Original | Odaily Planet Daily (@OdailyChina)
Author | Golem (@web3_golem)
Last week, a new Meme issuance platform named alt.fun in the Hyperliquid ecosystem garnered significant attention from Meme players. Within just one week of launch, its leading token ALT reached a peak market cap of $8.8 million, with the current price having retraced, maintaining a market cap around $6.7 million.
The novelty of alt.fun can be understood as a combination of Pump.fun and Hyperliquid, where users can simultaneously experience the dual thrill of playing with Memes and opening contracts.
Introduction to the alt.fun Platform Mechanism
Specifically, each Meme token issued on alt.fun has a corresponding contract position matched on Hyperliquid at its core.
Similar to Pump.fun, any user can issue a Meme coin with one click on HyperEVM through the alt.fun platform. The token price is still influenced by a bonding curve. The total supply of the created Meme coin is 1 billion tokens, and when 75% of the tokens are sold, the token successfully "graduates" and is migrated to a HyperSwap V2 liquidity pool.
The difference from Pump.fun is that when creating a token on alt.fun, users also need to select an underlying asset and choose a limited leverage multiple (2x/3x/5x) to go short/long. At the same moment of 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. This leveraged token corresponds to establishing a perpetual contract position on Hyperliquid. For example, if a user chooses to create a token based on a 3x long position on HYPE, what they receive is essentially a leveraged token that tracks the gains of a 3x long HYPE position.
As shown in the figure below, currently on alt.fun, users can choose from 14 types of underlying assets when creating a token. Similarly, when players buy Meme coins on this platform, the platform also 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 and then selling leveraged tokens as underlying assets is similar to the securitization of specific risk exposures like futures and options in traditional finance, such as 3x inverse Nasdaq ETFs or 5x inverse crude oil products. In this process, the alt.fun platform acts like an asset management company, managing the long-term positions behind the leveraged tokens for users.
The price of such financial products primarily follows the net asset value. However, since the token price issued by the alt.fun platform is also simultaneously influenced by the bonding curve mechanism of Meme coins, the graduation mode and price drivers of tokens on this platform are not singular either.
Dual Graduation Modes and Price Drivers
This means that the price of tokens on the alt.fun platform is influenced by two factors: one is market sentiment driven by buying and selling, and the other is the performance of the underlying asset. So now you might understand what alt.fun's slogan "Your token pumps even when nobody's buying" means.
For instance, if a user creates a token based on a 3x long HYPE position with an initial investment of $20 (the platform's minimum buy-in size), and subsequently HYPE rises by 10%, then even if no one buys the token, the user's holding value increases by 30% to $26.
Based on this dual driver of price, the token graduation mode on the alt.fun platform is not limited to one method either. Specifically, its token graduation condition is reaching a market cap of $9,000, which essentially calculates the value of the leveraged token. Besides achieving graduation through buying tokens, if the token itself reaches a market cap of $9,000 due to the rise of its underlying asset, it can also graduate successfully. Therefore, whether a token reaches the graduation threshold is often a combined result of the two pricing mechanisms.
Of course, ideally, a rise in the underlying asset drives up the leveraged token, and combined with the emotional catalysis of the Meme market, the token might soar step by step. But once the underlying asset falls, the value of the leveraged token continuously shrinks, the market might panic-sell, and the token price could potentially crash instantly.
Thus, while alt.fun's mechanism can effectively leverage amplification effects, this only works in a one-sided market trend and requires users to accurately time the trend. If encountering volatile conditions in the underlying asset, users also have to bear leverage decay losses. This is because when the underlying asset price fluctuates, the platform needs to perform "rebalancing" to manage positions to avoid liquidation. This means that even if the underlying asset drops and then recovers, the leveraged token will suffer depreciation due to forced position reduction during the decline.
Moreover, in the case of wick or flash crash events, the platform might fail to react in time, potentially leading the leveraged token value to zero.
Meme or not Meme
Currently, the alt.fun platform has a total of 41 graduated tokens, with only two having a market cap exceeding one million: ALT (based on 5x long HYPE) and STONKS (based on 5x long S&P 500). The total number of users is around over 1,000. Although alt.fun is still in its early stages, we can also discern its current development bottlenecks from this.
First, the platform has too few underlying assets. Based on the current 14 types of underlying assets, there can be at most 84 different combinations of leveraged tokens. alt.fun has already seen leveraged tokens with the same leverage multiple shorting/longing the same underlying asset. For example, the current highest token ALT is based on 5x long HYPE, while another token with the ticker ATH is also based on 5x long HYPE. Apart from the token name and creation time, there is no difference between the two. If so, why wouldn't investors buy the lower market cap ATH?
Although alt.fun may support more underlying assets in the future, its core pain point is its inability to coalesce 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 themselves is essentially to gain greater price leverage. Moreover, because the platform manages position rebalancing in the backend for users, individual users can be "hands-off landlords," not having to worry about individual liquidation risks.
But this is also the problem. Investors buying an alt.fun token are essentially still basing their decision on future price expectations for its underlying asset, rather than on narratives, market games, or attention—these "meaningless things" are precisely what support the core value of a Meme. A Meme's ability to rise or gain market recognition is often not due to any practical value backing or financial design behind it; more importantly, it's the community propagation attribute.
As a Meme player, it's difficult for me to develop a love for a leveraged token similar to the affection for a particular Meme's community culture. If one truly has conviction in the underlying asset of a leveraged token, it might be better to issue one's own leveraged token rather than buy an existing one and bear unnecessary premiums.
Therefore, while the mechanism of the alt.fun platform appears novel, in my eyes, it's merely a mechanical innovation. If alt.fun pivots towards developing as a DeFi platform in the future, there might still be opportunities. But if it insists on forcefully entering the Meme issuance platform track, it is destined to be a flash in the pan.
