- The Pump.fun platform has implemented its new Graduated Token Mechanism
- More than 1.38 million SOLs, worth over $287 million, have been removed from circulation
- The mechanism utilizes Raydium liquidity pools to “burn” SOL tokens
With the implementation of the new Graduated Token Mechanism aimed at reducing the number of tokens in circulation, over 1.38 million SOL tokens worth over $287 million have been removed. This will support Solana’s deflationary measures and could have a noticeable impact on the price of SOL among other factors.
More About Graduated Token Mechanism
Pump.fun co-founder shared on X that their new mechanism for reducing the number of tokens combined with burning pools effectively removed SOL from the circulating supply.
To elaborate, the working principle is as follows. Pump.fun works by issuing new tokens and sending a portion of their liquidity, including SOLs, to liquidity pools on the Raydium platform. The portion of SOL that goes to the pools is sent to addresses that are blocked from access, effectively making those tokens unavailable for use. Thus 1.38 million SOLs have been removed from circulation and are no longer available for trading or use on the market.
This is a highly important mechanism that creates a unique value in crypto relative to traditional financial systems with their inflationary effects and other drawbacks. Thus it gives Solana several important advantages:
It creates a scarcity of tokens, exerting a deflationary mechanism and supporting the SOL price.
It creates interest among investors, strengthening SOL’s position as one of the key cryptocurrencies like Bitcoin and Ethereum.
It also increases the importance of the Pump.fun platform itself, which is already creating more and more noise in DeFi.
Conclusion
This is important news and a critical functional improvement that has already been shown to work. Pump.fun is getting more and more attention, and is evolving.
Be aware and stay tuned for updates on the rapidly reshaping crypto landscape.
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