Memecoin casino: $100 bet on Pump.fun has worse odds than roulette

The odds of finding a successful memecoin to invest in on the token launch platform Pump.fun is lower than placing a winning bet in the casino.

Experienced traders employ strategies to attempt to lower those odds and improve their chances, but recent social media activity suggests there is growing discontent among the ranks of degens as increasingly few investments turn a profit. 

One X user even described Pump.fun as “the worst casino on Earth.”

In an Aug. 11 X post, memecoin trader Adam calculated that of the 16,357 tokens launched in the previous 24 hours, only 175 graduated to Raydium. Worse still, of those 175, only 19 remained above the $69,000 market cap threshold.

As Adam said: “From launch to profitable graduation that’s 0.12%,” dubbing the recent rate of success as a “slaughterhouse.”

Source: Adam

Why token launch services?

Token launch services such as Pump.fun and Basejump.pro aim to provide a safer environment for memecoin investors.

Coins created on the Solana-based Pump.fun have no presale or team allocation, and they must reach a market cap of $69,000 before they are allowed to “graduate” to a listing on Solana’s decentralized token-swapping service Raydium.

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In theory, these rules should help ensure fairness, prevent rugpulls and reduce bad actors, but even with these measures in place, most coins fail to make the grade.

On Aug. 9, a change to the Pump.fun launch mechanism removed the $2 creation fee, allowing anyone to create a new token for free. This immediately led to a spike in new memecoins, with most failing to reach the $69,000 mark.

Memecoin roulette

Cointelegraph spoke to Adam, a memecoin trader who also maintains a Pump.fun dashboard on the analytics website Dune, to help understand the odds of winning on Pump.fun.

With the probability of success already calculated at 0.12%, all that remained to work out is what kind of return investors could expect when picking a winner. Adam explained that buying $100 of a memecoin at a $5,000 market cap (MC) and exiting at $69,000 MC would return $1,380.

Using this information, Cointelegraph conducted a comparative analysis of Pump.fun against American roulette, one of the most popular casino games.

The comparison shows that a $100 bet on a single number in American Roulette has a 2.6% chance of success (1 in 38) and pays out $3,600. In contrast, picking a successful memecoin has a much lower 0.12% chance of success (1 in 833) and only pays out $1,380.

At face value, the comparison isn’t favorable, but trading a stock and placing a bet are two different things.

“A token could also run far past $69,000 after graduation,” Adam told Cointelegraph.”But that’s becoming increasingly rare. Hence the frustration.”

Further research backs up Adam’s assertion on the rarity of successful coins.

According to data shared by Newton Einstein on X, out of 1.7 million tokens launched on Pump.fun, only 41 maintained a market cap above $1 million for “multiple weeks,” while 15 maintained a market cap upward of $10 million for multiple weeks.

Community anger spills over

The frustration felt by the memecoin trading community is increasingly transparent. Putting the unfavorable comparisons with casinos aside, there are now those who are walking away from the market entirely.

As X user Anon said, “I’m boycotting. Dead serious. Done trading pump fun and suggest you do the same. Laughing in our faces while they tap us dry with enabling a million rugs.”

Crypto influencer Beanie said Pump.fun is by far the real winner, even as users lose out.

“No doubt Pump Fun and the insiders and professional ruggers that dominate the platform are this cycle’s financial winners,” they said. “By design it’s making a million dollars a day in fees while leaving a sea of dead bodies in its wake. Need a more fair launchpad.”

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On Aug. 13, 5 days after changes to the launch mechanism were announced on X, Pump.fun founder Sapijiju belatedly issued a statement explaining the move.

“Our thesis is that the more coins/content that is created, the higher the likelihood that there will be something worth consuming and fun to trade for our customers,” Sapijiju said.

Sapijiju said those blaming increased coin launches for failure were “blaming the wrong thing” and instead said the solution was to work on discovery to root out bad actors.

Cointelegraph contacted Pump.fun for comment but didn’t receive a response by publishing time.