Pump.fun Analysis: Is It Severely Undervalued, and What Should Its Target Price Be?

Author: Shaunda Devens, Analyst at Blockworks Research;

Compiled by: Shaw, Jinse Finance

Key Points

• PumpFun has built one of the most profitable and sustainable infrastructure businesses in the crypto industry. Its annual revenue reaches $677 million, with the lowest weekly revenue volatility among the top ten protocols. The business has a solid infrastructure layer (token issuance platform + decentralized exchange DEX) and is also expanding its user-facing business aimed at social trading; since early July, front-end trading volume has increased by 5.6 times.

• PUMP is one of the few high-liquidity assets available for positioning in the Meme coin sector and consumer-facing business. It can broadly capture the Meme coin market trends and has strong reflexivity, with revenue closely tied to token price increases: its weekly price volatility has a correlation coefficient of 0.35 with weekly revenue changes, ranking third among 46 revenue-generating tokens. Even so, the current price-to-sales ratio (P/S) of this token is only 2.8 times, significantly discounted compared to similar assets. We believe it is one of the assets in the crypto market that is severely mispriced, for two reasons:

• First, although there is still a risk of inconsistency in the interests of token holders, we believe the market has overly amplified this risk in the short term. The platform uses 50% of its revenue for programmatic buybacks, which, at current prices, accounts for about 17.6% of the circulating supply annually; meanwhile, about 77% of the issued internal personnel tokens have not been transferred out. According to disclosures, the project treasury has a fund size of $2 billion. The team understands that compared to competitors without tokens, the increase in token prices has strategic value in attracting market attention. Therefore, we anticipate that the scale of internal personnel selling will remain low, combined with buyback operations, the short-term liquidity will remain favorable.

• Second, we believe the market still misunderstands Pump's core business. The decline in the total market value of Meme coins does not indicate a deterioration in Pump's business, as 96% of its revenue comes from tokens with a market value of less than $1 million. On the contrary, this reflects Pump's monopolistic position in the industry: the token issuance platform ecosystem has become highly solidified, with funds being diverted to thousands of tokens. The current number of new tokens launched has reached the highest level since January 2025, and the number of projects that have successfully "graduated" (migrated to independent liquidity pools) has reached a historical high, with Pump's revenue in SOL also hitting a record high. Based on the expanded business lines, if industry activity returns to January 2025 levels, monthly revenue could reach approximately $280 million, nearly double Pump's historical peak revenue.

• The baseline scenario assumes that market activity returns to the average monthly level since April 2024 (the number of new tokens launched and curve trading volume in August has already exceeded this level), corresponding to an annual revenue of $836 million and a buyback yield of 21.7%. Comprehensive calculations of three scenarios suggest that the target price range for PUMP is $0.0108 to $0.0205, which is 2.3 to 4.4 times the current price. In an optimistic scenario, the price could reach 6.4 to 12.9 times the current price; in a pessimistic scenario, if market activity falls back to the June low and valuation multiples hit bottom, the price could retract by 59% to 76%.

PumpFun's Monopoly Position in Meme Coins

In the upcoming bull market, we prefer to allocate two types of tokens: those with reasonable valuations that can generate cash flow, and reflexive tokens that benefit from increased speculative activity. PUMP satisfies both. As the market leader in the infrastructure layer, it combines a token issuance platform and a decentralized exchange; at the same time, it is strategically positioning itself for front-end traffic through the Terminal and mobile strategies. PUMP is a "shovel seller" asset that participates in speculative markets with good liquidity.

With its near-monopolistic position in the infrastructure layer, PumpFun has captured 70% of the Meme coin trading volume on the Solana chain and about half of the decentralized exchange trading volume across the entire chain. The Meme coin sector is fast-changing and highly cyclical, yet the platform maintains its leading position in token issuance, continuously capturing DEX trading volume and expanding into emerging business segments like user-facing services.

This has ultimately created one of the most profitable businesses in the crypto industry: cumulative revenue has reached $1.37 billion since 2024. Excluding stablecoin issuers, it is the second-highest revenue-generating application this year, second only to Hyperliquid. Despite market concerns about its revenue sustainability, its revenue fundamentals are more stable compared to other leading protocols, with a weekly revenue volatility of only 29.7%, the lowest among the top ten protocols.

