Pump fun, Stonk fun, the war between them, and why I think STONK is a better investment going forward. If you're one of the ten people active in crypto right now, you've probably seen a lot of hullabaloo on the timeline about these platforms A critical mass of people are coming out to denounce pump, and I want to explain what's going on, and I want to do so purely from an investment perspective, as someone that recently sold the last of his PUMP tokens for solana:6GmAFSYs4gk3FDao5FzzySQpPZaWsa4rUJHacpMpUNgx I'm going to talk about: - Why PUMP feels like ETH during ETH's 2024 underperformance - The token model - Cultural issues (strictly related to price premium) - Solana's incentives for which platform succeeds (None of this is financial advice, this is purely my own views, which may be in parts inaccurate or flawed, but represent my best understanding of things) (Warning: Long post) The comparison to ETH: PUMP, the token, this past bear market reminds me a lot of Ethereum during the 2022-2023 bear market: ETH had a massive mcap, and that was based on: The assumption that it was, and *would remain* the only show in town, having defeated too many "ETH killer" alternative L1s to count (EOS, Tezos, etc). "This time isn't different" heavily favored ETH continuing its dominance, and after two cycles (nearly a decade) of trivially swatting away competitors, it justified its valuation. The air was thick with assumption-based complacency around this. "Eth 2k -> 20k" became a meme, which was eventually replaced by "10k", then "frontrun 10k at 8k", followed by "6k is ok", followed by Eth, very disappointingly, barely sweeping its previous cycle highs. Then Solana persisted its development, refinement, and app ecosystem, and exploded. It looked and felt amazing to use, and began the cycle new, cheap, and in public, and *CRITICALLY*, enabling people who believed early to enjoy all of its token's upside. Not only was it "this feels good to use, and makes sense to me", but also had organic community-based reinforcement via "I was allowed to get a big piece of the pie early, and will do well alongside the platform". It seemed impossible, and its resurgence seemed fleeting, until it absolutely ate eth's lunch, moving up something like nearly 40x from the bottom. PUMP is similar - it was early to the bonding curve (a novel and revolutionary product), it built a massive war chest, and it defended its moat aggressively, defeating numerous "alt token launch platforms" (Bonk, Moonshot, Jup, Bags, etc). I think there's a similar sense of complacency around PUMP continuing to dominate the space, and that's slowly being shattered by RH chain + Pons, and Stonk Fun on Solana; both platforms finding runaway PMF, and *CRITICALLY*, bringing its users along for the ride with fair, public launches, for as cheap as you wanted it, as early as you found it. (I think both platforms do well, respectively, alongside each other, but that's another story). The Token Model: PUMP was so dominant and unrivaled that it could afford to, despite absolutely CRUSHING it on industry-leading fees and building a massive war chest (that persisted for many, many quarters in a row) do a public sale of tokens at a 4 billion dollar valuation to raise nearly a billion additional dollars. Many people argued "hey this isn't necessary", or "hey, you guys are sitting on a mountain of capital, why not do an airdrop? this is the opposite of that. do you really need to squeeze more money? But because they had crushed all competition, there really was no alternative or "protest vote" platform to move to. And also because of that, the sale was a huge success. The problem with this: There are over a billion dollars locked up in a non-egalitarian, "previous-era" VC model, which creates pressure on supply. They do buy-back and burn with a substantial amount of fees in a way that's compelling, but these two forces are at odds. I believe the buybacks+burns are happening (it would be a massive scandal if they weren't), but PUMP's cultural issues and trust deficit (more on that later) had a lot of people believing even the stated buybacks were fugazi. For solana:6GmAFSYs4gk3FDao5FzzySQpPZaWsa4rUJHacpMpUNgx and Stonk fun, they launched in the post-Hyperliquid era of Egalitarianism, where the idea is "our platform will do better if we let the public come along for the ride as early as possible. If we win, they win, and vice versa. Let's win together, and use the good will generated and success people feel to create a PR + adoption-adherence flywheel". Stonk fun followed this, and said "Let's make 100% of supply available on day 1, for virtually free. And then rather than hoarding fees, let's use those fees to buy back and burn our token, and also buy the top ecosystem tokens, so holders of Stonk Fun launches also win." This creates a recursive loop of "Buy something on Stonk Fun, fees go to buying back + burning the STONK token, and also the project you just bought goes up too. Other people see this happening, and they rush to (very happily) take part, and enjoy the sense of community that builds when there's a mechanistic PVE setup the rewards holding a few tokens, rather than rotating endlessly. I, for example, kicked tires on STONK and bought some in late August for 18 million mcap, which is a comically deep value for a major platform. This is how egalitarian launches work, though - all tokens are circulating, rather than a company or group of VCs putting 5% of the float out (driving up the FDV to insane levels), and then slamming sells on your head with the 95% they reserved in a scrooge mcduck-style vault, for months-years. The token price oftentimes goes sideways, while mcap balloons -- basically a public ledger of how fucked over you got. This