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What is pump.fun? How the memecoin machine works, and who usually wins

Anyone can make a new coin on pump.fun in a minute or two. That's the whole idea, and it's also the whole risk. Here's how the machine actually works, step by step, so you can see who usually ends up ahead.

Beginner guide · 10-minute read · Updated 2026-10-21

The short answer

pump.fun is a website for launching new crypto tokens on the Solana blockchain. It went live in January 2024.

Anyone can create a token there. You pick a name, a picture and a ticker. You don't need to write code or put up a big pool of money.

Most of these tokens are memecoins: coins built around a joke, a picture or a trend, with no business behind them. Our guide to memecoins explained covers the wider picture.

Step 1: someone creates a token

A creator fills in a short form and launches the coin. In that moment, the token exists and can be bought.

Because it's so easy, a huge number of tokens are made every day. On-chain counts in 2025 often ran into the tens of thousands of new tokens a day.

That's the first thing to understand. The supply of new coins is close to endless. Each one is competing for the same buyers.

Step 2: the bonding curve sets the price

A brand-new token has no market yet. Nobody has sold it to anyone. So who decides the price?

pump.fun uses a bonding curve. In plain words, it's a price rule written into the code:

• Each time someone buys, the price goes up a little.
• Each time someone sells, the price goes down a little.
• The earlier you buy, the cheaper it is.

You aren't buying from another person. You're buying from the curve, which hands out tokens from a set chunk of the supply. Sellers sell back into it.

Here's why that matters. The curve means the very first buyers always pay the lowest price. Everyone who comes later pays more, and is effectively paying the people who came first.

Step 3: "graduating" to a DEX

If enough people buy, the curve fills up. A set amount of SOL (Solana's coin) has been collected.

At that point the token "graduates". Its money and tokens move into a normal trading pool on a decentralized exchange (a DEX: an app where people swap coins with each other, with no company in the middle).

• At first, graduated tokens moved to a DEX called Raydium.
• In March 2025, pump.fun launched its own DEX, PumpSwap, and new graduates now go there.
• After graduation, the pool's liquidity is locked so the creator can't simply pull it out.

That last point sounds safe. It only covers one trick. Big holders can still sell their tokens into the pool at any moment, and the price can still fall to almost nothing.

Step 4: fees on every trade

pump.fun charges a fee on trades. On the bonding curve it has been around 1% of each trade, and PumpSwap charges its own, smaller swap fee. Creators can earn a slice of trading fees too.

Fees have changed several times. Check the site's own fee page before believing any number, including ours.

The point for a beginner: every buy and every sell costs something. Fast in-and-out trading pays fees again and again, win or lose.

So who usually wins?

Here's the honest part. The design itself tilts the field.

• Creators. They can buy their own token first, at the lowest price.
• Snipers and bots. Programs watch for new launches and buy in the first seconds, before a person can even read the page.
• Insiders and groups. Friends of the creator, or paid promoters, may buy early and then hype the coin to everyone else.
• The platform. It collects fees on every trade, up or down.

Late buyers are the ones the early buyers sell to. That's what a Pump and dump is, and on a bonding curve it can happen in minutes.

What the data shows

Most of these tokens never graduate. On-chain counts in mid-2025 put the graduation rate well under 1 in 100 launches.

A February 2025 report from the blockchain analytics firm Solidus Labs looked at pump.fun tokens from January 2024 to March 2025. It found that about 98.7% showed signs of a pump-and-dump or a Rug pull. That's one firm's analysis, based on patterns, not a court finding about each coin. But the direction is clear.

The legal and safety record (dated facts only)

• November 25, 2024: pump.fun paused its livestream feature after streamers used it for harmful stunts to promote coins. It brought streaming back in April 2025 with stricter moderation.
• December 3, 2024: the UK's Financial Conduct Authority warned that pump.fun was not authorised to offer services in the UK. Days later the site blocked UK users.
• January 2025: a class action, Aguilar v. Baton Corp., was filed in federal court in New York against Baton Corporation (the company behind pump.fun) and its co-founders. It claims the tokens were unregistered securities and that the business ran like a racketeering scheme, including illegal gambling.

Those are claims in a lawsuit, and the case was still going when we wrote this. No court had found the company liable. Rules for crypto change fast, so check the latest news before you rely on any of it.

If you look at it at all

We don't suggest buying memecoins. If you still want to look, treat it like this:

1. Only money you can afford to lose entirely. Assume it goes to zero.
2. Size it from your risk rules, not from excitement. Our guide on how much to risk per trade shows the math.
3. Never sign anything you don't understand. Fake "pump.fun" sites and drainer links are common. See crypto scams to avoid.
4. Never share your seed phrase. No real site or support person will ever ask for it.
5. Run the checks first. Our rug pull checklist takes five minutes.

Try it today (without buying anything)

1. Pick one token that graduated last month. Find it on a block explorer like Solscan.
2. Look at its holders list. How much do the top 10 wallets hold?
3. Look at its price chart since launch. Where is it now compared with its first hour?
4. Write one sentence on who you think bought first, and who bought last.

Questions