Meme coins decline, revenue capture rises: Reviewing the new logic of Pump.Fun and Hyperliquid

Compiled/organized by Yuliya, PANews

“The era of worthless tokens is coming to an end; the real revenue model is the future.” inThe RollupIn the new podcast, Mike Dudas, general partner of 6th Man Ventures, shared the reasons for the success of Pump.Fun, Hyperliquid's repurchase mechanism, the decline of pure Meme coins, and the lessons he learned in his VC career. PanNews has transcribed this conversation.

Introducing 6th Man Ventures

Mike: I'm currently a general partner at 6th Man Ventures, a venture fund focused on early-stage crypto investments. Our primary focus is on the application layer, not the infrastructure layer.

If you imagine a typical venture fund, they usually invest in large L1 or L2 chains, but that's not our strategy, nor our area of expertise. I'm in my 40s and had extensive experience in the traditional business world before entering the crypto industry, and we understand the underlying logic of “building a business.”

What we are concerned about is how founders can use the power brought by public chains to build businesses that cannot be established in the Web2 world. This could be DeFi, DePin, stablecoins, payments, speculative entertainment projects or even trading apps, etc.

About the Pump.Fun craze

Moderator: How is Pump.Fun's competition with these new platforms recently?

Mike: The success of Pump.Fun shows that there is an extremely strong demand for tokenized assets in the market. Users want to be able to easily tokenize various things and issue new assets for different application scenarios. Its revenue scale has become the most explosive revenue event on the chain in addition to traditional perpetual contracts and spot markets, which have existed for 10 years.

We can say that Pump.Fun is an innovation “from 0 to 1” in this cycle.

This mechanism has given birth to many new assets on Solana. Just as Bitcoin and Ethereum initially created crypto assets for the crypto ecosystem, now we have Meme coins and tokens that can be issued instantly. This is a new original asset structure.

Frankly speaking, I was surprised that no platform has actually been able to seize Pump's market share in the past year. Now, at last, a few platforms are starting to try Pump.Fun, and I think that makes sense.

Moderator: What do you think of the innovations of challengers like Bonk?

Mike: Some imitators have indeed proposed interesting new models, such as letting token holders capture platform value. The token economy design of these projects is more complicated. Bonk, for example, has been doing quite well recently.

But let's be honest, most of the challengers are either not well-designed or just cause concern. What interests me more are platforms that claim that the tokens they issue are “related” to a business or enterprise.

I won't name these platforms because I know many of the founders are still rapidly experimenting and iterating. But the problem is: you can't control the expectations of token buyers.

For example, some platforms allow users to issue a token and then advertise that the token is related to a certain business, such as the revenue or operation of a company. This is extremely dangerous.

Even if you state in the white paper or disclaimer that “this token is not directly related to the enterprise,” the user's hearing will not follow the legal provisions, but rather interpret them selectively. We've already seen this misunderstanding during the NFT bubble. Users would take it for granted that buying an NFT “is tantamount to holding the right to the future benefits of the project.”

I have worked on a golf NFT project myself, and I have experienced this kind of gap deeply. The market is full of misunderstandings about the value binding between “token and enterprise,” and this misunderstanding is disastrous.

By contrast, Pump.Fun very clearly emphasizes that these tokens are “worthless meme coins.” Of course, in the future, some ecology may spontaneously form around these coins, such as community and trading activities, but the platform itself has never claimed any legal or economic value for these tokens.

Platforms that advertise that “buying this token early is tantamount to participating in a major project” have written disclaimers, but they suggest some kind of financial benefit in terms of marketing, which constitutes what I think is “hidden misleading.”

Even though I'm already an extremely risk-hungry investor myself, I'm uneasy about these games. If even I feel unwell, then the average user is even more wary.

I have a wait-and-see attitude towards “vibe coding” applications that combine tokens. Such projects usually overpromote the financial value of tokens and apps, and more provide an open testing ground. Nor have I seen this type of token project become a hot market hype. I think this is a healthy experiment with low risk and low expectations.

At the same time, the market is gradually optimistic about the ready-to-use token issuance model. Platforms such as Pump.Fun have established a clear token issuance and price growth mechanism through a “bonding curve (joint curve)”, and these tokens have hedged liquidity, which makes “running away” more difficult than before. This model is more secure than the previous method of sending funds directly to an address and expecting tokens to be issued.

Why are “pure meme coins” coming to an end?

Moderator: I think you mentioned an important point: token value comes from product revenue and is given back to holders through repurchases or dividends. This was rare in the crypto world in the past, but now Hyperliquid and the rest of the team are exploring this path. What do you think of this trend?

Mike: If you had asked me three months ago, I would have given a completely different answer. At the time, I also felt that Meme coins could completely survive on consensus for a long time, or rely on community-driven and brand narratives to maintain popularity.

But it's not the same now. In the future, I think it will become more and more difficult, or even unsustainable, to issue a token with no revenue that is pure memes.

