Dumpy.fun: Shorting Memecoins

Historically, for small market cap memecoins, investors have only had the option of speculating on price to the upside, with no way of profiting off of downward price movement.

However, dumpy.fun, created by Save (formerly Solend), is looking to change that with their recently announced platform that will allow users to short any memecoin with leverage.

Let’s take a look at how it works:

Users who are bullish on a token provide liquidity on squeeze.fun by depositing their tokens to earn yield from the high borrow rates.

Users who are bearish on the token deposit USDC or SOL as collateral to open a short position.

When the short position is opened, the protocol borrows the token being shorted and swaps it for the collateral token on Jupiter.

When the user closes their short position, the protocol swaps the collateral token back to the original token being shorted to repay the loan.

The user shorting receives the remaining collateral assets as profit/loss.

In addition to the new platform, the project will also be launching an experimental memecoin, DUMP, that is designed to “plummet to zero.” It aims to demonstrate how dumpy.fun operates and provides commentary on the game theory of market behavior.

Dumpy.fun is expected to launch in beta on July 30 and will add another layer to the PvP onchain memecoin ecosystem on Solana. Once live, it will allow users to develop new strategies for profiting off of memecoins, which should result in more efficient markets.