Meme wrappers for contracts – là alt.fun một sự đổi mới thực sự hay chỉ là nhu cầu ảo?

Original: Odaily (@OdailyChina)

Author: Golem (@web3_golem)

Last week, a new Meme launch platform called alt.fun on the Hyperliquid ecosystem attracted significant attention from Meme players. Within just one week of launch, its leading token ALT reached a market cap of up to $8.8 million, before retreating to its current level of around $6.7 million.

The novelty of alt.fun can be understood as a combination of Pump.fun and Hyperliquid. On this platform, users can experience the dual thrill of playing with Memes and trading perpetual contracts simultaneously.

Introduction to the alt.fun Platform Mechanism

Specifically, each Meme token launched on alt.fun has a corresponding contract position matched on Hyperliquid at its core.

Similar to Pump.fun, any user can launch a Meme coin on HyperEVM via the alt.fun platform with a single click. The token price is still influenced by a bonding curve. The total supply of the created Meme coin is 1 billion tokens. When 75% of the tokens are sold, the token successfully "graduates" and is migrated to the HyperSwap V2 liquidity pool.

The difference from Pump.fun lies in that when creating a token on alt.fun, users must also select an underlying asset and choose to go short/long with a specific leverage limit (2x/3x/5x). Simultaneously with the token creation, the platform mints a corresponding amount of leveraged tokens (LT) on BounceTech (Odaily Note: A permissionless leveraged token platform on Hyperliquid) and sends them to the user. These leveraged tokens correspond to establishing a perpetual contract position on Hyperliquid. For example, if a user creates a token based on going long 3x on HYPE, they essentially receive a leveraged token tracking a 3x long position on HYPE's returns.

As shown below, users can currently choose from 14 different underlying assets when creating a token on alt.fun. Similarly, when players purchase a Meme coin on this platform, the platform mints corresponding leveraged tokens on BounceTech. If a player sells, this process is reversed: the leveraged token is redeemed, and the user receives the corresponding USDC.

This model of packaging leveraged tokens as underlying assets and then selling them is analogous to securitizing specific risk exposures from derivatives like futures and options in traditional finance, such as a 3x short Nasdaq ETF or a 5x short Crude Oil product. In this process, the alt.fun platform acts as an asset management company, managing the long-term positions behind the leveraged tokens for the users.

The core price of such financial products typically tracks the net asset value. However, because the price of tokens launched on the alt.fun platform is simultaneously influenced by the Meme coin's bonding curve mechanism, the graduation model and price drivers for Meme coins on this platform are not singular.

Dual Graduation Model and Price Drivers

This means the price of tokens on the alt.fun platform is affected by two factors: first, market sentiment from buying and selling, and second, the performance of the underlying asset. So, you might now understand the meaning behind alt.fun's slogan: "Your token pumps even when nobody's buying."

For instance, if a user creates a token based on going long 3x on HYPE with an initial investment of $20 (the platform's minimum purchase size), and HYPE subsequently rises by 10%, then even if no one buys the token, the user's position value would increase by 30% to $26.

Based on this dual price driver, the graduation model for tokens on the alt.fun platform is not limited to just one method. Specifically, the graduation condition for a token requires its market cap to reach $9,000. This essentially calculates the value of the leveraged token. Besides achieving graduation through token purchases, a token can also successfully graduate if its market cap, driven by an increase in the underlying asset's value, reaches $9,000. Therefore, whether a token reaches the graduation threshold is often the combined result of both price mechanisms.

Of course, ideally, an increase in the underlying asset drives the leveraged token's value up, combined with catalytic sentiment from the Meme market, the token could potentially spiral upwards. However, if the underlying asset declines, causing the leveraged token's value to continuously shrink, the market might panic sell, and the token's price could crash instantly.

Therefore, while alt.fun's mechanism can effectively amplify leverage, it only works effectively in trending markets and requires users to accurately predict the direction. If the underlying asset experiences a ranging market, users must also bear leverage decay losses. This is because, during price fluctuations of the underlying asset, the platform needs to conduct "rebalancing" to manage positions and avoid liquidation. This means even if the underlying asset drops and then recovers, the leveraged token will suffer losses due to forced position reduction during the decline, gradually depreciating.

Furthermore, in the event of extreme price wicks, the platform might not react in time, potentially leading to the leveraged token's value becoming zero.

Meme or not Meme

Currently, the alt.fun platform has a total of 41 graduated tokens. Only two tokens have a market cap exceeding $1 million: ALT, based on a 5x long HYPE position, and STONKS, based on a 5x long S&P 500 position. The platform has approximately over 1,000 total users. Although alt.fun is still in its early stages, we can already observe its current development bottlenecks.

First, the platform's underlying assets are too few. Based on the current 14 underlying assets, the maximum number of different leveraged token combinations is only 84. alt.fun has already seen leveraged tokens going short/long on the same underlying asset with the same multiplier. For example, the current top token ALT is based on a 5x long HYPE, while another token named ATH (which reached its all-time high in market cap) is also based on a 5x long HYPE. Apart from their token names and creation times, they are identical. If so, why would investors buy the lower market cap ATH instead?

While alt.fun might support more underlying assets in the future, its core pain point is the inability to build a strong Meme coin community consensus.

The fundamental reason investors choose to buy leveraged tokens on the alt.fun platform instead of opening leverage directly on Hyperliquid is to gain greater price leverage. Additionally, since the platform handles rebalancing management for users' positions on the backend, individual users can be "hands-off" without worrying about individual liquidation risks.

However, this is also the problem. An investor's decision to buy an alt.fun token is essentially based on their future price expectation for its underlying asset, not on narratives, market dynamics, or attention – these "seemingly intangible things" are precisely the core values that support a Meme. A Meme token's rise or market acceptance often relies not on any tangible value support or financial design but, more importantly, on its community propagation attributes.

As a Meme player, it's hard for me to develop a passion for a leveraged token similar to the love for a specific Meme community culture. If one truly believes in the underlying asset of a particular leveraged token, it might be better to launch one's own leveraged token rather than buying an existing one and bearing unnecessary premiums.

Therefore, while the alt.fun platform's mechanism seems novel, in my view, it is merely mechanical innovation. If alt.fun pivots towards evolving into a DeFi platform, it might still have a chance. However, if it insists on competing in the Meme launch platform track, it is destined to be a flash in the pan.