Now, countless “pure meme” tokens are being launched on the market every day. There is too much information noise, and users are becoming more and more suspicious. To stand out, you have to come up with revenue capture mechanisms. I'm convinced we're moving away from newly launched pure meme coins, and I'm very good at this — I helped launch Bonk, and we invested in Pump. Although there are occasional meme coins that grow rapidly without real value, this is just an exception. The current market's focus has turned to tokens issued by projects, agreements, or companies that claim to have real value.

As regulatory and legal frameworks become increasingly clear, teams that can't see market changes over the next 3 to 12 months will no longer be favored by investors.

Currently, the two most common models in the crypto market are:

1. Repurchase (buyback)

2. Fee-sharing (distribution of dividends or fees)

Among them, the repurchase model is popular because it directly returns project value to token holders. For example, projects such as Binance and Hyperliquid have proven their sustainability and market appeal through repurchase models. Hyperliquid, in particular, uses business proceeds directly to repurchase tokens through its growing user base and market share, providing real value support to token holders.

Of course, there are still legal disputes, especially in the US, whether this mechanism can constitute “securities.” However, from the perspective of market expectations, users have accepted: for tokens to be valuable, they must capture protocol revenue.

You can't say, “We make $700 million a year, but our token is still a meme.” ——No one bought it. In other words, a token project with “high market value, low circulation, and no value support” is now at a dead end.

Token Value Reflow Mechanisms: Hyperliquid Case Study

Moderator: As a recent example, what do you think of Hyperliquid's buyback mechanism?

Mike: Our colleague within the fund, William, did modeling specifically in this area. The initial question was: “Is the repurchase a high level of buyback, but rather a waste of capital?”

But when we did the math, it turned out just the opposite. As long as the revenue is real and sustainable, and the revenue is invested in repurchases, it will establish very strong market confidence.

Hyperliquid is a prime example. Users love to use this product, the trading volume continues to rise, and the market share continues to expand. At this point, they directly fed back the revenue to token holders through buybacks. This has a strong effect on the price of the token itself, and it will form a positive cycle.

In traditional finance, if you keep using profits to buy back rising stocks, you'll end up buying in a very high position — this is not recommended financially.

But in crypto, the market mentality is different. Repurchases are no longer just “rational dividends”; they also have a token economy signal effect. It tells you, “We're really giving back our business revenue to the community.” While we lack enough historical examples right now, Hyperliquid and Binance's experience has proven that this model works.

Moderator: We are no longer in an age where “anything can go up.” If you don't have the ability to earn money and don't have a token repurchase mechanism, then you will be eliminated. This year (2025) could be a turning point. If we look back, we'll see that this was the first year when “value dominated the crypto market.”

Mike: In the past, the crypto industry was in “Easy Mode”: if you had a brand and a bit of community popularity, you could pull the wheel by searching for bots to scan data. But now it's not working. Now it's “Hard Mode”: You have to have real products, income, and users to build token value.

Furthermore, there is now a marked increase in market capital. We have seen Bitcoin reach new highs, Ethereum regains vitality, the Solana network is stable, and the overall market enters a high-quality development cycle.

Changes in the crypto investment pace and new investment logic

Moderator: What are your recent venture capital strategies?

Mike: It's true that our investment pace has been slow lately, which is actually part of the cyclical nature of the crypto industry. We are an early-stage fund, and the current capital activity of the entire market is focused on the mid to late stages, such as Series A, B, and even some growth rounds. I've observed that many large funds are now more willing to bet on agreements that are already showing a clear growth trend.

We work closely with accelerators such as Alliance, and have invested in many of the companies they have incubated. They also said that early rounds of financing are currently more difficult. But this isn't necessarily due to a lack of good founders or projects, but rather a decline in risk appetite in the overall market.

For us, the slowdown is also related to structural factors. Many crypto VC funds are now in a new round of fundraising, and the fundraising market is finally a bit better than it was two years ago. Our 6MV fund actually didn't raise much capital in 2023 or 2024; it only started this year. However, many institutional LPs now pay more attention to actual dividends (DPI). The problem is that from 2021 to 2022, most projects weren't able to provide much real return, so many funds are currently tight on capital.

But the good news is: as the market recovers, it is expected to see a return of capital in 2025, and funds that can be monetized will naturally be able to raise funds smoothly.

We are now seeing Bitcoin reach new highs, Ethereum is recovering, Solana's data is very healthy, and new public chains like Sui are gradually becoming more active.

So I believe: now you can confidently support early founders who really want to do big things for two or three years, rather than just playing short-term projects that make quick money.

Stablecoins, DeFi, on-chain economic flywheels

We have observed that there are now a number of innovative projects “doing real work”, including stablecoins, DeFi, consumer-grade wallets, etc., and the structure is much better than before.

Stablecoins are a prime example. For example, I just went to a stablecoin-related conference this morning, and their data is astonishing — the supply of on-chain stablecoins has increased by nearly $100 billion over the past 12 months.

People are actually using these things, not only as basic trading pairs for centralized exchanges; stablecoins are being used as actual payment and business operation tools, such as cross-border settlement, payroll payments, international payments, etc. Traditional financial giants such as Stripe, Visa, and Mastercard are all participating.

