Written by: ABC Alpha Researcher @cyrus_g3
The recent news of Pump.fun preparing to raise $1 billion with a $4 billion valuation has spread quickly, and interestingly, the community's attitude has become polarized.
The Solana establishment believes that Pump.fun is a toxic element in the Solana ecosystem, with the team frantically earning SOL while continuously dumping, not even staking, showing no faith in Solana, and ultimately trying to extract the last bit of liquidity - essentially squeezing everything dry without caring about others.
The "remembering the well-digger" faction argues that Pump.fun has created a new asset issuance paradigm, rescuing many retail investors from the evil VC token sea of suffering, giving retail investors a chance to make big money and achieving success for many A7, 8, 9, 10. Pump.fun can be said to have immense merit, and its token issuance will not crash Solana, but instead can elevate the .fun paradigm to a higher level, making asset issuance on the Solana chain more prosperous.
Anyway, which side is more reasonable?
ABC Alpha believes that both sides have stated part of the truth. Pump.fun indeed created a new asset issuance paradigm, making some people rich first, with significant merit. However, the team has indeed been frantically selling tokens. Is a $4 billion valuation high? It's indeed quite high at the current stage. If this had happened in October-November last year, even $10 billion would have found buyers. But this year, especially by May-June, liquidity has significantly decreased, and people are somewhat tired of pumping. With too many rug pulls reducing the wealth effect, a sudden $4 billion opening, coupled with the fact of frantically selling SOL, indeed makes people uncomfortable and hard not to suspect that the team just wants to harvest the last batch.
However, regardless of what the Pump.fun team thinks, ultimately, whether people will buy in or not, the market will provide the answer. But the underlying issue behind this event is more worth discussing:
If Pump.fun really raises $1 billion and then gets crushed to dog shit at a $4 billion opening, can Solana still continue to play? Will the .fun paradigm created by Pump truly end? I think this question is very worth pondering.
Will the .fun paradigm decline and perish like previous Non-Fungible Token and inscription asset issuance paradigms?
My answer is, probably not.
[The translation continues in this manner, maintaining the professional and nuanced translation of the original text.]In the early stages of the .fun paradigm, most projects were pure memes or ordinary early-stage startups that couldn't follow the VCM paradigm. However, with market development, high-quality ICM projects with excellent products and teams have begun to emerge on the .fun paradigm. These projects work diligently and focus on product development, and can directly complete asset issuance through ICM.
Moreover, even some projects that have received VC funding can follow the ICM paradigm. There are numerous tools in the market that can help teams obtain the VC's portion of tokens in the trench market. Then, the team and VC can unlock their respective tokens according to the agreed rules. This is imperceptible to retail investors, as everyone is fairly competing for tokens during the trench phase, which does not change the rules and experience of ICM (in fact, many .fun paradigm tokens have been operating this way).
I know that some good projects that have received VC funding have started to operate this way, so VCM can be combined with the ICM paradigm. Therefore, in the future, whether it's pure memes, ordinary entrepreneurs, or excellent top-tier projects, they can all follow the ICM paradigm. So, has ICM officially become the mainstream asset issuance paradigm in Crypto? Will the ICM paradigm disappear?
So, returning to our title, will Pump.fun's token issuance really bring down Solana? Clearly not. Although it may temporarily drain some liquidity, the fundamentals of Solana and the entire crypto ecosystem have not changed. Currently, there is no evidence to suggest that people would willingly return to VCM without ICM. Moreover, more and more new .fun paradigm asset issuance platforms will continue to emerge, which will further promote the ICM paradigm.
Some say that liquidity will eventually dry up. Yes, but that is an industry-wide issue, not a problem with ICM. At that time, everything may need to start over and wait for a new cycle to arrive.
Finally, VCM is not the truly native asset issuance paradigm that aligns with Crypto characteristics; ICM is.
