Builders in the Web2 ecosystem may start exploring Pump.Fun to raise funds like JELLYJELLY.
By Godfrey Benjamin
Edited by Marco T. Lanz
Updated
4 mins read
Cryptocurrency protocols like Ethereum, Solana, and Cardano are fundamentally reshaping the financial landscape, presenting unprecedented challenges to centralized banking systems. Beyond competing with traditional yield products, Decentralized Finance (DeFi) applications are expanding rapidly, unveiling innovative use cases that demonstrate blockchain technology’s transformative potential across industries.
Among DeFi’s most disruptive innovations are Launchpads, sophisticated fundraising platforms native to the cryptocurrency ecosystem. These platforms aim to revolutionize capital formation by offering an alternative to traditional Initial Public Offerings (IPOs). While crypto fundraising initially operated within its own niche, it’s now gaining traction in mainstream finance, attracting attention from traditional investors and entrepreneurs alike.
The Initial Coin Offering (ICO) model of raising funds is as old as the broader digital currency ecosystem. This system of fundraising involves buying tokens prior to their launch on public crypto exchanges at a defined price. The idea is that upon launch, the valuation will soar, giving early investors a massive return on their investments.
One of the early records of an ICO dates back to Mastercoin (now rebranded to Omni). Omni raised funds via the ICO model in 2013 to build new assets on the Bitcoin blockchain. After Omni, Ethereum also used the model to bootstrap its smart contract innovation in 2014.
In the years afterward, the ICO model blossomed, with the iconic fundraising era spanning until 2017. However, regulatory scrutiny from the US Securities and Exchange Commission (SEC) slowed down the tempo from 2018.
Innovators in the industry had to shift grounds, with ICOs evolving into Security Token Offering (STO) and Initial Exchange Offering (IEO). While this still left room for regulatory scrutiny, the funding models had to explore more insulating strategies, especially one that mainstream players can take advantage of.
After years of experimenting with new ways to introduce projects and raise funds, Pump.Fun, a memecoin launchpad, launched on Solana. The Pump.Fun model is a simple one as it permits direct community seeding for a project. With ease of token creation and a bonding curve that helps define price and liquidity, a new model to empower users was born.
This is currently the most popular model employed by creators to launch projects in the community. While the target is generally for retail investors, the Pump.Fun model is gradually becoming popular.
What was designed for crypto native ecosystems is fast becoming the go-to tool for Web2 developers. This trend became amplified recently with the launch of the JELLYJELLY token. This token, floated by Iqram Magdon-Ismail, a Venmo co-founder and Sam Lessin, an early investor in the mobile payment app, was the highlight of Pump.Fun in the past week.
Hours after launch, the token saw its valuation skyrocket to $230 million, a move that stunned Magdon-Ismail and Lessin. Despite the consolidation that trailed the token after the initial hype, the token float has sent a unique message to the Web2 world. The message? That a new funding model has emerged.
Building a usable product is a tough bid, one that becomes complicated when innovators need capital to scale. However, many founders have managed to break free in the mainstream tech world to gain global prominence.
While raising funds in the traditional financial ecosystem is rewarding for companies that succeed at it, the high entry barrier is discouraging. As a case study, the JELLYJELLY founders plans to deploy the earnings from the Pump.Fun launchpad to build their video chat app. First, the JELLYJELLY token holders will have exclusive access to the product, creating a unique community of users with minimal effort.
Innovators in Web3 may exploit this new trend to further enhance the launchpad process for Web2 builders with solid products. What started with JELLYJELLY is poised to become a new Internet Capital Market as many are choosing to call it.
In the near future, there is a possibility that outfits like Product Hunt and legitimate Silicon Valley builders will explore Pump.Fun-like capital raise model.
The pace at which innovation is evolving is a fast one; however, crypto is tagging along well. To get the best of the industry, proponents have projected linking up with the broader traditional ecosystem. With different product modes, the capital-raising model might be one way to bridge this gap.
When innovators from Web3 explore Web3-focused funding models, they are forced to adopt blockchain, a trend that can bring diversified talent to the industry. Ultimately, users get to benefit, marking a win-win situation for all.
While the timeline for this transition is unknown, proponents are optimistic the industry is right on track.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