This shows that the on-chain economy is gradually taking shape and is superior to traditional improvements in the fintech sector over the past 15 years. Stablecoin-related companies have begun active financing, and these companies have attracted capital into the decentralized finance (DeFi) market by providing stablecoin-based banking services, such as those similar to Stripe or Dakota, thereby driving the growth of the on-chain economy.

Currently, DeFi native companies and real asset companies are introducing different types of assets and benefits to the chain, forming a flywheel effect of development.

Many front-end companies, such as commercial banking service companies, consumer stablecoins, and self-custodial companies, are starting to offer global dollar accounts while also allowing users to transact in the real world through methods such as debit cards. In addition, these apps also integrate the ability to participate in decentralized finance (DeFi) earnings, and have built-in browsers like Coinbase Wallet, MetaMask, or Phantom to facilitate users to enter the decentralized economic ecosystem.

On the other hand, the strategy to attract users also includes diverting traffic through high-yield projects such as “moonshots” or similar “Trump coins,” and gradually introducing more products to users. Currently, more and more users are starting to use self-hosted accounts and deposit funds, and various apps are also trying to increase user stickiness. The previous NFT craze has subsided, but the industry is looking for the next growth point.

The return and investment logic of consumer-grade cryptographic applications

To that end, we are now actively re-betting on consumer-grade apps. For example, we voted for a project called Football.fun. Think of Sorare as a “mobile player card.” This model is closely tied to the interests of real-world users — people who love to watch are instinctively willing to participate.

We also invested in Worm, which is a prediction market. We've been looking for a good team to predict the market for a long time, and now we've finally waited for a team with excellent design and strong execution.

What these projects have in common is that they allow users to stay on the chain; they are not airdropping, not just playing around, but are willing to continue to use and establish sovereignty over their own assets. This is what we value the most.

Criticism of “investing only in infrastructure”

Moderator: Then why don't you invest in those “infrastructure” projects? Sounds like a lot of money and a quick exit?

Mike: Many of these “infrastructure-only” funds only use infrastructure as an arbitrage tool, sell SAFT ahead of time, and find a way to exit before the token goes live. The money they took was the same LP money as me. But I can say without exaggeration: I brought 10 to 100 times more users into the crypto industry than theirs.

For example, if you take a look at Movement Labs' Cap Table (financing list), I won't name them; you can find out by checking them yourself. These funds are just waiting for the tokens to go live and then clear their positions. Not only did this behavior not bring value to the industry, it was disruptive in the long run.

And the scariest thing about them is that they let retail investors take all the risks. They made money, and retail investors became successors.

If we don't speak out publicly now, this kind of thing will continue to happen round after round. The last round of the bull market has gone bad enough; we can't repeat it again.

We said last time we wouldn't do it again, but it happened again. This is an economically reasonable thing for these funds and founders, but this is a misallocation of capital because no long-term value is created; in fact, long-term value is destroyed. A select group of venture capitalists, founders, and their limited partners will earn huge sums of money directly out of the deceived population.

Lessons I've learned in my venture capital career

Moderator: What have you learned through your venture capital career that changed the way you invest now?

Mike: First, in the field of cryptography, the role of individuals is more important than anywhere else. Although the original intention or idea of a project may change over time, team and individual abilities and cooperation often determine the success or failure of a project.

• For example, Magic Eden. We invested in them in early 2021, when they were just an NFT marketplace on Solana. What about now? They have become a cross-chain wallet+NFT platform, providing full-chain integration services. This was not the direction we could have anticipated when we invested in them at the time, but their team's strong execution is the key to the continuous transformation and success of the project.

• Another example is Tensor. They were originally an NFT trading platform, but now they are also making Vector apps and other integrated products. Although we didn't vote for them (which is our anti-portfolio), they also came out through team ability and a very fast pace of adjustment.

But this also brings up a pain point — the overall level of respect for the spirit of contract among crypto founders is much worse than in traditional industries.

They are more rebellious and freer, but they are also more “unruly.” You'll find that even if you sign a legal contract, safe agreement, or token rights agreement, once the project is popular, they may revise the terms, re-sign the contract, or even force you to make concessions. After the project was launched, it said, “We need to revise the token release schedule.” What else can you do? They know you won't sue, and they bet you won't trigger a PR incident. So all you have to do is renegotiate or hold back your voice. So you'll find that no matter how good you sign, the market is chaotic, the founder's behavior is unpredictable, and the legal structure is often ineffective in the face of moral reality.

Another thing is that the crypto market is highly volatile and unpredictable, and you can form small groups and then reap huge rewards. For example, we only invested $100,000 on STEPN — with a valuation of 15 million dollars, and the final market capitalization was several billion dollars. You won't see this extreme revenue path in traditional SaaS or AI. Of course, there was also a lot of chaos and failure in the middle. So this brings me to my third perception: you have to learn “emotional regulation” and “lengthen time.”