Reasonable valuation of 7 billion? Buying PUMP in the public sale means making a profit?

pump.fun will sell coins at a valuation of 4 billion, and Messari's latest research report values PUMP at 7 billion.

Written by: Sunny Shi, Messari Crypto

Compiled by: Alex Liu, Foresight News

According to reports from major media outlets citing informed sources, pump.fun is preparing to sell 25% of the PUMP coin at a valuation of $4 billion to raise $1 billion.

Is this price attractive?

Sunny Shi from Messari has built a valuation model for PUMP, which shows that its FDV (Fully Diluted Valuation) could reach 7 billion dollars. If the prediction is correct, buying PUMP tokens would mean profit. However, there is an important prerequisite. Here is their valuation process (from Sunny Shi's perspective, "we" refers to Messari):

No matter how you view Memecoins, this sector continues to "print money."

Although the trading volume of the pump.fun token issuance platform has decreased compared to the beginning of the year, it is still far higher than the levels for most of 2024.

The trading volume of Pump.fun is higher than most of the time in 24 years, data: Messari

People may also underestimate the success of PumpSwap. This DEX launched about three months ago, but has already significantly eaten into Raydium's market share on Solana.

Comparison of market shares between PumpSwap and Raydium, data: Messari

Our valuation method employs a top-down model, assuming the overall trading volume of the cryptocurrency market, the share of Solana, the share of launch platforms, and the market share of PumpSwap. These assumptions and models are only available to corporate clients, but I will share the main conclusions.

In our base case, we believe Memecoins will occupy a niche in the broader crypto economy because they are more suitable for speculative purposes than NFTs.

Of course, the Solana ecosystem will undoubtedly diversify towards new asset pairs as it matures, but this is also very likely to be the case.

We believe that even though pump.fun's market share within the Solana ecosystem has slightly declined, PumpSwap continues to grow, and the pump project is still expected to generate approximately $675 million in revenue over the next two years.

Based on a 10x valuation multiple, the corresponding FDV is approximately 7 billion USD.

However, the key premise is: if the project party chooses an opaque token / equity structure that allocates most of the income to insiders rather than to token holders, then we believe that the current market has become quite cautious and will not overlook this poor value accumulation method.

In our comprehensive report, we provide a valuation table to assess the potential value of PUMP based on the percentage of income that token holders can receive.

Regardless of how the market ultimately judges, this is a great opportunity to participate in the most profitable crypto application in history. Now it depends on whether the project team provides enough buy-in value for token holders to make it a project worth investing in.

Editor's Note:

In the pre-market perpetual trading market of Aevo, the current price of PUMP is 6 dollars, corresponding to a FDV (Fully Diluted Valuation) of 6 billion.

PUMP's pre-market price on Aevo