This edition of the newsletter analyses Pump.fun which has become Solana's leading memecoin launchpad and one of crypto's most successful consumer dApps, generating nearly $700 million in cumulative revenue through its integrated platform that allows anyone to create and trade memecoins while capturing fees from both issuance and secondary trading. The protocol is preparing to launch its $PUMP governance token at a $4 billion valuation, with success depending on whether the team can transition from rapid cash generation to long-term value sharing with token holders while expanding beyond the speculative memecoin niche.
a) The Future of Ecosystem Development at the EF
• The Ethereum Foundation is significantly expanding and reorganizing its Ecosystem Development (EcoDev) efforts into four key areas: Ecosystem Acceleration (supporting developers, founders, apps, and enterprises), Ecosystem Amplification (media, events, and community scaling), Ecosystem Support (grants and funding coordination), and Long-Term Ecosystem Unblocking (policy, institutional, and academic relations).
• This restructuring aims to maximize both the number of people using Ethereum and the resilience of its technical and social infrastructure as the platform scales beyond its original tech-focused community to serve enterprises, governments, and everyday users.
Ethereum stands at a pivotal moment. Interest in Ethereum has expanded beyond technologists and enthusiasts, bringing enterprises, governments, and everyday users who seek practical solutions and tangible benefits. The Ethereum ecosystem is adapting to meet these needs, and the Ethereum Foundation is ready to play its part.
b) How AI Companies Will Build Real Defensibility
• AI companies need to build defensibility through a "motte-and-bailey" strategy, where they first establish rapid growth using fast-deploying advantages like distribution, scale, and brand (the "bailey"), then transition to deeper, long-term defensibilities like network effects, embedding, and systematic lock-in (the "motte") as competition intensifies.
• While AI has made it easier to start companies and build products, lasting success will depend on companies that can successfully navigate this sequential defensibility approach, with emerging AI-native network effects including collaborative context/memory systems, AI-native distribution models, and future AI-agent networks becoming the key differentiators between category leaders and those that fail to build sustainable moats.
Modern GTM strategies have evolved. Learn how fast-growing startups are building authentic communities to drive growth.
a) Particle Network
• This report analyzes how Web3 fragmentation has worsened over the past year, with the top 5 blockchains' share of total value locked (TVL) dropping from 85% to 80% while the number of operational chains continues to grow exponentially across ecosystems like Ethereum rollups, Optimism's Superchain, and others.
• The study concludes that chain abstraction solutions are racing to solve this fragmentation problem, but predicts they will never fully catch up to the pace of new chain creation, though they may eventually reach a "sweet spot" where fragmentation becomes invisible to end users.
In 2024, we demonstrated multi-chain fragmentation is Web3's most pressing issue. This report shows its advances, and the path to solving it.
b) imToken
• ERC-7786 is a proposed Ethereum standard that aims to unify the fragmented Layer 2 ecosystem by creating a universal cross-chain messaging interface, allowing smart contracts on different Ethereum-aligned networks to communicate seamlessly through a single API rather than requiring separate bridges for each protocol.
• This "USB standard" for cross-chain communication would enable developers to build natively interoperable applications that work across the entire Web3 ecosystem, potentially solving the liquidity fragmentation problem that has plagued Ethereum's hundreds of L2 networks.
Pump.fun has emerged as Solana’s breakout memecoin infra and crypto's standout dApp, combining a no‑code launchpad with a native AMM (PumpSwap) that monetise attention and speculation. With nearly US$700 million in cumulative revenue and roughly US$1 billion of cash on its balance sheet, the protocol now prepares to list its governance and revenue‑sharing token, $PUMP, at a FDV of US$4 billion.
The launch poses an important question: can the team pivot from rapid cash generation to long‑term value alignment with token holders? Can they see out their vision of overthrowing legacy and large incumbent livestream platforms in the space as a media powerhouse? A favourable outcome would turn $PUMP into one of the few credible revenue generating assets in crypto; any misstep (i.e. team selling tokens from the get go) could cap returns despite healthy underlying cash flow.
Core Product
Built on Solana, Pump.fun’s core innovation (this cycle's standout PMF dApp) is a permissionless bonding‑curve contract that lets anyone mint and sell a token (memecoins) within minutes. Liquidity provided during the sale is permanently locked to eliminate the ever-classic ‘rug‑pull’ exits, encouraging repeat participation from retails. Once a coin reaches a preset market‑cap threshold, liquidity is transferred to PumpSwap, a minimalist AMM that charges a 0.30% trading fee.
This vertical integration recaptures secondary market fees that previously bled to external venues such as Raydium's DEX. Features such as live‑stream token launches, a mobile beta, and discussions around a proprietary L2 or stablecoin, aim to deepen user retention and broaden the addressable market.
Why this matters
• Demonstrated product‑market fit: Pump.fun converts cultural moments and viral events into liquid markets faster than any competing tool (throwback to Moodeng and Labubu), sustaining daily activity above 300k wallets even after the January memecoin peak.
• Vertical fee capture: Owning both issuance and trading allows the protocol to earn on average US$45 million per month, this is quite unheard of and extraordinary for a consumer dApp.
• Built‑in anti‑fraud measures: Auto‑burned LP tokens create a safer environment for retail traders and remove a key reputational drag on the memecoin niche.
Performance thus far
Revenue has averaged roughly US$45 million monthly, with a January spike to US$140 million during the TRUMP frenzy (the local top for memes). PumpSwap processes about US$14 billion in trades each month, while the original launchpad handles another US$5 billion. Combined, these activities annualise to roughly US$500 million, which places Pump.fun alongside Hyperliquid as the only 2 crypto dApps posting 9 figure annualised revenue.
Bull and bear thesis
Bull Case: A credible revenue‑sharing policy (rumoured to be 25% of fees), continued dominance of Solana’s flows, and smart deployment of cash reserves into adjacent businesses (Telegram trading bots, analytics dashboards, data platforms and media companies) could re‑rate $PUMP into the ‘blue‑chip yield’ bracket of crypto assets. In a bullish broader market, $PUMP also offers high beta to renewed memecoin mania (especially for funds that cannot allocate capital to memes due to their fund mandate).
Bear Case: A US$4 billion starting valuation and high circulating float limits upside versus peer tokens that TGE-ed at lower FDV. If the team allocates only a modest 25% of revenue to buy‑backs, or if competition (BONK's launchpad or another competitor that is not live yet) and regulations intensify, cash flow may no longer offset the heavy initial supply.
Key risks and conclusion
Regulatory clarity around memecoins remains thin; any move to designate them as securities could impair the launchpad’s core business. We do not feel that this is going to happen in the near future, but still remains a non zero chance. Pump.fun’s brand also hinges on speculative euphoria, extended market downturns would compress volumes and fee income (which we have seen in the past month, dominated by BONK's launchpad in terms of volume and fees).
Finally, with only 0.16 percent of traders historically realising more than US$10,000 in profit, the protocol lacks the grass‑roots and die hard evangelism enjoyed by Hyperliquid (cult-like community), raising the risk of large airdrop sell‑pressure at TGE (for Pump.fun, there is no community as the community centres around the memes that are launched on the platform).
Pump.fun illustrates the rare case of a crypto consumer dApp that already has material cash flow and mindshare. Adhering to the thesis of speculative dApps having the most PMF in crpyto, $PUMP offers equity‑like exposure to those revenues, but long‑term returns will hinge on the team's willingness to share value transparently and to diversify beyond a single speculative niche.
It will remain to be seen whether crypto’s most profitable ‘casino’ can evolve into a sustainable business.
*Disclosure: The team behind this research plans to buy $PUMP at launch.
The information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
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