PumpFun Infrastructure: Token Issuance Platform and DEX

The foundation of PumpFun's business is two core infrastructures for Meme coins: the token issuance platform and DEX. The token issuance platform simplifies the token creation process, allowing creators to avoid providing AMM liquidity in advance. Initially, tokens are traded using an AMM with a virtual reserve pool; user buying behavior continuously accumulates real reserve funds, which will form a liquidity pool once the token "graduates". The liquidity pool is built on Pump's self-developed DEX------PumpSwap, allowing the platform to collect secondary market trading fees without flowing to external trading venues.

Pump integrates token creation and liquidity generation into a single product, creating differentiated services and charging considerable fees: the trading fee for the bonding curve is 125 basis points, of which the platform retains 95 basis points. As this token issuance platform becomes the default channel for Meme coin issuance, its infrastructure deeply integrates with applications aimed at end users, such as Axiom and Fomo, which direct users to Pump's trading market. This allows Pump to capture trading flow generated by various competing products without relying solely on a single application to retain users.

Ultimately, in this highly competitive and rapidly evolving industry, Pump has built a relatively solid infrastructure barrier. The industry leaders in front-end applications have undergone several iterations, but Pump still occupies about 98% of the bonding curve trading volume on the Solana token issuance platform. Each ecological integration further solidifies its traffic distribution advantage: projects issuing tokens on Pump can reach the user groups behind these cooperative applications.

With the two major businesses of the token issuance platform and DEX, PumpFun can achieve commercial monetization throughout the complete lifecycle of Meme coins. In the second quarter of 2026, revenue reached $85.2 million, with the annualized revenue estimate for the third quarter at $125.4 million, a quarter-on-quarter growth of 47%. Among them, the token issuance platform corresponds to an annualized revenue of $87.1 million (quarter-on-quarter +41%); PumpSwap contributes $38.3 million (quarter-on-quarter +64%), with its actual fee retention rate increasing from 5 basis points to 13.3 basis points.

PumpFun User-Facing Business

The second major pillar of PumpFun's business, and its more ambitious layout, is to enter the user-facing sector. For an infrastructure service provider, this step is significant for two reasons: first, to capture the user-facing market in the Meme coin industry and recover previously lost fee revenue; second, to consolidate its barriers by directly controlling end users, reducing reliance on third parties, and enabling continuous iteration and development of upper-level functions.

Although PumpFun has completed multiple acquisitions, from acquiring the Kolscan wallet analysis tool in July 2025 to acquiring the Vyper execution layer infrastructure, its user-facing business layout relies on two major product carriers, corresponding to different stages of the token lifecycle, targeting different existing players in the industry:

• Terminal: Targeting newly launched tokens. After acquiring Padre in October 2025, Pump launched Terminal as a professional trading product specifically for trading early tokens still in the bonding curve stage, directly competing with Axiom.

• Mobile App: Targeting tokens that have "graduated". This application focuses on social trading for retail users, with trading pairs that have completed the graduation migration. The product competes through feature iteration and migration incentives and Fomo: it integrates Kolscan wallet tracking, trader profit and loss, and leaderboard features to help users discover targets; it also has a Callouts feature ------ users can publish token recommendations to their followers and earn rewards from the Callout reward pool. This reward pool consists of a daily USDC fund pool, distributed according to the trading volume generated by each recommendation.

These two products work together to target the user-facing sector. Since March 2024, the user-facing segment has contributed 31% to 44% of all Meme coin fees in the Meme coin industry, while PumpFun had not yet made substantial breakthroughs in this market.

The expansion speed of user-end business is slower than that of infrastructure business. The reason lies in the fact that PumpFun needs to compete for users with mature front-end products: the mobile market is significantly lagging behind Fomo, and the trading terminal products are not as good as Axiom.

