---
# System prepended metadata

title: 'Final Report: Pump.fun'

---

**Pump.fun Fee Optimization Report**

# Introduction

In Pump.fun's Solana-based launchpad and DEX platform, the multifacted fee parameters play a critical role in balancing user engagement, liquidity provision, and revenue generation. Gauntlet and the Pump Fun Foundation have partnered to optimize the platform's performance by calibrating protocol, token creator, and liquidity provider (LPs) fee values. The results of this analysis contain explicit insights and recommendations regarding: 

 - platform revenue and its relationship to increased transaction volume and efficiency 
 - token creation market share via offering competitive yields and incentives that attract more launches
 - LP retention via attractive fee structures to encourage sustained liquidity depth
 
The below details data-driven recommendations derived from inferential and descriptive modeling, offering a preliminary assessment and proposed fee allocations for each of the above constituents.

# Background

Historically, Pump.fun employed a mostly static fee model in its bonding curve and swap stages, until adjustments in September, 2025. A shift toward dynamic, model-guided optimizations enables A/B testing for iterative improvements, ensuring fees adapt to sectors and participant behaviors. This analysis, based on pre-change data, serves both as an evaluation of legacy ecosystem dynamics and a foundation for initial fee schedules. It leverages funding and trading patterns to identify where fees are doing the most marginal work, and where they reach saturation point. We suggest a redesign that aligns economics with long-run growth. 

In Pump.fun's ecosystem, trading fees are typically divided among three key constituents: the protocol, token creators, and LPs. For example, prior to the September, 2025 fee change, the swap stage allocated 0.2% fee to LPs, and equal 0.05% fee for creators and protocol. 

The *protocol* fee is the main source of platform revenue. 

The *creator* fee, in the form of per trade royalties, incentivizes token launches by providing ongoing revenue to token initiators based on trading activity. 

The *LP* fees reward those who supply liquidity to pools, facilitating smoother trades and reducing slippage. 

Each component serves to align interests within the DEX framework, but adjustments carry tradeoffs. For instance: 

 - increasing protocol fees can enhance platform revenue, but may deter users if perceived as excessive, potentially reducing overall volume.
 - boosting creator fees attracts more token launches, yet it could diminish LP attractiveness if their share shrinks, leading to shallower pools and higher costs for traders
 - higher LP fee can lead to deeper liquidity and lower trading costs, benefiting traders through reduced slippage but potentially reach a saturation point beyond which LP participation and trader volume tapers. 
 - prioritizing creators might spur more projects and market share but alienate traders with elevated effective costs. 

Despite these tradeoffs, an "optimal" fee structure exists based on basic economic principles of supply-demand equilibrium and price elasticity, where fees are set to maximize total revenue, participation, and liquidity. This preliminary analysis quantifies fee saturation levels and derives market cap specific insights, revealing opportunities for substantial economic impacts: cost savings for traders via efficient liquidity, amplified platform revenue through higher sustained volumes, and robust incentives for creators and LPs. 

# Summary of Goals 

Optimizing fees within each steakholder's share is essential, as "proper" calibration aligns incentives to foster a cycle of growth across the platform. To this end, we provide the following analysis:

 - market cap specific LP fee recommendation, based on relationship between pool liquidity and slippage.
 - creator fee recommendation based on competitor analysis (Bags) that would close the current revenue gap.
 - token lifecyle analysis in support of creator fee changes that sustain coin creation and trader appetite.
 - semi-causal volume~cost elasticity model to quantify response of changes in effective trading cost as a function of changing pool liquidity.
 - maximum total tolerable cost analysis for traders based on current incurred cost and its variance within each market cap segment.


# Data

## Overview
The dataset underpinning this analysis comes from three sourses: PumpSwap, as well as competitors Bags, and Bonk. PumpSwap comprises detailed, per-liquidity pool trade-level data, alongside a comprehensive liquidity pool event table, capturing deposit and withdrawal activities within the swap stage. This data spans a historical period from March 2025 to August 2025, encompassing liquidity events across approximately 800,000 PumpSwap canonical pools, and over 1 billion trades. These records provide a foundation for understanding trading dynamics and liquidity shocks within Pump.fun's ecosystem during the swap stage, and are used for fee optimization. In addition, competitor data from Bags (since May, 2025) and Bonk is used in creator fee analysis, and includes historical trading volume, token creation volume, market share, and revenue figures based on their distinct fee structure, offering a comparative benchmark for fee optimization strategies. The dates of all three datasets have been carefully aligned to capture contemporaneous market dynamics. When a more general historical analysis can reveal important insights, individual historical patterns 

