We are all familiar with pump.fun, where you can easily launch a meme coin. We are also familiar with Hyperliquid, where you can easily open leverage.

So, what happens when you can launch a meme coin with just one click and open leverage at the same time? This is what a new project on HyperEVM, alt.fun, has tried to do—combining pump.fun with Hyperliquid.

alt.fun Mechanism

Firstly, similar to pump.fun, anyone can mint tokens. However, when creating a token, in addition to providing basic information such as the token name, ticker, logo, description, etc., the first step is to choose an asset, select a direction (long/short), and choose a leverage multiplier.

As shown in the diagram below, alt.fun currently supports mainstream crypto assets such as BTC, ETH, HYPE, SOL, DOGE, ZEC, as well as traditional large assets like silver, Nvidia, and the S&P 500 Index. The leverage options include 2x, 3x, and 5x.

On pump.fun, during the bonding curve phase, users deposit SOL to receive meme coins. However, on alt.fun, users deposit USDC to receive leverage tokens.

The so-called leverage tokens represent the contract positions on Hyperliquid. Therefore, the underlying trading logic on alt.fun is as follows:

Buy: USDC -> Leverage Token -> Meme Coin

Sell: Meme Coin -> Leverage Token -> USDC

Instead of saying that users are trading meme coins, it is more accurate to describe it as a fundraising leveraging wrapped in a meme coin. Whether before or after the token generation event, the asset reserve corresponding to the meme coin always consists of the underlying leverage token. This means that even if a particular meme coin is not actively traded, the appreciation/depreciation of the underlying leverage token's contract position will impact the price movement of the meme coin.

Due to this mechanism, alt.fun has two graduation thresholds for tokens. One is to follow the bonding curve path until completion, and the other is for the contract position value of the token to reach $9,000. The former can be easily understood as collectively leveraging at $9,000, while the latter implies that there is no need to raise funds as the position itself is worth that much.

After graduation, liquidity migrates to the AMM pool, but the asset paired with the meme coin is still a leveraged token, so buying at this point actually amplifies the leverage position. The catch-22 is here: if the underlying leveraged position increases in value, it will trigger FOMO, causing more money to flow in, amplifying the meme coin's rise with one foot in and one foot out. However, conversely, if the underlying leveraged position loses value, it can also easily lead to a sell-off.

Does this mechanism have a "leader"?

New projects coming out easily trigger FOMO. From the perspective of the meme coin launchpad, undoubtedly the most valued and emotional $ALT.

However, since alt.fun actually wraps a leveraged position in a meme shell, it should also be noted that $ALT is actually a meme-ified 5x long position on $HYPE leverage. If $HYPE rises by 10%, the underlying leveraged token will rise by 50%, catalyzed by emotion, and the market cap of $ALT itself will also be magnified.

But what if $HYPE falls? Or even, when $HYPE is in a oscillating trend, such as a 10% drop followed by a 10% rise, although the price of $HYPE remains the same, the system will dynamically rebalance in the background to avoid liquidation, meaning that in a ranging market, positions will be forced to deleverage to reduce leverage during a downturn. This means that if the underlying asset drops by 10% and then returns to its original price, your token net worth will not only not return to the starting point but will actually incur a loss, and the higher the leverage, the more severe the loss.

In extremely volatile markets, theoretically, dynamic rebalancing may not be able to respond in time, leading to liquidation (the leverage token value goes to zero).

In summary, although this platform can still use emotion to capture the leader, this emotion needs to be strong; otherwise, the underlying leveraged asset's sideways movement can easily result in losses.

What is new about this platform?

Although many seasoned players may think that this is simply adding a layer of meme gameplay to the existing leveraged token gameplay, with today's contract players either placing their own orders or engaging in copy trading and other methods of gameplay, what is new about this platform?

@frozenraspberry raised an interesting point—that this thing cannot work on ETH/Solana, but can run on HyperEVM:

In addition, @nyenchenn also pointed out that memeing the leverage position itself is inherently fun:

Conclusion

Adding a layer of meme to leverage has amplified the emotional aspect, where this amplification effect of alt.fun has become an innovative aspect that attracts attention, but at the same time, it has also increased the risk of the asset itself. When investing, a more cautious approach is needed.

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