Can Meteora kill Pump.fun with its stealth token launch?

Meteora has introduced M3M3 — pronounced “meme” — a new project looking to change the way meme coins operate by presenting staking incentives for investors. However, some analysts are concerned about its operating mechanism.

The platform facilitated the launch of the M3M3 token to serve as a test run for this concept, with the token quickly gaining traction among the crypto community.

Understanding the M3M3 platform  

M3M3 is Meteora’s attempt to address the challenges in the meme coin market, where the majority of tokens fail to sustain long-term value. 

Data confirms the grim state of meme coins, as out of 1.2 million new tokens launched last month on pump.fun, only 1.4% migrated to decentralized exchanges, and a mere 0.05% surpassed a $1 million market capitalization. This is largely due to the high rate of rug pulls.

Earlier in the year, a crypto.news report confirmed that deployers of Solana-based meme coins facilitated rugpulls, leading to a combined loss of $26 million for investors in March. Most recently, the Hawk Tuah token collapsed 90% hours after launch amid rug pull allegations. 

Meteora looks to address these issues by promoting a player-versus-platform (PPP) model for meme coins. This would represent a shift from a player-versus-player (PvP) environment, where quick liquidity withdrawals often leave holders at a loss.

The new PPP model will introduce a staking approach, according to the announcement. This staking mechanism essentially encourages token holders to stake their assets, reducing selling pressure and fostering long-term stability.  

How the M3M3 staking model works

The M3M3 system incentivizes staking by presenting rewards derived from locked liquidity swap fees. These fees are distributed among the top stakers in the form of Solana (SOL) tokens, which can be claimed immediately, and meme coin rewards that are automatically restaked. 

The model potentially creates a positive feedback loop: as more participants stake, the competition increases, driving token purchases and enhancing liquidity, which in turn generates more rewards.  

Unstaking comes with conditions, as participants must wait a designated period before withdrawing tokens. This mechanism discourages short-term speculation and promotes sustained participation.  

A saturated market

Meanwhile, M3M3 enters a crowded market of token deployment platforms, including Pump.fun, SunPump, and Snek.fun. PancakeSwap also recently launched Springboard on BNB Chain.

Each competitor has carved out a niche by facilitating meme coin launches and liquidity generation. For instance, Pump.fun focuses on hype-driven token launches, while SunPump leverages on-chain buyback and burn mechanisms. Meanwhile, Springboard allows free token launches.

However, M3M3’s introduction of staking rewards could set it apart by addressing the issue of value retention. By comparison, M3M3 leverages a staking mechanism inspired by the “(3,3)” model to create a sustainable ecosystem.  

Possible strengths and drawbacks

The M3M3 model has several advantages. First, it incentivizes token holders to stake rather than sell, reducing market volatility. 

Second, it reportedly provides a steady income stream through fee rewards, even during market downturns the official website claims. Also, its configurability makes it attractive to launchpads seeking staking solutions for new projects.  

However, the platform is not without challenges. Its reliance on staking to sustain demand may falter if rewards become insufficient to attract participants. The potential for high entry barriers, as only top stakers benefit significantly, could alienate smaller investors.  

M3M3 token launch  

Meteora launched the M3M3 token as a test for the platform. Within hours of its release, the token has skyrocketed by over 962,000%, now boasting a $116 million market capitalization, per market data.

Its rapid success prompted a major cryptocurrency exchange, MEXC, to list the token shortly after its debut.  

Meteora distributed M3M3 tokens via an airdrop to active users of its platform. Despite its success, the launch sparked debate, with critics alleging insider control and expressing concerns over the lack of transparency. 

Community reactions

The M3M3 launch has triggered mixed reactions, with opinions ranging from commendation to harsh criticism. 

DeFi project CC2 Ventures highlighted the generosity of Meteora’s airdrop strategy, which rewarded active users with M3M3 tokens. They noted that the tokens held significant value, thanks to the token’s rapid rise to over $113 million in market capitalization. 

Lemon, another pundit on X, praised the staking model, comparing it to game-changing DeFi innovations of the past. Lemon noted the platform’s ability to allow token holders to earn rewards without needing to sell their assets, describing it as a new frontier for meme coins.  

However, not everyone viewed the launch favorably. A commentator expressed disappointment that the launch did not utilize Jupiter Exchange’s established launchpad, which might have ensured greater transparency. 

These critics argue that Meteora’s decision to stealth-launch the token undermined trust and gave an unfair advantage to a select few.  

Meanwhile, some skeptics dismissed the project entirely, suggesting it was overhyped and risky. An observer discussed the unexpected “insider-driven” nature of the launch, cautioning investors to avoid risking their SOL tokens on what they deemed an uncertain proposition.