Pump.fun pivots from launch speed to holder retention with new Diamond algorithm
TREE NEWS reports: Pump.fun co-founder Alon announced on X that the platform has launched a new rewards algorithm called Diamond, running alongside the renamed Degen algorithm. While Degen rewards callout creators who drive trading volume, Diamond adds multipliers for high-market-cap tokens, perpetual futures, EVM-chain assets, and non-Solana assets. Most notably, it rewards holding time—a striking shift for a platform built on rapid token issuance and high-frequency trading.
Why the change? The old model is stalling
The timing is telling. In October 2026, Pump.fun’s total product fees hit a record $175 million, with PumpSwap contributing $107 million—61% of the total. But beneath the headline, launchpad fees fell 15% month-over-month to $50.2 million, and weekly trading volume dropped nearly 46% from early October to early November. The platform’s share of new token trading volume has slipped from over 90% at its peak to as low as 52%. The revenue record was driven by a new 0.45% platform fee and PumpSwap’s resilience, not by growing user activity.
Pump.fun is not alone in shifting focus. Virtuals Protocol introduced Diamond Hand Bonuses in 2025, BNB Chain’s $4 million Meme season centered on a HODLer Index, Moonshot distributes 80% of issuance fees to early holders, and BONK rewards long-term lockers with trading fees. The industry is moving from a competition over issuance efficiency to a competition over retention.
The mechanics—and the loopholes
Diamond’s design has a critical flaw: it rewards spot holding without accounting for hedged positions. Large holders can use multiple addresses to meet holding-time and market-cap thresholds while shorting equivalent amounts on perpetual futures or in liquidity pools, earning risk-free rewards. MEV front-running, wash trading between related addresses, and flash loans to temporarily meet snapshot requirements are also viable. The algorithm sees on-chain balances but cannot detect hedges or identify layered related addresses.
There is also a trust problem. Callout rewards come from a platform fee pool, not directly from followers’ trades, but when a creator’s payout and their own pre-positioned holdings are tied to the tokens they promote, every recommendation carries an implicit conflict of interest. Blockchain analytics firm Bubblemaps estimated that a top KOL can earn about $125,000 from a single packaged recommendation—$80,000 from the reward pool and $45,000 from pre-positioning and selling.
Bigger threats loom beyond memecoins
The real competitive threat may not come from other launchpads. Robinhood Chain, an Arbitrum-based L2 launched in July 2026, brings 28 million retail customers into a single wallet for stock tokens, RWAs, DeFi, and memecoins. Coinbase’s Base, with over $5 billion in TVL and up to 38 million monthly active addresses, integrates wallet, trading, social, and DeFi. These platforms are competing for the broader financial activity entry point—not just token issuance.
Pump.fun’s expansion into perps, EVM assets, and non-Solana rewards is an attempt to widen its asset boundary. But the core question remains: when the rewards stop, will users stay? If they stay only for the subsidies, Pump.fun has simply swapped token-issuance subsidies for holding subsidies—still buying flow with money. If they stay for trustworthy creators and genuinely discussable assets, it may have built a real trading social network. Diamond hands, after all, are never manufactured by rewards.
