The bold gamble of Solana's strongest "money printer": Can the PUMP Token break the "drop to zero" curse of Meme coins?

Original Author: Sunny Shi, Messari Crypto

Reprint: Daisy, Mars Finance

According to major media outlets citing informed sources, pump.fun is preparing to sell 25% of its PUMP tokens 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. If the prediction is correct, buying PUMP tokens would mean a 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 on the pump.fun issuance platform has declined compared to the beginning of the year, it is still far above 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 it has already significantly eaten into Raydium's market share on Solana.

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

Our valuation method adopts a top-down model, assuming the overall trading volume of the crypto market, the proportion of Solana, the share of the launch platform, and the market share of PumpSwap. These assumptions and models are only open to corporate clients, but I will share the main conclusions.

In our base case, we believe that Memecoins will occupy a niche in the broader crypto economy, as they are more suitable for speculative purposes than NFTs. Of course, as the Solana ecosystem matures, it will undoubtedly diversify into new asset pairs, but this point is also likely to hold true.

We believe that even though the share of pump.fun within the Solana ecosystem has slightly declined, PumpSwap continues to grow, and the pump project is still expected to generate around $675 million in revenue over the next two years. Based on a valuation multiple of 10 times, the corresponding FDV is approximately $7 billion.

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 token holders, we believe the current market has become quite cautious and will not overlook this poor value accumulation method. In our full 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 an excellent opportunity to participate in the most profitable crypto application in history. Now it depends on whether the project team provides enough participation value (buy-in) to the token holders to make it a worthwhile investment.

Editor’s note: At this moment, the price of PUMP in Aevo's pre-market perpetual trading is $6, corresponding to a fully diluted valuation (FDV) of $6 billion.

The pre-market price of PUMP on Aevo