the ceiling is dropping and nobody is asking why

the observation

summer 2024 was the most euphoric period memecoins have ever seen. 20M runners were daily occurrences. generational wealth in hours. charts felt limitless.

then — slowly, invisibly — the ceilings started dropping. 500M runners became 100M. then 20M. now 5M. the community grew but the liquidity didn't. and nobody asked why.

@omen_xbt wrote the thread that finally said the quiet part out loud:

omen@omen_xbt

before pumpswap, raydium's fee compounding model did something most people took for granted: it automatically recycled trading fees back into LP depth. every buy, every sell was quietly strengthening the liquidity pool. then creator fees replaced that mechanic. instead of fees compounding back into the pool, they started flowing outward - out of the ecosystem entirely.

omen@omen_xbt

a token with a growing community but stagnant liquidity is a business scaling headcount without scaling resources. eventually the cracks show. and when they do, one or two large holders exiting is enough to take the whole chart down with them.

the mechanic that broke

the old model was simple: trading fees compound back into the liquidity pool. every transaction makes the pool deeper. deeper pool means less slippage, which means bigger buys are possible, which means higher ceilings. it was a flywheel.

the new model redirects those fees outward — to creator wallets, to protocol treasuries, to cashback programs. the pool stops growing. but trading volume doesn't stop. so you get more and more transactions against a pool that's no longer keeping up.

omen@omen_xbt

the question was never whether fees should exist. it was whether they should leave.

two phases, two different problems

there's a distinction most people miss — and it changes everything about how fees work.

this is why the bonding curve phase is so destructive. pump.fun takes 0.95% on every trade and the LP gets literally zero - not because fees aren't going to LP, but because there is no LP. the pool doesn't exist yet. fees have nowhere to compound.

the moment a token graduates and the real pool is created, wet-router starts working. creator fees get claimed from the vault, half is swapped for tokens, and both sides get deposited back into the pool. the faster a token graduates, the sooner fees start compounding into real liquidity instead of sitting in a vault or getting extracted.

this is fundamentally different from meteora or raydium - those are pools from day one. pump.fun tokens start on a bonding curve with zero LP mechanics and only get a real pool after graduation. understanding this distinction is the difference between knowing what the problem is and knowing when it can be fixed.

the debate

the thread hit 38K views. then alon — pump.fun's founder — entered the replies. what followed is the most revealing exchange about fee mechanics the ecosystem has produced.

live debate — march 2026

alon @a1lon9 (pump.fun founder)

the core premise of the article is flawed because PumpSwap coins and Raydium coins from back then have a near-identical LP structure and both auto-compound fees at pretty much the exact same rate

omen @omen_xbt

the total fee may be the same but the effect from its existence and the alignment for the token long term is completely different. when all the fees generated stay in the coin, all holders benefit whether they bought on day 1 or after 2 weeks. the cashback system incentivizes quick attention rotation rather than long term growth.

remus @remusofmars

the total fee is very different. you pointing out the "LP fee" is the same is a complete non sequitur. we realize the actions inside the piggy bank are the same but when there's someone at the gate of the piggy bank collecting a cent off every dollar put in/taken out of it, then the piggy bank will not fill up as much as it otherwise would.

alon @a1lon9

that was true until cashback coins, where the total fee is exactly the same as the OG pump fun experience

remus @remusofmars

ok yes got it. you do understand that this is not the same as ray pools/og pump at all right? the old way was low taxes. the new way is high taxes that are then redistributed to high volume traders. pretending these are the same is mental gymnastics, at best.

alon @a1lon9

everyone gets the exact same fee discount/cashback, so it's not mental gymnastics. it's an economic fact that every trader gets the same deal

remus @remusofmars

no it literally does. in the former system, that fee stayed in the LP (stayed in the coin). in the new system, it gets kickbacked to traders (which they rarely use on the coin they earned it from). cashback favors high volume traders relatively to the old system which favored holding relatively more.

remus @remusofmars

this whole thing is the most intellectually dishonest shit ever. i'm kinda like i'm saying it's bad that ur charging import and export tax and you are like "noooo but income tax rate is the same"

alon's defense hinges on one claim: "the LP fee auto-compounds at the same rate." let's look at his own docs.

raydium AMM v4 charged 0.25% total per trade. 88% went to LPs (0.22%), 12% to RAY buyback (0.03%). total extraction from the ecosystem: 0.03%.

pumpswap's bonding curve charges 1.25% total - 0.95% to pump.fun, 0.30% to creator. LP fee: 0%. nothing compounds. this is where the majority of early trading volume happens, and zero goes back to the pool.

most memecoins graduate and then stall at 0-420 SOL mcap. at that tier pump.fun still takes 0.93% on every trade. LP fee: 0.02%. even at higher tiers it only reaches 0.20% - actually lower than raydium's 0.22%. when alon says "they compound at the same rate" - the LP fee is literally worse.

then there are two types of pumpswap tokens and alon conflates them:

creator fee tokens - the creator fee (0.30-0.95% depending on mcap) goes straight to the dev wallet. the most common model. the most obviously extractive. the dev drains the pool in real time.

cashback tokens - alon's argument: the creator fee gets "returned" to traders, making it "exactly the same as the OG pump fun experience." but as remus pointed out: in the old model, that fee stayed in the LP. in the new model, it gets kicked back as SOL - and traders almost never reinvest it in the same coin. it incentivizes volume rotation (more trades = more cashback) over holding.

total extraction per trade went from 0.03% (raydium) to 0.80-1.25% (pumpswap). that's a 27-42x increase. calling this "the same" is, as remus put it, like saying import and export taxes don't matter because income tax is the same.

the equation nobody wants to hear

omen@omen_xbt

mindshare without the liquidity depth to support it is a lit fuse on a small powder keg. you can get the community. you can get the attention. but if the liquidity pool's total value is roughly equal to one top holder's bag, you are one exit away from a chart that will never recover.

this is the structural reality most projects ignore. you can have the best narrative, the hardest community, the most viral content - but if your liquidity can't absorb a single whale exit, you're running on borrowed time.

omen cited $TripleT as an example: 1/15th liquidity-to-mcap ratio, 1/30th on the SOL side. that means one holder with 3% of supply could crater the chart by exiting. not because the project failed - because the liquidity was never built to handle success.

the $WET answer

this is exactly what $WET was built for. not as a response to this thread — the tool was already written — but because this problem was obvious to anyone watching the meta compress.

wet-router is a free, open-source bot that activates the moment your token graduates. it claims creator fees from the pump AMM vault, swaps half for tokens, and deposits both sides back into the pool. no protocol cut. no middleman. 100% of creator fees → back to LP. pre-graduation, fees accumulate in the vault waiting. post-graduation, the bot starts routing them home.

the code is on github. you can run it yourself. or use our hosted service if you don't want to manage infrastructure - we charge only operating costs, zero profit margin.

the thesis is simple: fees that stay in the pool compound. fees that leave the pool decay. we're not anti-fee. we're anti-extraction. creators should earn — from holding supply on a healthy chart, not from siphoning the pool that makes that chart possible.

omen@omen_xbt

the ceilings are dropping. they will keep dropping until the ecosystem stops debating whether fees should exist and starts asking what fees should do.

we already answered.

open-source fee-to-LP routing. no protocol tax. no middleman. your fees, your liquidity, your control.