Meme coins recede, revenue capture rises: Review Pump.Fun and Hyperliquid’s new logic

Compiled/Organized by: Yuliya, PANews

"The era of valueless tokens is coming to an end, and true revenue models are the future." In the latest episode of The Rollup podcast, Mike Dudas, a general partner at 6th Man Ventures, shared the reasons behind Pump.Fun's success, Hyperliquid's buyback mechanism, the decline of pure meme coins, and the lessons he learned in his VC career. PANews has compiled this conversation into text.

Introduction to 6th Man Ventures

Mike: I am currently a general partner at 6th Man Ventures, a venture capital 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 or expertise. I'm over 40 years old and had extensive experience in the traditional business world before entering the crypto industry, and we understand the underlying logic of "building a business".

We focus on: How founders can leverage the capabilities of public chains to build businesses that cannot be established in the Web2 world. This can be DeFi, DePIN, stablecoins, payments, or even speculative entertainment projects and trading applications, and so on.

About the Pump.Fun Trend

Host: How is Pump.Fun competing with these new platforms recently?

Mike: Pump.Fun's success demonstrates an extremely strong market demand for tokenized assets. Users want to easily tokenize various things and issue new assets for different application scenarios. Its revenue scale has become the most explosive on-chain revenue event besides traditional perpetual contracts and spot markets that have existed for 10 years.

We can say that Pump.Fun is the "zero to one" innovation of 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 instantly issuable tokens, which is a completely new primitive asset structure.

To be honest, I'm surprised that no platform has been able to truly capture Pump's market share over the past year. Now a few platforms are finally starting to challenge Pump.Fun, which I think is understandable.

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

Mike: Some imitators have indeed proposed interesting new models, such as allowing token holders to capture platform value. The token economics of these projects are more complex. For example, Bonk's recent efforts are not bad.

However, to be frank, most challengers are either not well-designed or concerning. What I'm more worried about are platforms that claim their issued tokens are "related" to a certain business or enterprise.

I won't name these platforms because I know many 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 claim that this token is associated with a business, such as a company's revenue or operations. This is extremely dangerous.

Even if you write in the whitepaper or disclaimer that "the token has no direct association with the enterprise," users' hearing will not follow legal terms but selectively interpret them. We've seen such misunderstandings during the NFT bubble, where users would naively believe that buying an NFT means "holding the future revenue rights of the project".

I've personally done a golf NFT project and deeply experienced this gap. The market is full of misreadings about the value binding between "tokens and enterprises," and this misunderstanding is disastrous.

In contrast, Pump.Fun explicitly emphasizes that these tokens are "valueless meme coins". Of course, some ecosystems may spontaneously form around these coins, such as communities and trading activities, but the platform itself has never claimed that these tokens have any legal or economic value.

Those platforms that claim "buying this token early is equivalent to participating in a major project" may have disclaimers, but their marketing subtly implies some economic benefits, which constitutes what I consider "implicit misleading".

Even as an investor with extremely high risk tolerance, I feel uncomfortable with these approaches. If I feel uneasy, ordinary users should be even more cautious.

I'm taking a wait-and-see attitude towards "vibe coding" applications with tokens, which often over-promote the financial value linking tokens to applications and are more about providing an open experimental field. I also haven't seen such token projects do excessive market hype. I think this is a benign attempt with low risk and low expectations.

At the same time, the market is gradually becoming optimistic about the instant token issuance model. Platforms like Pump.Fun have established a clear token issuance and price growth mechanism through a "bonding curve", and these tokens have locked liquidity, making "running away" more difficult than before. This model is safer compared to the previous method of directly sending funds to an address and expecting token issuance.

Why "Pure Meme Coins" Are Ending

Host: I think you mentioned an important point: token value comes from product revenue and is fed back to holders through buybacks or dividends. This was rare in the crypto world in the past, but now Hyperliquid and other teams are exploring this path. What do you think about this trend?

Mike: If you had asked me three months ago, I might have given a completely different answer. At that time, I still thought meme coins could exist long-term based on consensus or be sustained by community-driven brand narratives.

