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

Meteora has introduced M3M3 (pronounced “meme”), a new project that aims to change the way meme coins work by offering staking incentives to investors. However, some analysts are concerned about the working mechanism of this mechanism.

The platform facilitated the launch of the M3M3 token to serve as a test case for this concept, and the token quickly gained traction among the crypto community.

Understanding the M3M3 platform

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

Of the 1.2 million new tokens launched on Pump.fun last month, only 1.4% migrated to decentralized exchanges and only 0.05% exceeded the $1 million market cap. The data confirms the dire situation of meme coins. This is largely due to the high carpet shrinkage rate.

A crypto.news report earlier in the year confirmed that Solana-based distributors of meme coins were facilitating rugpulls, resulting in a total loss of $26 million for investors in March. Recently, Hawk Tuah token crashed 90% hours after launch amidst rug-pulling allegations.

Meteora is trying to solve these problems by promoting the player versus platform (PPP) model for meme coins. This would represent a shift from the player-versus-player (PvP) environment, where rapid liquidity withdrawals often left owners at a loss.

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

𝗛𝗲𝗿𝗲’𝘀 𝗵𝗼𝘄 𝗠𝟯𝗠𝟯 𝘄𝗼𝗿𝗸𝘀:

• Stake your memecoin to earn fee rewards in M3M3.
• The more you bet, the more you win.
• Only top stakers share fee rewards.
• If you withdraw your tokens, you must wait before you can withdraw them. pic.twitter.com/uZF1aAIpac

— Meteora (@MeteoraAG) December 4, 2024

How does the M3M3 staking model work?

The M3M3 system incentivizes staking by offering rewards from locked liquidity swap fees. These fees are distributed among top stakers in the form of instantly claimable Solana (SOL) tokens and automatically re-staking meme coin rewards.

The model creates a potentially positive feedback loop: As more participants place bets, competition increases, token purchases are incentivized, and liquidity increases, generating more rewards.

Staking comes with some conditions, as participants must wait a certain amount of time before withdrawing tokens. This mechanism discourages short-term speculation and encourages sustainable participation.

A saturated market

Meanwhile, M3M3 is entering a crowded market of token distribution 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 example, Pump.fun focuses on excitement-based token launches, while SunPump leverages on-chain buyback and burn mechanisms. Meanwhile, Springboard allows free token launches.

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

Possible strengths and disadvantages

The M3M3 model has several advantages. First, it reduces market volatility by encouraging token holders to buy shares rather than sell.

Secondly, it reportedly provides a steady stream of income through fee rewards even during market downturns, the official website claims. Its configurability also makes it attractive to launchpads looking for staking solutions for new projects.

However, the platform is not without its challenges. Its reliance on staking to sustain demand could falter if rewards become insufficient to attract participants. The potential for high barriers to entry could drive away smaller investors, with only top-tier investors benefiting significantly.

M3M3 token launch

Meteora launched the M3M3 token as a test for the platform. According to market data, within hours of its launch, the token has surged over 962,000%, currently reaching a market cap of $116 million.

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

Meteora distributed M3M3 tokens via airdrop to active users of its platform. Despite its success, the launch sparked controversy, with critics claiming internal control and voicing concerns about a lack of transparency.

Community reactions

The launch of M3M3 triggered mixed reactions, with opinions ranging from praise to harsh criticism.

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

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

M3M3 is actually a genius.

Game changing launch where imo could have a similar impact to PF with its creativity. The $M3M3 protocol is the first mover in the space that allows users to monetize their memecoins. You will have the opportunity to stake any token on their platform and… https://t.co/5FDhh0kBlI

— lemon (@lemondontfloss) December 4, 2024

However, not everyone was positive about the launch. One commenter expressed disappointment that the launch did not use the Jupiter Exchange’s built-in launch pad, which could have provided greater transparency.

These critics claim that Meteora’s decision to launch the token in secret undermines trust and gives an unfair advantage to a select few.

Meanwhile, some skeptics have dismissed the project outright, arguing that it is overhyped and risky. One observer discussed the unexpected “insider-driven” nature of the launch and warned investors against risking their SOL tokens on what they saw as an uncertain offering.