#4: Is Pump.fun (PUMP) a buy?

Pump.fun (PUMP), a crypto that trades for under 1 penny, is one of the most successful crypto businesses ever.

Over the last year, the platform has generated over $600 million in revenue.

In comparison, Solana (SOL), the sixth-largest crypto, made “just” $400 million in revenue.

Pump.fun came up with an innovative business model. It lets anyone, anywhere, launch a crypto in under 60 seconds. No coding experience required.

Some 11 million cryptos have been launched on Pump.fun’s platform since it debuted in 2024.

Longtime readers know my focus in RiskHedge Venture is finding great crypto businesses that can appreciate 10X or more. At $0.003, is Pump.Fun one of them?

For Day 4 of Crypto Week, let’s evaluate PUMP through the lens of my Venture investing framework.

• Does Pump.fun have a great business model?

In a world where every creator, brand, and community will eventually tokenize, Pump.fun is the closest thing we’ve seen to a self-serve launchpad.

Users can customize token names, ticker symbols, and images. And every token launches under the same fair rules. There are no pre-mines or special allocations that would give unfair advantage to the founders.

You can also livestream the launch, use real-time dashboards to monitor performance, and ride the platform’s social leaderboard to gain visibility.

It has all the ingredients of a great business model.

There’s just one problem. The platform doesn’t filter the quality or legitimacy of tokens. Most launches are, in fact, worthless memecoins.

It’s a huge red flag.

Sure, memecoins make Pump.fun boatloads of money. But it means it’s committed to a sector with questionable ethics that no institutional investor will touch.

• How much money is it making?

In Venture, we invest in real businesses making real money today. Not “someday.”

Pump.fun passes this test with flying colors. By taking a tiny cut from every token created and traded, it raked in almost as much money over the last year as industry giant Ethereum (ETH).

• What advantage does it have over competitors?

Pump.fun has the first-mover advantage in this market. No competitor even comes close in terms of revenue or number of launches.

But this is its only advantage. And since there are zero barriers to entry, anyone can clone this model.

• Who are the key people involved?

From Sam Bankman-Fried to the guys behind Centra Tech (watch the Netflix documentary Bitconned), the crypto space is full of scammers.

Very little is known about the team behind Pump.fun. Reports suggest they’re a small group of twenty-somethings, likely linked to earlier memecoin projects.

Compare that to Uniswap (UNI) or Hivemapper (HONEY), where the founders are publicly known and have a great track record.

That makes it hard to judge the long-term credibility of Pump.fun. Especially in a regulatory climate that’s cracking down on anything opaque.

• What are Pump.fun’s tokenomics?

In crypto, tokenomics are everything.

Tokenomics set the rules for how a crypto token operates. They determine:

• How many tokens are in circulation.

• How new tokens are created.

• How old tokens are destroyed.

• How the token is used.

• And how the token accrues value from the underlying crypto business (if there is one).

Think of each crypto project as its own little economy. A crypto’s “token economics” defines how money (tokens) is distributed and earned in its economy.

Pump.fun’s tokenomics are a work in progress at best.

Its token—PUMP—has a total supply of 1 billion. It was initially airdropped to early users and launched without a presale, in line with the platform’s “fair launch” ethos.

In theory, PUMP will serve several purposes. Users may receive fee discounts. Creators could be rewarded in PUMP. And staking may eventually unlock revenue sharing or governance rights.

But in practice, it’s yet to implement anything significant. PUMP has no staking. No governance system. No revenue sharing. And it’s only begun buybacks recently after immense pressure from the community to stabilize the falling PUMP price.

It tells me the team is figuring things out as they go, rather than executing a clear plan.

Overall, I’m not impressed with PUMP, which has fallen 45% over the past year. It doesn’t meet my Venture criteria.

• A legitimate version of Pump.fun is coming...

Today, companies trying to raise money from the public must get listed on a stock exchange. That means going through a months-long process and dishing out millions of dollars.

As I explained yesterday, there are just too many middlemen involved with an IPO. Compliance officers. Underwriters. Investment banks. Lawyers. Exchanges. You name it.

Crypto’s superpower is that it cuts out middlemen.

That’s exactly what Pump.fun does. It makes going public better, faster, and cheaper. You can raise money from anyone in the world, in seconds, for less than $2.

Someone will create a legit version of Pump.fun run by experienced leaders. A version that focuses on launching cryptos with real business models and with smart and sustainable tokenomics.

Disrupting the IPO market is too big of an opportunity to pass up. We’re talking about a business that could potentially generate hundreds of billions of dollars. Way more than Pump.fun earns already.

When such a platform does go live, my Venture members will be the first to know about it. 

Stephen McBride
Chief Analyst, RiskHedge

PS: If you’re looking for real opportunities—not passing fads or hype-driven trades—I break down the most legitimate, actionable ways to build wealth in crypto and other corners of the market in my free letter, The Jolt. Follow along with us here.