The Decline of Meme Coins and New Income Capture Models: Analyzing the Pump.Fun Craze and Hyperliquid Buyback Strategy

Recently, the crypto market is undergoing a paradigm shift. The era of pure Meme coins is coming to an end, and real revenue models are becoming the key to project success. In the latest podcast episode, Mike Dudas, partner at 6th Man Ventures, shared insights on the success of Pump.Fun, the Hyperliquid buyback mechanism, and new logic in crypto investment.

The Success and Challenger of Pump.Fun

The explosion of Pump.Fun proves the strong demand for tokenized assets in the market. It allows users to easily tokenize various things and issue new assets for different scenarios. Its revenue scale has become one of the most explosive revenue events on-chain, regarded as the "from 0 to 1" innovation of this cycle.

Although some imitators have proposed interesting new models, such as allowing token holders to capture platform value, most challengers are either poorly designed or carry potential risks. In particular, platforms that claim their tokens are "related" to a certain business or enterprise are prone to causing users to misunderstand the value of the tokens.

In contrast, Pump.Fun clearly emphasizes that these tokens are "worthless Meme coins" to avoid misleading promotion. Mike believes that platforms suggesting tokens have economic benefits, even if they include terms in disclaimers, constitute "implicit misleading."

The Decline of Pure Meme Coins

Mike stated that it will become increasingly difficult and even unsustainable to issue purely meme, non-revenue tokens in the future. There are countless "pure Meme" tokens launched in the market every day, and the information noise is too great, leading users to become more skeptical. To stand out, a revenue capture mechanism must be provided.

As regulatory and legal frameworks become clearer, teams that cannot foresee market changes in the next 3 to 12 months will lose favor with investors. Currently, the two most common value return models in the crypto market are buybacks and fee distribution.

Hyperliquid Case Study

Hyperliquid uses a buyback mechanism to directly use business profits for the repurchase of tokens, providing actual value support for holders. This approach not only provides strong support for the token price but also creates a positive feedback loop.

Although continuously buying back rising stocks with profits may be seen as unwise in traditional finance, this practice has a unique signaling effect in the crypto space. It conveys the message to the market that "we are really giving our business income back to the community."

New Logic of Crypto Investment

The cryptocurrency industry has entered "Hard Mode": projects need real products, revenue, and users to build token value. Market funding has significantly increased, and the overall high-quality development cycle has begun.

The early investment pace has slowed down, but this is part of the industry's cyclical characteristics. The market focus has shifted to the mid-to-late stage, such as Series A, B rounds, and even growth rounds. Many large funds are more willing to support protocols that already show a clear growth trend.

Emerging Investment Fields

A new batch of "real work" startups is emerging in areas such as stablecoins, DeFi, and consumer wallets. In the past 12 months, the on-chain stablecoin supply has increased by nearly $100 billion, and is being used as a real payment and business operation tool.

DeFi native companies and real asset companies bring different types of assets and yields on-chain, forming a development flywheel. Many front-end enterprises have begun to offer dollar account services globally while allowing users to participate in DeFi yields.

Consumer-grade crypto applications are gaining renewed attention. Investors are placing greater emphasis on projects that enable users to be active on-chain for the long term and establish their own asset sovereignty.

Venture Capital Lessons

1. Personal capabilities are more important in the crypto space than anywhere else. Team execution and adaptability often determine the success or failure of a project.

2. The level of respect for the spirit of contracts among crypto founders is generally low. Even if a legal contract is signed, once the project is successful, they may request to modify the terms or renegotiate.

3. The cryptocurrency market is highly volatile and unpredictable. Small-scale investments can yield huge returns, but failures are also common.

4. Investors need to learn "emotion regulation" and "long-term thinking" to cope with extreme market fluctuations.