However, we still have confidence in the upward potential of this sector for two main reasons. First, the project treasury is ample, allowing for substantial incentives to participate in competition: the daily reward for Callout recommendations alone is about $1 million. Second, relying on the token issuance platform and PumpSwap, the underlying trading volume is already capable of generating revenue for the platform, allowing it to set lower fees for competition; the mobile app does not charge interface fees, while Fomo's interface fee is 0.5%.

Data indicates that this strategy is beginning to show results: since early July, the daily trading volume of the two major front-ends (mobile and Terminal) has increased by 5.6 times, with an average daily trading volume of $15 million in the first week of the statistical period, rising to $84 million in the first week of September, and peaking at $100 million on September 4. The daily active users on the mobile end have grown from 5,600 to 34,100 during the same period.

Although these front-end products are not intentionally commercialized at present, we conducted scenario calculations based on Fomo's 50 basis points fee to demonstrate their potential as significant profit drivers in the future: based on last week's trading volume, the mobile app alone could generate about $128 million in revenue annually, representing a 24% increase compared to Pump's current total revenue.

Controlling the front-end is also crucial for user-facing business, as it can help the protocol achieve commercialization and business expansion. Just as Kalshi and Polymarket leverage their market positions to expand into related tracks, Pump is also expected to replicate this path in the future, adding perpetual contracts and prediction market businesses; it has already led a $1 million financing for Pumpcade.

Market Positioning of PumpFun

From the perspective of comprehensive revenue performance and strategic expansion layout, PumpFun has become an infrastructure deeply embedded in the industry. It relies on Meme coin trading to form a solid fee revenue base, while the high-growth user-end business brings upward growth potential.

Pump also aligns with our investment framework for the next cycle. In an increasingly abstract financialized environment of the cryptocurrency industry, we prefer to invest in the infrastructure layer and user-end. The PUMP token also possesses unique thematic value: Meme coins, perpetual contracts, public chain L1, spot trading, stablecoins, and prediction markets are all core tracks in the cryptocurrency field, and PUMP is one of the few investment targets with ample liquidity that purely focuses on the Meme coin track.

Another characteristic that makes Pump attractive, especially in the current environment where we judge that Meme coin trading volume is sluggish, is its reflexivity. The activity level of Pump's business is tied to market speculation; an increase in token price will lead to more trading activity and revenue growth. This means that the token can appreciate quickly, and the valuation multiple will not be overly inflated. This creates a self-reinforcing cycle: rising prices drive increased trading activity, revenue increases accordingly, further pushing up the token price. Among the 46 income-generating token samples we selected, the correlation coefficient between PUMP's weekly price changes and weekly revenue changes over the 48 weeks starting from September 2025 is 0.35, ranking third in the sample, higher than HYPE's 0.32.

Even with these advantages, PUMP's current price-to-sales ratio is only 2.8 times, significantly discounted compared to similar tokens. If we exclude the 240 billion tokens allocated to the community and ecosystem, and calculate based solely on circulating tokens, PUMP's valuation is $2.77 billion.

We believe this discount stems from two points: a fundamental misunderstanding of Pump's business model in the market, and concerns about the consistency of interests among token holders. These concerns are reasonable, but we believe the market has overly amplified this risk in the short term.

PumpFun's Dilemma: Consistency of Interests Among Token Holders

The core issue facing PUMP's valuation is not its business itself, but how much value the token can capture from the business it creates.

The Relationship Between Tokens and Equity

Even after completing over $1 billion in financing, the market remains unclear about how Pump's substantial revenue will be returned to token holders. The widely cited 25% revenue-sharing data comes only from third-party reports and is not an official announcement. Official public information has always clearly stated: PUMP "does not represent equity, debt, nor does it enjoy any rights related to income, profits, dividends, or other cash flows"; investors should not buy PUMP with the expectation of relying on buybacks or project team operations to obtain profits.

The division of rights and responsibilities between the two is very clear: the $2 billion project treasury belongs to Baton Company, not to token holders. What remains unclear is the importance of the token to the business itself. There are two interpretations: one viewpoint believes that PumpFun values the financing advantages of tokens, raising over $1 billion through tokens without granting them legal recourse to the business; the other viewpoint believes that the team and token holders have highly aligned interests, but are unable to publicly state this due to regulatory restrictions. This article leans towards the first judgment. The team's actions have not demonstrated a priority for token holders; moreover, in a relatively friendly regulatory environment, if this is not the case, there is no reason not to clarify the relationship between tokens and equity.

