s meteoric rise and examine whether its current valuation holds water.

The Rise and Current Status of Pumpfun

According to the latest data, Pumpfun’s total revenue has exceeded 1.52 million SOL, with cumulative earnings surpassing $262 million. The platform has issued a total of 4.02 million tokens. Within the past month, it captured 70% of all meme coin issuances on the Solana blockchain.

Overall, Pumpfun has become one of the fastest revenue-growing applications in the history of the crypto economy. It achieved $100 million in revenue in just 217 days—far faster than traditional DeFi projects. For comparison, the second-fastest, ENA, reached this milestone in 251 days, while established DeFi platforms like Curve (CRV) and Sushi took 350 and 546 days, respectively.

Team Background

Pumpfun’s success owes much to the youth and innovative spirit of its founding team. The team did not initially focus on meme coin issuance—in fact, their early ventures included attempts at building an NFT marketplace. After several pivots, they gradually shifted their attention toward the meme coin sector, where they quickly found traction.

The team is based in Europe, and its founding members are generally quite young. Notably, the CTO’s formal education only extends to secondary school. However, this hasn’t held them back from demonstrating exceptional technical prowess. Their sharp product intuition and innovative thinking have helped them stand out in the Web3 space and ultimately build the successful project that is Pumpfun.

As many entrepreneurs say, the road to success isn’t crowded—most people simply don’t persevere. Pumpfun’s rise is a testament to their ability to turn ideas into action and to overcome obstacles in practice. It’s this blend of persistence and technical innovation that has made Pumpfun a dark horse in the crypto industry.

Investor Background

Pumpfun has not only gained recognition in the market thanks to its strong team but has also attracted support from notable investors—most prominently Qiao Wang, co-founder of Alliance and a well-known figure in the crypto investment world.

Alliance typically invests in ultra-early-stage projects valued at only a few million dollars, and Qiao Wang reportedly earned a return of at least 1000x from his investment in this round of Pumpfun.

Wang recalled that when he first invested in Pumpfun, the team hadn’t yet zeroed in on meme coins. At the time, they were experimenting with various ideas, including positioning Pumpfun as a token launchpad.

Wang saw in Pumpfun the potential to become something akin to Zora—an NFT launchpad that, despite not having a circulating token, has built stable revenue over the years. It was the team’s unique and creative approach that ultimately convinced him to invest. While no one initially expected Pumpfun to pivot fully into meme coins, it has since surpassed all expectations, emerging as a trailblazer in the meme coin space.

Wang emphasized that consumer-facing projects like Pumpfun typically don’t require massive funding. Although Alliance only invested tens of thousands of dollars, that amount was sufficient for a project of this nature. In fact, excessive funding can sometimes hinder development. Today, Pumpfun’s valuation has grown to 100 times its initial level, proving its substantial market potential and investment appeal.

Solana’s Market Shifts and Pumpfun’s Token Sell-Off

Since Solana reached its recent price peak on November 22, capital inflows into the Solana ecosystem have noticeably slowed—particularly over the past week. Meanwhile, the proportion of funds flowing into Ethereum has significantly increased. According to data from Artemis, more than 53% of recent capital inflows into Ethereum over the past seven days originated from Solana. Could this shift be related to Pumpfun’s token sell-off?

According to tracking data from Ember, Pumpfun sold another 65,000 SOL approximately seven hours ago, valued at around $15.3 million.

To date, Pumpfun has earned approximately 1.52 million SOL in transaction fees. In just the past week, it sold nearly 200,000 SOL. Overall, Pumpfun has offloaded a total of about 1.137 million SOL, equivalent to $206 million at an average price of $182 per SOL.

Clearly, Pumpfun’s ongoing liquidation of Solana holdings may serve as an important signal for market liquidity trends.

The SOL/ETH pair has been on a downward trajectory.

Recently, Pumpfun introduced a live-streaming feature, combining meme token issuance with livestream-based product promotion—an innovation that catapulted the platform to an all-time high in popularity. On November 23, Pumpfun recorded a single-day revenue of $14.58 million, setting a new platform record. Shortly afterward, however, the platform paused its livestreaming activities. This has sparked speculation that the token sell-off might be tied to an impending strategic shift or liquidity need.

If the Pumpfun team is liquidating SOL to raise funds, it could imply preparations for the next phase of expansion or adjustment. While the livestream feature brought a surge in revenue and visibility, the continued sell-offs might exert downward pressure on the Solana market.

Given the close relationship between Solana’s price movements and Pumpfun’s capital flows, this behavior might reflect Pumpfun’s operational funding needs and hint at anticipated changes within the broader market.

