tl;dr
A Solidus Labs report reveals that 98.6% of tokens issued on Pump.fun, a Solana-based token creation platform, are scams or involve fraudulent trading. Since January 2024, Pump.fun has issued over 7 million tokens, but only 1.4% maintain liquidity above $1,000. A major scam involving MToken caused l...
A recent report from Solidus Labs uncovers that a staggering 98.6% of tokens issued on Solana's Pump.fun platform are scams or involve fraudulent trading.
Since January 2024, over 7 million tokens have been created on Pump.fun, yet only 1.4% maintain liquidity above $1,000.
The most significant scam identified, MToken, resulted in losses up to $1.9 million, highlighting the financial risks for investors.
Ethereum co-founder Vitalik Buterin has openly criticized platforms like Pump.fun for encouraging detrimental speculation within the crypto ecosystem.
On Solana's Raydium decentralized exchange (DEX), 93% of liquidity pools—totaling around 361,000—show signs of “soft rug pull” scams, where developers slowly withdraw liquidity to the detriment of investors.
Median losses from these soft rug pulls are approximately $2,832, though some losses have reached as high as $1.9 million.
Despite these concerns, Raydium recently introduced LaunchLab, a new platform directly competing with Pump.fun, even as scam issues persist on both fronts.
Solana’s blockchain technology, famed for its lightning-fast transactions and exceptionally low fees (roughly $0.00025 per transaction), attracts both legitimate projects and malicious actors.
The ease of token creation on Pump.fun, paired with minimal vetting, has inadvertently fostered an environment ripe for scams.
Nonetheless, Solana continues to underpin a vibrant DeFi ecosystem, hosting billions in monthly trading volume and numerous trustworthy projects.
This dichotomy presents a compelling landscape: rapid innovation and accessibility on Solana's network enable exciting opportunities, yet they come with heightened risks of fraud and loss.
Investors navigating platforms like Pump.fun and Raydium are urged to exercise caution and scrutinize liquidity pools closely.
What measures could be implemented to better protect participants in these fast-evolving DeFi markets?
Are these platforms capable of reforming to balance open access with security?