This round of bull market, fueled by the “one-click coin issuance” feature, has propelled the token launch platform Pump.fun into the limelight. Last week, the average daily transaction fee income plummeted by 30% compared to the previous week, affecting the activity within the Solana ecosystem.
The cryptocurrency market’s current focus, amid the ongoing bull market, revolves around memecoins that can easily create hundredfold myths. Solana’s low transaction costs have positioned it as one of the prime breeding grounds for memecoins.
Pump.fun, the token issuance platform, seized the investors’ enthusiasm for memecoins by introducing the simple and rapid “one-click coin issuance” feature, enabling users to easily create memecoins. This triggered a “coin issuance frenzy” within the Solana ecosystem, driving a rapid expansion of memecoins and subsequently propelling Pump.fun’s growth.
Daily transaction fees plummet by 30%
However, as the cryptocurrency market sentiment remains subdued, the memecoin sector is exhibiting signs of exhaustion. According to reports, Pump.fun’s average daily transaction fees dropped from $870,000 in the previous week (6/10~6/16) to $605,000 last week (6/17~6/23), marking a significant 30% decline.
The report further indicates that the decrease in Pump.fun’s transaction fees may stem from the continued market downturn, leading to a general decrease in user risk appetite. For Pump.fun, the decline in risk appetite is particularly severe because the platform involves the deployment of assets that are among the most speculative in the crypto market, attracting users seeking quick profits who may swiftly exit during market downturns.
Additionally, the substantial drop in fees compared to the previous week suggests a relative reduction in deployed tokens and overall activity, indicating that Pump.fun’s token deployment may have reached a level of oversaturation.
Solana’s overall activity may witness a significant drop
Over the past two months, Pump.fun has accounted for an average of 35% of Solana’s total transaction fee income. It is noteworthy that this 35% proportion does not include the transaction fee income generated when Pump.fun’s deployed tokens are listed on decentralized exchanges (DEXs) or aggregators.
After tokens are deployed on Pump.fun, when the token’s bonding curve reaches 100%, liquidity will be deposited into the decentralized trading platform Raydium, allowing users to trade using Raydium.
The high level of activity and substantial fees generated by Pump.fun and its deployed tokens have demonstrated significant user participation and brought significant economic activity to Solana, albeit attracting users seeking high-risk, speculative returns.
However, this reliance may introduce potential risks. The speculative nature of Pump.fun implies its cyclical essence and susceptibility to rapid fluctuations. If speculative fervor wanes or market conditions turn unfavorable, the platform’s activity could significantly slow down, potentially resulting in a substantial decrease in transaction fees and overall activity on Solana.