At the same time, SecondLane’s decision to offer equity in Pumpfun has also garnered significant attention. The platform listed 1% of Pumpfun’s shares at a $1.5 billion valuation—potentially signaling the team’s own outlook on future development. The conjunction of token sell-offs and the pending equity transaction may indicate that Pumpfun is on the brink of a major transition or strategic pivot. These developments warrant deeper exploration.

Discounted Cash Flow (DCF) Analysis: Pumpfun’s Current Valuation

Using the Discounted Cash Flow (DCF) method to assess Pumpfun’s valuation provides a more traditional and comprehensive approach. This model estimates a project’s intrinsic value by forecasting its future free cash flow (FCF) and discounting it back to the present.

In the case of Pumpfun—a platform-based protocol—its transaction fees and revenue from token issuance form the basis for projecting future cash flows. In the following section, we will walk through the steps to perform a DCF analysis of Pumpfun’s valuation.

Step 1: Estimating Future Cash Flows

Pumpfun’s primary revenue sources include:

• Token issuance fees: A 1% transaction fee charged by the platform. This is Pumpfun’s main revenue source—each time a user purchases tokens on the platform, a corresponding percentage fee is collected.

• Listing fees: A 6 SOL fee charged for each new token that gets listed. This revenue comes from new meme coin projects launched and listed on the platform.

• Potential additional value-added services: These might include token re-issuance, advertising, platform promotions, etc., which could serve as new revenue streams in the future.

Current data:

• Cumulative revenue for 2024 is $262 million, which includes income from token issuance and transaction fees.

Step 2: Setting Scenario Analyses (Optimistic, Neutral, Pessimistic)

When valuing Pumpfun, we must account for the unique nature of the cryptocurrency market. Unlike traditional financial markets, crypto markets experience highly volatile bull and bear cycles, usually not exceeding four years in length. Therefore, this Discounted Cash Flow (DCF) analysis uses a four-year cash flow forecast, aligning with the cyclical nature of crypto markets and changing expectations for future returns.

Given the inherent volatility, factors such as revenue growth and SOL price fluctuations can significantly affect Pumpfun’s future cash flow. We analyze three scenarios:

• Optimistic Scenario: Assumes a strong bull market, rising SOL prices, and continued user growth for Pumpfun. Revenue growth is set at 30%, SOL price at $350, and discount rate at 14%.

  This scenario assumes a booming market with investor optimism and lower perceived risk. A higher SOL price would expand liquidity, attract more meme coin investments, and increase transaction volumes and revenue.

• Neutral Scenario: Assumes slowed market growth, stable SOL prices, and steady revenue for Pumpfun. Revenue growth is 0%, SOL price is $240, and discount rate is 9%.

  Here, the market is stable with moderate risk. While participation continues, a lack of volatility may dampen trading activity and revenue potential.

• Pessimistic Scenario: Assumes a bear market, falling SOL prices, and declining revenue for Pumpfun. Revenue growth is -30%, SOL price is $130, and discount rate is 4%.

In a downtrend, investors may take a conservative stance, expecting uncertain future cash flows. As market participation dwindles, meme coin demand could plummet, leading to revenue contraction.

These scenarios reflect different market environments and external risks, offering a more comprehensive valuation perspective.

Step 3: Calculating Future Cash Flows

Based on the revenue growth rates under each scenario, we calculate and discount future revenues to their present value.

Optimistic Scenario: 30% revenue growth, SOL price $350, discount rate 14%

Neutral Scenario: 0% revenue growth, SOL price $240, discount rate 9%

Pessimistic Scenario: -20% revenue growth, SOL price $130, discount rate 4%

With DCF values calculated for each of the three scenarios—Optimistic, Neutral, and Pessimistic—the final valuation is derived using an equal-weighted average:

Weighted DCF = (1/3 × Optimistic DCF) + (1/3 × Neutral DCF) + (1/3 × Pessimistic DCF) = $1.06 billion

Conclusion

Based on our Discounted Cash Flow (DCF) analysis, the weighted valuation of Pumpfun is approximately $1.06 billion.

SecondLane has listed 1% equity of Pump.fun at a price of $15 million, implying a total valuation of $1.5 billion. However, according to our DCF analysis—taking into account Pump.fun’s current revenue levels, market risks, and the volatility of Solana’s price—a more reasonable valuation should be around $1 billion. In a pessimistic scenario, the valuation could fall to $500 million or even lower.

Therefore, a $1.5 billion valuation appears to be overly optimistic, particularly given the volatility of the crypto market and the fact that Pump.fun’s revenue growth lacks long-term sustainability. Meanwhile, Bitcoin has recently surged past $97,000, and the market’s optimism around potential crypto policies under a possible Trump administration might be excessive. Combined with macroeconomic indicators suggesting a potential pullback in the crypto market in Q1, SecondLane’s valuation could indeed be too high. Should market sentiment or revenue growth fall short of expectations, investors may face significant valuation corrections.

Disclaimer

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