Is Pumpfun's ICO Extractive?
Olivia Capozzalo & Camila Russo
June 04, 2025
gm Defiers!
Today’s big story:
- Sources confirm a pumpfun token sale, and doomsday prophecies are rampant
Plus:
- Solana treasury firms raise another $500M and launch liquid staking
- Trump Media’s Truth Social plans to launch a Bitcoin ETF
- The U.S. CLARITY Act gives regulators (too much?) room for interpretation
- Ethena’s yield-bearing USDe is now live on TON-based STONfi
- DNA fund CEO Chris Miglino details shift from ETH & Tether to a $50M bet on decentralized AI [MEDIA PARTNERSHIP]
- Andrew McFarlane of Validation Cloud shares how they’re building the backbone of web3 [MEDIA PARTNERSHIP]
Read more below! But first, please give our sponsors some love; they make this newsletter possible.
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Taking Pumpfun’s Side: How a Token Sale Could Go Right
Pumpfun is reportedly gearing up to raise a staggering $1 billion at a $4 billion fully diluted valuation. News of the sale has unleashed every doomsday prophecy imaginable: the sale is simultaneously the death of memecoins, the end of an incipient altcoin bull market, and the beginning of the end for pumpfun itself.
Critics warn it could crater SOL’s price and wipe out the next wave of Solana projects. But, of course, this being Crypto Twitter, there are equally loud counterarguments. So which is it: apocalypse or ascendancy?
But one of the most frequent — and fiercest— criticisms about pumpfun is that it’s “extractive.”
Here are the arguments for that:
“Earning too much revenue!”
Critics point out that every trade on pumpfun levies a 1% swap fee before tokens “graduate” to pumpfun’s DEX PumpSwap, a flat fee of 0.015 SOL when tokens graduate, and a 0.3% fee on each trade, which is broken down as follows: 0.2% goes to liquidity providers, 0.05% goes to pumpfun, 0.05% goes to the token creator.
That results in hundreds of millions of dollars funneled to the team, without any of it flowing back to users or token holders.
“Users left out”
Even if you’re a loyal memecoin trader generating volume, you don’t get a cut of those fees. The token sale sells at a $4 billion FDV, yet token holders won’t have a stake in the actual cash flows.
“Crazy valuation”
At $4 billion FDV, pumpfun is valued on par with marquee Layer 1s like Aptos or Near, despite being a memecoin launchpad. Critics argue that’s ludicrous.
“Memecoins=Bad”
Many have issues with pumpfun itself as the main hub for memecoin trading, which they argue doesn’t add any value to society other than luring newbies in with the potential to 100x on a token, when in reality it’s mostly pump and dumps rigged by insiders.
I’ll play devil’s advocate here:
Earning what users agree to pay
Users know exactly what they’re paying and decide the product is worth the cost. I also don’t get the outrage about the team making a lot of revenue. They offer a service and collect fees for it, as do DEXs and CEXs. They earned that money fairly.
Users are left out — just like in every other crypto project
I agree that tokens should act as on-chain equity, and token holders should have actual ownership over a protocol and the ability to get a cut of revenue. We don’t know the exact details of pumpfun’s token, but it’s likely it will be like all other tokens — no actual ownership and only an indirect way to share upside. But that’s the state of crypto right now, not specific to pumpfun.
One thought: You don’t have to buy
Some say $4 billion FDV is bonkers. Fine — then opt out. Nobody’s handcuffed to the token sale. Market forces will decide.
Memecoins=PMF
On the issuer side, before pumpfun existed, launching a memecoin meant cobbling together a liquidity pool, hiring an auditor, and crossing your fingers your CEX listing would happen, securing distribution. With memecoin launchpads like pumpfun, you can deploy, bootstrap liquidity, and instantly tap into a user base. That’s literal product-market fit — something 99% of crypto projects never achieve.
On the user side, the platform is open, meaning anyone can buy tokens, no whitelists and no gatekeepers. Sure, most tokens flop, but it’s exactly the thrill of that gamble that people on pumpfun are (apparently) looking for.
Pump-onomics
Details are still sketchy about pumpfun’s tokenomics, but here’s what they could do right:
Airdrop for power users: Create a wealth generation event for loyal users, those “trench warriors” who’ve forked over the most fees, the creators who generated the biggest volumes; those are the users that have made pumpfun the giant it is today, and they should be rewarded.
Buyback model: Rumor has it that 25% of revenue will be used for buybacks, which could kick-start healthy tokenomics.
