Welcome to the end. Maybe

https://dumpy.fun/

It was bound to happen.
A market abhors a vacuum and in the vast majority of the memecoin space on Solana we have lacked any sort of coverage with basic defi borrowing and lending primitives.

You can LP anything you want, but you can't borrow or lend it.

Into this vacuum steps dumpy.fun, a product looking to solve for the two sided problem every degen has faced at least once a day:

• "How can I dump a ****coin I don't own?"
• "How can I get some non-LP yield on this absolute piece of garbage I just aped into?"

Now you might think I'm think I'm being sarcastic but .... read the "whitepaper".
It might be written tongue-in-cheek but they're pretty clear about what this is.
And what it isn't.
https://docs.google.com/document/d/1m1b21V4ABi9kuK5Ph06eLgAQjcqnThtH_cdjyEq_kkY/edit#heading=h.v1a1efo3e1wa

It's a very short read but to summarise: It automates borrowing on Save and swapping on Jupiter in order to short.

There's a sister product flagged called squeeze.lol supposed to be coming soon which is mentioned in the whitepaper as the 'other side' to dumpy.fun positions

The really interesting bit hasn't launched yet

IMO the really interesting bit here is the deposit side.

There is a potential for squeeze.lol to generate high deposit rates for memecoin lenders (aka holders) based on high borrow rates on dumpy.fun.
Historically we've yet to see any decent lend rates for even billion dollar MC memecoins but if this could pull off double digit deposit rates for sub 10M dollar memecoins that would be very attractive to large numbers of users.

Enough talk, let's get dumping!

Enough theory, what does this look like in practice.

My first test was WIF, as it was the only token listed when the platform first opened a couple of days ago.

It's not like I had any great foresight, I just aped in and ended up ahead as the overall market tanked.


It's not a bad return but it's not stellar. Let's see how dumpy.fun stacks up against other lending platforms on their newest listing: W

We're using 69 USDC in each case as our collateral.

Dumpy.fun

I've been able to take out 100.15 W of borrows. But I haven't been able to get W as an asset deposited in my wallet.

Kamino Finance

I've borrowed just under my max as to not start liquidations. Kamino has much lower risk thresholds.
I was only able to take out 36.73 W of borrows.

I got that W as an asset in my wallet so technically I could've looped that back through (swap to USDC and deposit, borrow more W) to increase my total position.

Drift

I didn't take Drift to the max borrow either. Here I've been able to borrow 200 W against my collateral. Albeit with a lower account health.

I got that W as an asset in my wallet so technically I could've looped that back through (swap to USDC and deposit, borrow more W) to increase my total position.

MarginFi

On MarginFi I have been able to go to max borrows and pick up 131.06 W with a decent account health still.

I got that W as an asset in my wallet so technically I could've looped that back through (swap to USDC and deposit, borrow more W) to increase my total position.

The elephant in the room

This is the current line up of tokens on dumpy.fun


None of them are even close to the target market dumpy.fun is going after: pump.fun style tokens.
It is very early days but there is yet to be a token listed that isn't already available with much more liquidity on other platform for borrow/lend or as a perp.

dumpy.fun won't be battle tested until they can list a properly long tail asset that people are able to short successfully.

Product market fit or competitive pressure?

It would be remiss of me not to broach the subject of Save Finance (previously Solend) and what their recent history might tell us about the launch of this product.

Because on one hand you can look at this product and say: Who actually thinks memecoins need MORE sell pressure?

Save Finance were, for a while, the largest lending platform on Solana. However they were quickly supplanted by MarginFi when they launched their platform and points program mid 2023 and fell even further behind as Kamino started to dominate the space.
The team's deployment to Sui has taken up time and is yet to show significant traction due to the infancy of the Sui ecosystem in general. Solana continues to increase in volume and popularity so it will not be lost on the team that they have given up a lot of ground in a space they were still a major player in less than 12 months previous.

Kamino and MarginFi continue to release new features, each of which help generate more interest and attract more capital, whereas Save Finance just hasn't been as active in terms of product releases.

All that and pump.fun makes more actual revenue than most defi products on Solana right now.

dumpy.fun is a genuinely new product IF they can make good on their stated aim of listing long tail assets that aren't listed anywhere else. That could help them claw back some of the ground they've ceded to their competitors.
It's risky but potentially a key differentiator for Save Finance in the market.

In my reading I think it's not so much that there was a huge demand for this product as much as there is a strong incentive from Save Finance to have this product be successful.

Why not perps?

A reasonable question to ask is why I haven't included perps in this analysis. After all, all the tokens currently listed by dumpity.fun are available on Zeta/Drift.

Leading perp dex dYdX has the ultimate goal of being able to have any asset able to be permissionlessly listed on their exchange https://www.dydx.foundation/blog/new-trading-pairs-permissionless-markets-on-the-dydx-chain

There's a couple of key differences between establishing a trading market (which implements leverage) and lend/borrow.

The biggest difference is you're able to deposit single tokens (lend) into a lend/borrow market. Holding token positions is likely over 95% of all crypto usage, and probably an even higher percentage in memecoins. It's also much lower risk than taking a long position (even at low leverage).

Another difference is you're able to better control for bad debt in simple lend/borrow positions than in leverage positions. It does mean you get worse liquidity (you can short a lot more WIF than you can borrow for instance).

Who will you dump?

Do you take out short positions?
Let us know about your shorting strategies and war stories in the comments!

A shout out for BULB

dumpy.fun have a Canny page where you can suggest new listings. Let's get BULB listed on there. The price is dumping any way AND in order to dump a token you first need to buy that token which means much needed buy pressure for BULB.

https://dumpy.canny.io/memecoin-requests/p/bulb