98% of Pump.fun Tokens Are Scams: What You Need to Know

Pump.fun, a popular token launch platform on the Solana blockchain, has become a hotspot for meme coins and quick-profit schemes. But beneath the hype lies a harsh reality: about 98% of tokens launched on Pump.fun are scams. This article breaks down why this happens, what it means for investors, and how to stay safe.

The Harsh Truth About Pump.fun Tokens

Since January 2024, over 7 million tokens have been launched on Pump.fun. Out of these, only about 97,000 tokens-less than 1.4%-still hold liquidity above $1,000. That means the vast majority of these tokens quickly lose value and become worthless.

The scam rate is staggering: 98.6% of tokens are flagged as scams, rug pulls, or pump-and-dump schemes. One of the largest scams involved a token called MToken, which caused losses of up to $1.9 million.

How Does Pump.fun Work?

Pump.fun uses a bonding curve pricing model. This means token prices rise exponentially with each purchase. Early buyers and creators can make big profits, but late buyers often get stuck with tokens that crash in value.

Some creators also use tricks like same-block sniping-buying and selling tokens within the same blockchain block to profit quickly before others can react.

Why Are So Many Tokens Scams?

• Easy Token Creation: Anyone can create a token on Pump.fun quickly and cheaply, with no strict verification.
• Speculative Hype: Meme coins and hype-driven trading fuel pump-and-dump cycles.
• Platform Design: The bonding curve model encourages early profits and punishes late investors.

The Bigger Picture: Solana and Scam Risks

Solana’s blockchain is fast and cheap, with transaction fees around $0.00025. This makes it attractive for developers but also a playground for scammers.

For example, on Raydium, a major Solana decentralized exchange, 93% of liquidity pools show signs of “soft rug pulls”, where liquidity is slowly drained, causing price crashes.

Pump.fun itself is under legal scrutiny, facing class-action lawsuits for securities violations and excessive fees.

What This Means for Investors

• Pump.fun is a high-risk platform dominated by scams.
• Most tokens launched lose value quickly.
• The platform’s design and Solana’s low fees make scams easy to execute.
• Investors should avoid chasing quick profits on Pump.fun.
• Legal actions may change the landscape soon.

Summary Table

How to Protect Yourself

1. Research Tokens Thoroughly: Don’t invest in tokens based on hype alone.
2. Avoid Pump.fun Unless You Understand the Risks: The platform is mostly scams.
3. Look for Transparency: Legit projects share clear information and have real use cases.
4. Be Wary of Quick Profits: If it sounds too good to be true, it probably is.
5. Stay Updated on Legal Actions: Regulatory moves can impact token safety.

FAQs

Q: What is a rug pull?

• A: A rug pull is when token creators suddenly remove all liquidity, crashing the price and leaving investors with worthless tokens.

Q: Why does Pump.fun have so many scams?

• A: Because it allows easy token creation without strict checks and uses a pricing model that encourages pump-and-dump schemes.

Q: Is Solana itself unsafe?

• A: No. Solana is a legitimate blockchain, but its ecosystem currently has many scam projects.

Q: How can I avoid scams?

• A: Focus on projects with transparency, real utility, and avoid hype-driven tokens on platforms like Pump.fun.

Key Takeaways

• Pump.fun is mostly a scam-filled platform.
• The bonding curve pricing model benefits early creators but hurts late investors.
• Solana’s low fees attract scammers.
• Investors must be cautious and do thorough research.
• Legal scrutiny may improve the situation in the future.

Are you ready to rethink your crypto investments?

Pump.fun’s data shows that chasing quick gains without research can lead to big losses.

Stay informed, stay cautious, and protect your money.