Discretionary Power of Buyback Operations

However, the short-term situation has changed. Starting from April 28, 2026, 50% of the protocol's revenue will be executed programmatically through a locked contract for PUMP buybacks and burns, with a duration of one year. At the same time this mechanism was launched, the project completed the destruction of $370 million worth of PUMP tokens, accounting for 36% of the circulating supply at that time.

Based on Pump's current revenue level, calculated using the average of the past 30 days, the monthly buyback amount is approximately $27.8 million, corresponding to an annualized buyback yield of about 17.6% on the circulating market value. As of September 8, the actual buyback annualized yield over the past 30 days was 16.4%, ranking first among the benchmark samples we selected. From a relative market value perspective, this buyback fund exceeds the peak Bitcoin accumulation scale of Strategy institutions and BitMine's Ethereum holdings, second only to the combined fund size of Hyperliquid's rescue fund and Hyperliquid Strategies.

Unlocking of Token Holders

Another closely related market concern comes from the concentrated unlocking of PUMP tokens: team members and insiders holding company equity may sell off tokens after their vesting period. The unlocking plan sets a 12-month cliff period, covering 20% of the tokens held by the team and 13% held by early investors; the cliff period ends on July 12, 2026, releasing 82.5 billion PUMP tokens at once, of which 50 billion belong to the team and 32.5 billion belong to investors. After that, a three-year linear release begins: 68.75 billion tokens are released monthly over 36 months, with the team releasing about 42 billion monthly and investors about 27 billion monthly, continuing until July 2029.

Tracking the flow of this fund has two layers of significance: it allows for observing the hedging effect brought by buybacks; at the same time, in the absence of information disclosure from the project, the actions of this group are the most valuable signals. Insiders have the most up-to-date information on token valuation, and how they handle their tokens reflects their judgment on the long-term value and utility of the tokens.

Monitoring results show that the confirmed selling scale is very low. As of August 31, a total of 62.1 billion PUMP tokens have been transferred to beneficiary wallets; of these, 5% were sold on-chain, 13% were transferred to exchange deposit addresses, and 5% were moved to other wallets; about three-quarters of the tokens have remained in the receiving wallets without being transferred out.

Assuming that the currently transferred 23% of tokens are all considered sold, by April 2027, the total circulating chips will still shrink by about 8%; even if insiders sell all unlocked tokens, the overall circulating supply will only increase by about 2%.

Secondly, in our view, this phenomenon indicates that the group most knowledgeable about the long-term value of the tokens has largely refrained from selling. We do not believe this proves that token holders can continuously capture value (if they could, PUMP would be clearly recognized as undervalued), but this phenomenon suggests that the tokens indeed possess a certain ability to capture value, and insiders do not merely view the tokens as cash-out tools. Our perspective is similar to that of the VVV project, whose founder stated: "The equity entity is the largest holder of the tokens, and maintaining the token value is one of the most efficient means for the equity party to realize its own interests." Similarly, Pump holds $2 billion in assets and retains 50% of protocol revenue, operating in a sector that heavily relies on traffic attention. The tokens are its core advantage compared to non-token competitors, and the rising token price is also a powerful tool for attracting traffic.

Therefore, we judge that the team has little reason to sell tokens in the current undervalued environment, which would undermine this strategic value. Our hypothesis is: Repurchases combined with limited internal sales and relatively low valuations are expected to support the tokens in achieving excess returns in the short term.

Misunderstood Business Logic of PumpFun

We believe the second reason for PUMP's current valuation level is that the market has misunderstood the Meme coin sector and has not recognized Pump's true sources of income. Observing from the market capitalization perspective, the Meme coin sector is overall in a structurally declining channel: the total market capitalization of Meme coins issued by Pump has dropped by 81% from the peak in January 2025, and the market capitalization of Meme coins in the entire crypto market continues to decrease; the issuance of Meme coins by the U.S. president is almost the strongest signal of a market top.

