Solfate
Over the last few months, the Solana ecosystem has seen a surge of memecoin trading activity after coins such as $BONK, $WIF, and $BODEN took off, leaving traders searching for the next coin to make a run-up.
Phantom has recently hit 7 million active users and volume across the Solana blockchain has drastically increased as shown in DeFiLlama data, both partially fueled by the current memecoin mania.
Compared to the 2021 meme coin mania on the Binance Smart Chain, Solana has been poised as a solid blockchain alternative to handle memecoin trading due to its cheap fees and fast transaction times.
Amidst the recent trading frenzy a new platform, pump.fun, has recently emerged. Pump.fun is a memecoin launch/trading platform that enables developers to launch their own memecoins without any starting liquidity, all for a $2 fee.
The platform also generates revenue by charging a 1% swap fee for users buying or selling tokens on the platform, and by taking a 2 $SOL fee whenever a memecoin created on their site gains enough liquidity to be listed on Raydium. The platform lists a few simple rules outlining how the token launches are done on the platform shown below.
Although the platform claims to prevent rugs, most users still end up on the losing side of a trade when going after these memecoin plays, so be sure to DYOR when investing!
This platform gained tons of traction very quickly, drawing attention from memecoin traders all around the world. In its most recent peak, the platform generated a total of $1.2 million dollars in revenue within a 24-hour period, surpassing Solana itself, and landed just under Tron, which did $1.4 million that day.
However, on March 16th, the platform was exploited by a former team member, known as @STACCoverflow on X. The user took ownership of the attack that day, using their position at the company and access to contracts to take funds totaling ~12.3K SOL (or ~$1.9m).
In a post by X-com user @r0bre, they dove into the transaction data from the attack, showcasing how STACCoverflow was utilizing flash loans from the DeFi protocol marginfi to buy the full bonding curve of a set token on pump.fun, and would then use his admin privileges to withdraw the liquidity from a set token and repay the flash loan. The team halted trading on the platform on March 16th by 17:00 UTC, approximately 1.5 hours after the attack started to take place.
The team released a post-mortem on X-com later that day of the exploit, outlining the details of how the funds were misappropriated and the actions being taken moving forward. To summarize their post: the team redeployed contracts, lowered trading fees to 0% for 7 days, and is looking to make users whole by seeding the LPs for each affected coin with an equal or greater amount of SOL liquidity that the coin had at the time of the exploit.
In the meantime, Vybe Network released an analytics report of user activity on pump.fun following the exploit, showing the platform was still maintaining ~54k DAU, and made $5 million in fees over the past 7 days.
With the continued use of the platform, the memecoin trading craze seems to be continuing on Solana in the short term, with many people still focused on the pump.fun.
If there’s anything to take away from this, it’s be sure to DYOR on anything you decide to invest in.
