Pump.fun will issue tokens but not airdrop to the community?

According to information shared from the Wu Blockchain site, the Pump.fun platform, the famous memenoin launchpad on the Solana blockchain, is preparing to issue tokens and hold a public offering.

It is worth noting that the platform will adopt the Dutch Auction* model for the token distribution, and is working with several centralized exchanges (CEX) to implement the event.

*The Dutch Auction model is an auction method with a high starting price, then decreasing at a fixed rate. Participants will set the purchase price at a level they deem reasonable. This is a model that helps detect market prices more transparently than traditional token distribution methods.

Information about Pump.fun issuing tokens and adopting the Dutch auction model was initially revealed by the @hebi555 account. Subsequently, Wu Blockchain spoke out confirming this information through numerous internal sources from exchanges.

Earlier, He Yi, co-founder of Binance, also mentioned the use of Dutch auctions to improve the IEO (Initial Exchange Offering) model during an AMA session, indicating that the trend toward adopting this method is gaining increasing interest in the crypto industry.

Currently, Pump.fun has collected approximately $572 million in transaction fees and has transferred approximately $386.8 million to Kraken Exchange. However, the platform is also facing legal lawsuits from several lawyers in the US, which could affect their ability to issue tokens in the future.

This means that Pump.fun will likely not host the airdrop, as the platform has chosen the Dutch Auction model to distribute tokens instead of traditional token issuance forms. This marks a difference from many other projects on Solana, which often use airdrops to engage the community.

The Dutch auction model helps the project create liquidity from the start by selling tokens at a decreasing price, rather than issuing them for free which leads to selling pressure as soon as the token is listed. This helps to form a more stable market from the moment of opening the sale, and also attracts people who really want to own the token instead of just receiving an airdrop to sell right away.

In 2023, Nansen also studied this auction model, showing the performance of tokens after being distributed through the Dutch Auction, with very different results between each project.

In the first week after the auction is completed, the studied projects have the following price action:

• CREB: The strongest increase, reaching levels above 100% after a week.
• ILV: Recorded an increase of about 80%, being in the group of high-performing tokens.
• BIT, RSS3, MPL: Stable growth, fluctuating around 40-60%.
• AURA, PERP, RAD: There is a slight upward trend, but without sharp breakouts, fluctuating in the range of 20-40%.
• WNCG, XDEFI, YGG: Having difficulties after listing, some tokens fell in price by as much as -40%, indicating selling pressure soon after the end of the auction.

This suggests that, although the Dutch auction helps determine the price according to actual supply and demand, there is no guarantee that the price will continue to rise once the token is officially traded.

One of the key factors affecting the performance of tokens is the final price in the auction. If the price is pushed too high due to FOMO sentiment, there is a high probability that buyers will take profits as soon as the token is listed, leading to strong selling pressure.

Conversely, if the starting price is reasonable and not overly manipulated, the token can keep the price stable or continue to grow after going to the floor. This suggests that the correct valuation in the Dutch auction is the determining factor in the success of a token.After the news went viral, the majority of users including prominent figures such as Frank DeGods, appeared surprised by the announcement. Meanwhile, some people are still wondering if Pump.fun will do the airdrop. At the moment, the founder of Pump.fun has not made any new moves or statements following the announcement.