However, we believe the market has drawn the wrong conclusion, equating the decline in total market capitalization of Meme coins with a weakening of Pump's business. Counterintuitively, this situation may be precisely due to Pump itself ------ traffic being dispersed across a multitude of Meme coins. Pump's profit focus is in the early stages of token issuance: during the peak market in January 2025, 94% of revenue came from tokens that were listed for less than a day, and 97% came from tokens listed for less than a month; by August 2026, these two proportions were 87% and 94%, respectively.

Compared to the peak level in January 2025: the number of new coins launched in August was 69% of the peak, the number of transactions on the bonding curve was 76%, and the trading volume on the bonding curve measured in SOL reached 91% of the peak, while the number of tokens "graduating" reached a historical high. Meanwhile, the total market capitalization of tokens issued by Pump was only 19% of the peak, and the trading volume of Meme coins in the secondary market was only 11% of the peak. The platform's revenue measured in SOL was 661,000 tokens, compared to 647,000 tokens in January 2025; from this perspective, Pump's revenue has already reached a historical high.

Another change is that Pump subsequently launched its own DEX and Terminal trading terminal. Therefore, if the overall market activity returns to the level of January 2025, the revenue achieved by the platform will almost double the $145 million revenue of that month.

Valuation Calculation for PumpFun

Translating the above analysis into valuation, we categorize different scenarios based on the activity level of Pump's business and calculate the corresponding values. Based on the current market share and fee retention rate, we select three historical benchmarks to model revenue and repurchase scale under different activity levels:

• Pessimistic Scenario: Business activity falls back to the low point of June 2026, which is the month with the lowest trading volume for Solana Meme coins since April 2024.

• Baseline Scenario: Activity recovers to the average monthly level since April 2024; the number of new coins launched in August and the trading volume on the bonding curve have already exceeded this average, with only the secondary market trading volume still lagging.

• Optimistic Scenario: Activity rises to the average peak level of the quarter from November 2024 to January 2025; an additional bullish scenario is set to benchmark the peak level of January 2025.

According to the current fee rate standards: the token issuance platform charges 91 basis points on the bonding curve trading volume; PumpSwap charges 14 basis points; and the Terminal's traffic trading volume achieves approximately 58 basis points in revenue (100 basis points front-end interface fee minus trader rebates). Substituting the fee rates into each scenario, the annualized revenue in the pessimistic scenario is $310 million, in the baseline scenario is $836 million, and in the optimistic scenario is $2.5 billion; if it reaches the peak monthly level of January 2025, the annualized revenue could reach $3.4 billion.

The protocol uses half of its revenue for repurchase and destruction: in the pessimistic scenario, it repurchases and destroys $155 million worth of PUMP annually, in the baseline scenario $418 million, and in the optimistic scenario $1.24 billion. Based on the current market capitalization of $1.93 billion, the corresponding repurchase yields are 8.0%, 21.7%, and 64.3%, respectively. The remaining term of the repurchase contract is 231 days (until April 28, 2027), during which this mechanism will destroy tokens equivalent to 5.1%, 13.7%, and 40.7% of the current market capitalization, respectively.

Finally, we convert the calculation results into implied valuations.

Perhaps counterintuitively, we believe that different scenarios should not adopt fixed valuation multiples. Pump's business activity and token price have a positive feedback loop: scenarios with rising revenues will attract market attention, driving valuation multiples to expand; while declining revenues will lead to valuation contraction. Therefore, we match corresponding valuation ranges for different business activity levels: the pessimistic scenario adopts a historical bottom of 1.5 times to the current 2.8 times price-to-sales ratio; the baseline scenario is set at 3 to 5 times; and the optimistic scenario is set at 5 to 10 times.