same phenomenon is what lead to memecoin populism in late 2023 - a rebellion again this sort of token launch, but that's another story. Additionally, Stonk Fun not only offers virtually unrivaled access to RWA (stock) pairs, but reflection, or "yield" tokens as they're coming to be known, allow setups that, rather than seeing fees go straight to a company, reward long term holders with the right-side of a pair (like KNOTS/STONK, a memecoin that pays out stonk to holders). This further incentivizes PVE holding, and brings us back to a calmer, happier, more community-oriented era of memecoin trading. Pump's launch today is a reactionary version of this, where they re-route the modest amount of "creator fees" that accrue to holders, which feels like a cynical bolt-on to try to claw back much of the attention and foothold it's lost, but mechansitically, doesn't come nearly close to what's happening (and the excitement around it) on Stonk Fun, or PONS for that matter. Cultural Issues: Pump fun has allegations of deceit/double-promises ("airdrop soon!"), dropping its buyback/burn fees without feedback or warning, bankrolling antisocial behavior (remember the bagworking 'disrupt sporting events' meta? the 'poor/desperate third worlders forehead tattoo' bounty product?), undisclosed paid partnerships and deals, and probably worst of all: (allegedly) Directing large groups of insiders/associates to bully, intimidate, harass, and humiliate anyone that show dissent or disagreement with them on the timeline. To the point where people even I talk to directly have silently disagreed with Pump, or wanted to support another network, but have voiced a real and genuine fear of speaking out, pointing to examples of multi-month harassment campaigns directed at them. I don't have smoking gun proof that this is true, but these allegations are everywhere, and have persisted for a long time. This sort of fear-based information space tactic is straight out of the playbook of totalitarian societies, and is just awful. Even under a recent post of mine, a pump fun payrolee quietely told me that they were directed to delete their comment on my post. Yikes. I've looked past that, because I, as an investor (read: hypocritical pig) am in crypto to make money, and Pump generates massive fees, but *as an investor*, it's a concern because the above is a big part of the fact that their *token* has a price appreciation drag in the form of a *trust deficit*, rather than a *trust premium*, where a token trades at above what it'd normally be valued, based on the org behind it being proactive and egalitarian (see: hyperliquid/jeff) I think we've reached a point lately, where enough people have seen Stonk Fun get to stock/memefi/yield token pairs early enough, and have enough fees/growth, and let people get as much of the pie as early as possible to enjoy the success, That people aren't afraid to speak out anymore. And once there's a critical mass, the fear of reprisal diminishes, because Pump simply doesn't have the breadth or resources to target and attack that many people concurrently. Stonk fun vs Pump fun feels like onchain arab spring/star wars/berlin wall falling, metaphorically, in terms of what I'm seeing on the timeline. Which leads me to the next point -- Solana's incentive for which platform succeeds: Solana has done a lot over the past few years in terms of creating industry-best UX, speed, and scale. It's, in my mind (as a former Eth maxi), the best blank canvas we have for general purpose activity in crypto. But it has two principle complaints, both of which were/are valid: 1) Tokenomics (Inflation is bad) This has been largely addressed + ameliorated with recent SIMDs, where disinflation was doubled, and more Sol gets burned 2) Culture Rot Pump Fun's RUNAWAY past success as Sol's #1 fee-generating app put Solana in a position where they had no other choice but to hitch their wagon to PUMP. I empathize with that. However, Sol's nascent success in RWAs and a half dozen other verticals has given them a hopeful path increasing optionality for fee diversification, and now, Stonk Fun has come along and found real PMF in the form of a new/exciting set of primitives (and a massive userbase that gets to enjoy the upside of Stonk Fun's success as if they were all day-1 investors or employees at the company!), and a massive social moat via community/goodwill. The mechanisms of the platform incentivize "buy and hold" PVE, rather than adrenaline-soaked PVP rotational jungle war. It's a fee-generating MONSTER, and those fees look sustainable. It provides SOL with AMM diversity, rather than the vertical integration at Pump. And critically - stonk fun doing well directly addresses the "Trust Deficit" valuation drag on SOL (the token) that has spilled over from the cultural dominance/fee dominance of Pump Fun. -- I've said enough here, but do need to say this - I don't "hate" pump fun. As a token holder, I've simply been disappointed and frustrated. The hope was always (and still is) that they'd just clean up their act a little bit, and they (and token holders) *and* solana could all win. But it just doesn't seem to be happening. If anything, the culture of cynical reactionary product/PR/comms seems to be getting slightly worse as they feel cornered. I'd like to see them do better, and go on to succeed, and compete on the merit of excellent product UX + liquidity, and genuinely wish them the best. So no, I don't "hate" them, I don't really think about them, or anyone in crypto at all. Crypto to me is simply a lever to generate wealth. And because of all of the above, though this may change down the road, I'm shifting my investment over to to Stonk Fun for the foreseeable future. Because Doug Funnie Said So, Diaperliquid.