Is Pump.fun worth $4 billion?

Author: Haotian

It is a mixed feeling to see Pump.fun raise $1 billion by issuing a token with a valuation of $4 billion. 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:

1) The inflated and bubbled market valuation is quite unreasonable

From the data, Pump.fun is indeed the biggest beneficiary of this round of MEME super cycle, with a peak monthly revenue of tens of millions of dollars. This wealth-creating effect is phenomenal in the traditional Internet.

However, Pump.fun's attention economy business is an irrational product that relies on the short-term height of Fomo of the market MEME coin. To put it bluntly, it is the monetization of traffic driven by "gambling". This means that the monetization ability of Pump.fun's business model is entirely a product of the short-term market spotlight effect, rather than a sustainable normalized profit logic.

Based on this, let's look at the valuation of 4B. Is it 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 and cut leeks will crush the blue-chip innovation protocol. Once the MEME craze subsides, or the market returns to rationality, Pump.fun's revenue model will collapse instantly. So what exactly is http://Pump.fun, which chooses to issue coins at this moment when the MEME tide is cold, pouring into the market?

2) Fragile business moats are easily overtaken

Pump.fun's success seems accidental but is inevitable. It has seized the technical dividends of Solana's high performance + low cost, as well as the era dividend of MEME culture from niche to mass.

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 user migration cost 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 people's infrastructure is essentially a "living under someone else's roof" business, not to mention that it is extremely unsustainable. How can it support an independent valuation of $4B?

3) Launchpad’s tool-like attributes make it difficult to form an ecosystem

Pump.fun is currently only a “coin-issuing tool”, and to support a market valuation of 4B, at least a huge MEME economic ecosystem is needed. Knowing that it is impossible, but doing it anyway, it is hard to imagine what the purpose of raising $1B in financing is?

As everyone knows, there is a paradox in itself in order to transform from a pure Launchpad into a complex MEME economic ecosystem: the core of MEME culture is simple, direct, and viral, and excessive function superposition will only make the platform lose its original “wildness”.

In fact, the “short, flat, and fast” characteristics of MEME are balanced with the long-term value accumulation of the platform. Products that try to evolve from tools to platforms often lose themselves in the pursuit of “big and complete” and eventually become a hodgepodge. Pump.fun, with $1 billion, is likely heading for such a fate.

4) Super high valuation will subvert the original value innovation system

Pump.fun's super 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". Let me ask, when it is more profitable to concoct gambling platforms than to promote technological innovation, who will still bite the hard bone of infra? It is hard to imagine what kind of catastrophic industry chain reaction this new value orientation will produce.

On the one hand, more capital and talents will flow into the construction of MEME-related infrastructure; on the other hand, it may also intensify the industry's "entertainment" trend and marginalize real technological innovation.

In general, the issuance of coins by Pump.fun 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 abnormal valuation will bring great innovation disasters to the entire industry, foreshadowing a more utilitarian, short-sighted, and more detached from the origins of technology geeks in the future of Crypto.