## Preprocessing and Sampling
Prior to modeling, the dataset underwent rigorous preprocessing and subsampling to ensure analytical integrity. This includes filtering for pools with non-zero reserves, removing missing or invalid entries (to enhance statistical significance), applying robust outlier removal techniques to mitigate noise, and ensuring repeatability in model outputs and inferential results. Descriptive statistics are stabilized through consistent sampling methods, such as random subsampling with balanced limits (e.g., 100,000 liquidity pool deposits, withdrawals, and trades), adjusted to capture representative trends while managing computational feasibility. These steps safeguard the reliability of downstream analyses, enabling a stable foundation for both descriptive insights and inferential modeling of fee impacts.


# Methodology
## Quasi-Experimental Elasticity Model - The Framework

### Theoretical Discussion

As paft of fee optimization, we investigate the response of traders to changes in total incurred cost, and propose a semi-causal analytical framework that compared trading activity around slippage shocks intruduced by LPs. The motivation here is to use LP deposits and withdrawals as proxies of cost variance (as other fees are static within the scope of current dataset). We provide a procedure to estimate volume elasticity of demand in a quasi-experimental fashion. 

In standard econometrics, the price elasticity of demand measures the responsiveness of quantity demanded to changes in price, formally defined as:

$$
\epsilon_V = \frac{\partial \ln V}{\partial \ln C} = \frac{dV/V}{dC/C} \rightarrow \frac{dV}{V} = \epsilon_V\frac{dC}{C}\tag{1}
$$

where $C$ is total trading cost (slippage plus fees) and $V = V(C)$ represents cost dependent trading volume. The volume elasticity captures the relative rate of change: a 1% increase in cost elicits an $\epsilon\%$ change in volume. 

To define elasticity threshold, we find the relative change in revenue $R = C \times V(C)$ and substitute Eq(1) we obtain: 

$$
\frac{dR}{R} = \frac{dC}{C} + \frac{dV}{V} = \frac{dC}{C} + \epsilon_V \frac{dC}{C} = (1 + \epsilon_V) \frac{dC}{C} \tag{2}
$$ 

Setting Eq(2) to zero, we see that $\epsilon_V = -1$ serves as a baseline optimum for revenue maximization. When $-1 < \epsilon_V < 0$, volume drops slower than the cost increase, netting positive revenue growth. For values $\epsilon_V < -1$, volume drops faster than increase in cost, reducing revenue. This motivates a forcing function for cost (e.g. with fee adjustments). For an inelastic case $-1 < \epsilon_V < 0$, revenue is increasing with cost, fee can be raised to drive volume lower, until revenue reachest its maximum. Conversely, for elastic case $\epsilon_V < -1$, fees can be reduced until revenue is maximized, approaching the unitary threshold $\epsilon_V = -1$. Finally, positive elastivity $\epsilon_V > 0$ would imply revenue increases with cost hikes, but this is rare in trading contexts.

The figure below shows a classic revenue Laffer curve simulated from an elastic, $\epsilon_V < -1$, response to cost (arbitrary units).

![Laffer](https://hackmd.io/_uploads/rJuC7Lzieg.jpg)


Thus, the goal of this model is to establish quasi-causal inference on how trading volume responds to cost variations induced by LP shocks (deposits and withdrawals) that alter pool depth and thus slippage. By treating LP shocks as exogenous pivots, we quantify volume elasticity, assuming significant cost changes causally affect trader behavior. 




### Difference of Differences (DiD): Model Mathematics

To address endogeneity (e.g., volume influencing costs via liquidity), we employ a two-stage difference-in-differences (DiD) regression approach. In the first stage, we predict cost changes using LP shocks as an instrument, segmenting data into treatment (pools with shocks) and control (similar unshocked pools) groups. The first-stage OLS regression is:

$$
\ln(C_{it}) = \gamma_0 + \gamma_1 (\text{Post}_{it} \times \text{Treated}_{i}) + \delta_t + \eta_i + \mathbf{Z}_{it}\theta + u_{it}
$$

Where:
- $C_{it}$: Total cost for trade in pool $i$ at time $t$
- $\text{Post}_{it}$: Binary indicator (1 if trade occurs after an LP shock within a short window, e.g., 30 minutes; 0 otherwise).
- $\text{Treated}_{i}$: 1 if trade occurs within influence zone of an LP event. 
- $\delta_t$: Time fixed effects (e.g., day/hour dummies) to control for market-wide factors.
- $\eta_i$: Pool fixed effects to account for time-invariant pool characteristics.
- $\mathbf{Z}_{it}$: Controls/instruments (e.g., volatility).
- $u_{it}$: Error term.
- $\gamma_1$: DiD coefficient capturing shock-induced cost change.