Our comprehensive scenario target price range for PUMP is $0.0108 to $0.0205, representing an increase of 2.3 to 4.4 times from the price of $0.0047 on September 9. This value is a probability-weighted average of the three scenarios: pessimistic scenario weight 25%, baseline scenario 50%, optimistic scenario 25%, and is not a single scenario result from the calculation matrix. We judge that if business activity returns to previous peak levels, the token price is expected to reach $0.0299 to $0.0598, which is 6.4 to 12.9 times the current price. In a pessimistic scenario where market sentiment weakens simultaneously, the token price will fall back to near the low point of June, in the range of $0.0011 to $0.0019, with a maximum drawdown of 59% to 76%.

Risk Warning

Although we maintain an overall optimistic attitude, it is still necessary to outline the relevant risks. One major concern in the market regarding Pump is that during the bear market, its income has been unusually stable, raising questions about wash trading and whether Pump pays to have bots issue tokens in bulk. We cannot discern its internal accounting situation, which itself is a risk; however, Blockworks' data has already excluded wash trading. As for whether there are paid activities guiding users to issue tokens and trade, the related activities seem to belong to natural and genuine behavior: wallets that issued tokens more than 100 times made a profit of $32.3 million in August, with 72% achieving profitability; the top 100 traders by trading volume collectively made a profit of $14 million after deducting fees.

However, the more pressing risk at present is that PumpFun is gradually losing its previously held monopoly position in the token issuance platform sector. Since July, the entire token issuance sector's fee scale has grown 4.4 times, from $20.8 million in the first week of July to $92.4 million in the week ending September 8. Competitors Pons and STONK have rapidly emerged, with market capitalizations reaching $677 million and $211 million, respectively. However, PUMP's performance has lagged, with its share of the total fees among these three platforms dropping to 32%, while as of the week ending August 25, that share was still as high as 90%.

Pump has previously experienced losing market share and then regaining it, but this time it is worth noting because the platform's response pace is clearly slow:

• Regarding the competitor Pons, we believe Pump's mistake was not expanding into the EVM ecosystem. Pump's inherent view is that the execution layer has already achieved abstract isolation from the end user, making it irrelevant, and that Solana has optimal performance. We judge that this assessment is flawed, as the team has underestimated the importance of ecological narratives, especially public chains like Base and Robinhood that come with their own traffic, where ecological tokens are likely to benefit from exchange listing bonuses. Pump's own mobile app has already seen over half of its trading volume directed to Robinhood Chain, but its token issuance platform still adheres to Solana; meanwhile, PONS's market capitalization has risen from $83 million to $677 million.

• The STONK track integrates the stock concept with Meme coins on the Solana platform. We believe that Pump's response has been significantly delayed: StonkFun launched on August 3 and migrated its token issuance to Raydium LaunchLab on September 6. The corresponding feature, Custom Pairs, was not introduced until September 9, five weeks after the competitors launched, and three days after StonkFun's daily transaction fees exceeded $1 million. The market clearly did not recognize this response plan, as the token price dropped by about 10% following the announcement.

Our previous view was that Pump, relying on its solid industry position, could replicate the competitors' model and achieve a lead through effective execution. However, a series of recent events have weakened our confidence in this logic. How Pump responds to the competitive challenges in the coming weeks to months will be a key observation window.

Finally, we reiterate the risk of token interest misalignment mentioned earlier. This risk is real; if the holding period exceeds April 2027, or even before that, it will face significant constraints. The market is pricing in the potential risk of programmatic buybacks not being renewed after expiration. However, in the short term, there is a possibility of delays in programmatic buybacks, which can hedge against the aforementioned negative factors.

Conclusion

PumpFun has one of the strongest profit-generating businesses in the crypto space, yet it is also plagued by issues such as insufficient transparency and weak token interest binding, making PUMP one of the hardest tokens to evaluate for pricing. There are two major cognitive biases in the market: first, an overestimation of the risk of interest misalignment, while the programmatic buyback mechanism can at least guarantee until April 2027; second, the market is pricing PUMP based on the Meme coin sector index, rather than referencing Pump's own revenue performance, which reached an all-time high when priced in SOL. At the current 2.8x sales multiple, we maintain an optimistic view on PUMP. Whether Pump can effectively respond to the impacts from Pons and StonkFun will be crucial in testing whether its token issuance platform can maintain its competitive moat.

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