Value the token fairly: Crypto traders are tired of token launches at sky-high valuations, where the chart only goes in one direction (not up). The $4B number is still just a rumor, but pumpfun has the opportunity to raise at a valuation that allows for more upside for retail token buyers.
A Hat Tip
Rather than branding them greedy, let’s appreciate what the pumpfun team — barely in their twenties — has accomplished so far:
- 24-hour revenue beats Ethereum: pumpfun consistently is among the top 10 revenue-generating crypto protocols and chains, even beating major Layer 1s like Ethereum. In the past 24 hours, it’s brought in $1.3 million, ranking 6th, compared with Ethereum’s $1 million (source: DeFiLlama).
- Ranked third in 24-hour fees on Solana: With $2.12 million funneled in a single day, pumpfun ranks third for 24-hour fees among Solana projects, following Meteora and Jupiter (source: DeFiLlama).
- Amassed over $760 Million in lifetime fees: No other memecoin launchpad has even come close (source: DeFiLlama).
- Supported over 10 million token launches: More than any rival launch service — proof of product market fit (Source: Dune Analytics).
These superlatives are a testament to an operation firing on all cylinders.
Playing in L1 Territory
When you compare pumpfun’s prospective $1 billion haul to other token sales, it’s eye-watering. According to ICO Drops, only four projects have ever raised $1 billion or more: EOS (now Vaulta), FTX’s FTT, Acala, and Bitfinex’s LEO.
So pumpfun would reportedly be elbow-to-elbow with big-league players, mostly L1s and CEXs. But they’ve already generated more fees in eighteen months than most L1s do in a year. And rumor has it they’re considering launching their own chain — further solidifying their L1 bona fides.
History is littered with colossal token sales that became dead ends. EOS’s $4 billion ICO ended up mired in governance squabbles. FTX collapsed and brought multiple firms and crypto markets down with it.
These cautionary tales remind us that capital alone doesn’t ensure survival, but it would give the team the resources to level up their infrastructure (become an L1?), polish their UX, and fund security audits, etc.
If they squander it, they’ll join the hall of shame. But if they invest wisely, this could be a watershed moment for pumpfun, allowing it to mature beyond memecoin launchpad into something bigger — perhaps a truly web3-native social media app?
That’s the hard path, but so far, this team has done some pretty hard things.
With love,
Cami, founder of The Defiant
📈 Markets in the last 24 hrs:
| TICKER | VALUE | 24H | |
|---|---|---|---|
 | Bitcoin | $105,026 | -0.33 % |
 | Ethereum | $2,622.93 | 0.40 % |
 | XRP | $2.24 | 0.75 % |
 | BNB | $668 | 0.58 % |
 | Solana | $155.75 | -3.39 % |
 MessariPortals | MINDSHARE Rank | MINDSHARE % Change (7d) |
|---|---|---|
Solana SOL | 6  | 41.55% |
Avalanche AVAX | 20 | 28.95% |
TRON TRX | 8  | -19.81% |
| Powered by Messari Portals | ||
This is the news that mattered in the past 24 hrs:
- In the latest move from SOL treasury firms, edtech company Classover announced it is raising $500 million to buy SOL, bringing its total funds for its Solana treasury strategy to $900 million; meanwhile, SOL treasury firm DeFi Development Corp. has launched its liquid staking token, dfdvSOL.
- NYSE Arca has filed to list a Bitcoin ETF from Truth Social, the social media company owned by Trump Media, which is majority owned by the U.S. President; just last week, Trump Media confirmed plans to raise nearly $2.5 billion for a Bitcoin treasury.
- A critical question around the new crypto market structure bill circulating in Congress is how much discretion will be given to U.S. regulators on the ground? Four crypto lawyers weigh in on the current version of the CLARITY Act, which is being discussed in a hearing today.
- Ethena’s USDe is officially available on TON blockchain-based DeFi protocol STONfi, making the yield-bearing stablecoin natively part of the TON ecosystem for the first time.
🎬WATCH
In the latest episode of The Defiant Podcast, we spoke with Rob Viglione, co-founder and CEO of Horizen Labs, to explore the groundbreaking potential of zero knowledge proofs.
From balancing transparency and on-chain privacy to the intersection of AI and web3, Rob dives into the critical role of cryptography in reshaping how we share and protect data.
That’s it for today — if you enjoyed this newsletter, tell your friends! https://thedefiant.io/subscribe