But now it's different. I believe that issuing a pure meme, non-revenue token will become increasingly difficult, even unsustainable.

Now there are countless "pure meme" tokens launched daily in the market, with too much information noise, and users are becoming more skeptical. To stand out, you must provide a mechanism for revenue capture. I firmly believe we are moving away from newly launched pure meme coins - I'm quite experienced in this area. I helped launch Bonk, and we invested in Pump. Although occasionally a meme coin might grow rapidly without actual value, this is an exception. The current market's focus has shifted to tokens issued by projects, protocols, or companies that claim to have real value.

As regulatory and legal frameworks gradually become clearer, teams unable to see market changes in 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. Buyback

2. Fee-sharing

Among these, the buyback model is popular for directly feeding project value back to token holders. For example, projects like Binance and Hyperliquid have proven the sustainability and market appeal of the buyback model. Especially Hyperliquid, which uses business revenue for token buybacks through its continuously growing user base and market share, providing actual value support for token holders.

Of course, whether this mechanism constitutes a "security" is still legally controversial, especially in the United States. But from a market expectation perspective, users have accepted that tokens must capture protocol revenue to have value.

You can't say: "We have $700 million in annual revenue, but our token is still a meme." - No one will buy that. In other words, a token project with "high market cap, low circulation, and no value support" is now a dead end.

Token Value Backflow Mechanism: Hyperliquid Case Study

Host: As a recent example, what are your thoughts on Hyperliquid's buyback mechanism?

Mike: Our fund's colleague William has specifically modeled this. The initial question was: "Is buying back at high prices a form of capital waste?"

But when we calculate, the result is exactly the opposite. As long as the income is real and sustainable, investing the earnings into buybacks will build very strong market confidence.

Hyperliquid is a typical case. Users like this product, trading volume continues to rise, and market share keeps expanding. At this point, they use buybacks to directly feed income back to Token holders. This has an extremely strong price support effect on the Token itself and will form a positive cycle.

In traditional finance, if you continuously buy back stocks that are constantly rising, you will ultimately buy at a very high position - which is not recommended financially.

But in crypto, market psychology is different. Buybacks are no longer just "rational dividends", they also carry a token economic signal effect. It tells you: "We are truly feeding business income back to the community." Although we currently lack sufficient historical cases, the experience of Hyperliquid and Binance has proven that this model is feasible.

Host: We are no longer in the era of "everything can rise". If you lack income capability and don't have a Token buyback mechanism, you will be eliminated. This year (2025) might become a turning point. When we look back, we'll find this is the first year of a "value-driven crypto market".

Mike: Previously, the crypto industry was "Easy Mode": if you had a brand, some community heat, and could find some bots to brush data, you could pump the price. But that's not possible now. Now it's "Hard Mode": you must truly have a product, have income, have users to build token value.

Moreover, market funds have obviously increased. We've already seen Bitcoin reaching a new high, Ethereum reviving, Solana network stabilizing, and the overall market entering a high-quality development cycle.

But this also highlights a pain point - the overall respect for contractual spirit among crypto founders is much lower compared to traditional industries.

They are more rebellious, more free, but also more "undisciplined". You will find that even if you have signed legal contracts, Safe protocols, Token rights agreements, once the project becomes successful, they might modify terms, re-sign contracts, or even force you to make concessions. After the project takes off, they might say: "We want to modify the Token release arrangement." What can you do? They know you won't sue, and they bet you won't trigger a public relations event. So you can only renegotiate or swallow your grievances. Therefore, you will find that even if you sign everything perfectly, the market is chaotic, founder behaviors are unpredictable, and legal structures are often ineffective in the face of moral realities.

Another point is that the crypto market has high volatility and unpredictability. You can form a small team and then obtain huge returns. For example: We only invested $100,000 in STEPN - entering at a valuation of $15 million, ultimately reaching a market value of billions of dollars. You won't see such extreme return paths in traditional SaaS or AI. Of course, the chaos and failures in between are also very numerous. So this leads to my third insight: you must learn "emotional regulation" and "time extension".