IOSG Ventures Warns of Pump.fun's 92% Revenue Drop, 51% Market Share Loss

IOSG Ventures, a prominent venture capital firm, has expressed concerns about the recent public sale of Pump.fun, a decentralized finance (DeFi) platform. According to an IOSG founding partner, the public sale appears to be more of a liquidity exit strategy for the team behind the project, rather than a genuine effort to raise funds for development. The partner highlighted that the project's fundamentals and market conditions do not support the inflated valuation placed on Pump.fun during the sale.

Jocy, the founding partner of IOSG, posted on social media that the Pump.fun public sale seems more like using participants as exit liquidity, constituting a highly speculative gamble. Since its launch in early 2024, Pump.fun has experienced explosive growth, with a cumulative protocol revenue of about $7 billion, becoming one of the most profitable projects in the cryptocurrency field. However, Pump.fun's daily revenue has dropped by 92% from its peak, currently standing at only about $500,000. The project's market cap has plummeted from tens of millions of dollars in the past to a rock-bottom $50,000 to $100,000. Its market share has also been surpassed by a competitor, LetsBonk (with a 51% share), causing Pump.fun to fall to 39.9%.

From a tokenomics and risk exposure perspective, this ICO round targeted retail investors (15%) and institutions (18%), selling a total of 33% of the tokens, corresponding to a funding amount of $1.32 billion. Considering past fee revenues, the Pump.fun team will hold nearly $2 billion in cash. This poses an extremely unfriendly risk exposure to public investors. The lack of a transparent governance structure, opaque team/investor release terms, and overvalued financing that has overdrawn future growth potential are significant concerns.

Jocy believes that the Pump.fun team has neither the intention nor the ability to "pump" or "control" the price. They have already amassed a huge fortune through fees, and this ICO is more like a final "value realization" (Exit Liquidity). In the current market environment with severely insufficient buying pressure, such a high valuation simply cannot be sustained. This is completely different from Hyperliquid's valuation support logic. Jocy believes that this market public fundraising is a highly speculative gamble, not a fundamental investment. The funds invested should be risk capital that can be completely lost. The market's enthusiasm for meme launch platforms and shitcoins has shown signs of fatigue. Investors are advised to wait for the token to trade on the open market for a week before making a decision, observing the true market response.

The partner's comments suggest a lack of confidence in the long-term viability of Pump.fun, given the current market conditions and the project's fundamentals. This perspective is significant as IOSG Ventures is known for its investments in early-stage blockchain and DeFi projects. The firm's skepticism could influence other investors' decisions regarding Pump.fun and similar projects.

The concerns raised by IOSG Ventures are not isolated. The broader DeFi landscape has seen a surge in projects seeking to raise funds through public sales, often at valuations that seem disconnected from their actual market potential. This trend has led to increased scrutiny from investors and analysts, who are becoming more discerning about the projects they choose to support.

The situation with Pump.fun underscores the importance of thorough due diligence in the DeFi space. Investors need to carefully evaluate the fundamentals of a project, including its team, technology, and market potential, before committing capital. The inflated valuations seen in recent public sales can be misleading, and investors should be wary of projects that appear to be more focused on liquidity exits than on long-term growth.

In conclusion, the concerns raised by IOSG Ventures about Pump.fun serve as a reminder of the need for caution in the DeFi space. While the sector offers significant opportunities for innovation and growth, investors must be diligent in their evaluations to avoid being drawn into projects with inflated valuations and questionable fundamentals.