This stage is essential for causal inference, as it isolates exogenous cost variation from shocks, mitigating reverse causality (e.g., high volume lowering costs). Predicted costs $\hat{C}_{it}$  from this stage serve as an instrument for the second stage, in which we regress log(volume) against log(predicted cost) within each market cap bin:

$$
\ln(V_{it}) = \alpha + \epsilon_V \ln(\hat{C}_{it}) + \mathbf{X}_{it}\beta + \varepsilon_{it}
$$

where $\epsilon_V$ is the local elasticity. This instrumental variable (IV) approach via predicted costs enhances causality, assuming shocks affect volume only through costs. 

### Assumptions, Strengths, and Weaknesses

Key assumptions include:
- **Parallel Trends**: Treatment and control groups would follow similar cost/volume paths absent shocks.
- **Exogeneity of Shocks**: LP events are not driven by anticipated volume changes (plausible for sudden deposits/withdraws).
- **No Spillovers**: Shocks in treated pools don't affect controls (e.g., via arbitrage).
- **Sufficient Variation**: Shocks induce meaningful cost changes for identification.

**Strengths**: DiD + IV provides robust causal estimates in quasi-experimental settings; bin segmentation captures heterogeneity; log-log directly yields elasticity.
**Weaknesses**: Violation of assumptions (e.g., endogenous shocks) biases results; small liquidity changes and small samples per bin reduce power; aggregation windows introduce noise.


## Quasi-Experimental Elasticity Model - Results

The distribution of relative shocks due to LP deposits and withdrawals is depicted in the fugure below. For this analysis, we calculate the signed change in pool depth relative to initial reserves, defined as the relative depth change 
$$
\Delta D_{\text{rel}} = \frac{D_{\text{after}} - D_{\text{before}}}{D_{\text{before}}} 
$$
where $D_{\text{before}}$ and $D_{\text{after}}$ represent the total value locked (TVL) before and after the LP event, respectively. The distribution reveals that a *2-sigma* LP event corresponds to approximately a *2% relative change* in pool depth, indicating small liquidity fluctuations within the dataset.

![Screenshot 2025-09-12 at 11.43.48 PM](https://hackmd.io/_uploads/r1Us_vMseg.png)


 Given the median cost within each market cap bin, we simulate the slippage using the entire distribution of LP shocks (depth changes) and a fully deterministic AMM curve traversal. The theoretical cost change is calculated from AMM constant product relation as:

$$
C_{\text{post}} =  \frac{C_{\text{median}}}{1 + \Delta D_{\text{rel}}} 
$$

where $C_{\text{median}}$ is the pre-shock median cost. Withdrawals with $\Delta D_{\text{rel}} < 0$ result in increased slippage (higher effective cost), while deposits with $\Delta D_{\text{rel}} > 0$ lead to decreased slippage. The distribution of cost "premium" (increase for withdrawals) and "discount" (decrease for deposits) is illustrated in the next figure, showing that the bulk of LP events induces relatively small changes in total cost for traders, typically within 1 basis point. This limited impact reflects the constrained magnitude of most shocks.

![Screenshot 2025-09-09 at 6.42.41 PM](https://hackmd.io/_uploads/SkSqHvfsll.png)


Based on these observations, we anticipate a small response in volume elasticity with respect to cost. The bar chart below presents the elasticity distribution per market cap bin, derived from the second-stage regression $\ln(V_{it}) = \alpha + \epsilon_V \ln(\hat{C}_{it}) + \mathbf{X}_{it}\beta + \varepsilon_{it}$, where $\epsilon_V$ is the elasticity coefficient. The results reveal small and mostly statistically insignificant elasticity coefficients, with confidence intervals often straddling zero, suggesting that the current quasi-experimental framework is limited. This limitation arises from the boundedness of pool reserve changes, which leads to insignificant slippage variance, and potential sparsity of trade events within a reasonably short time period of each LP event (necessary to maintain a causal connection). 

![Screenshot 2025-09-13 at 12.03.16 AM](https://hackmd.io/_uploads/HktN6wzjee.png)


This elasticity analysis corroborates the need for more significant *experimental cost variation*, which can be achieved through dynamic fee reallocations but is beyond the scope of the current static fee dataset. Future analyses with varied fee structures will enhance the robustness of these findings.

### Maximum Tolerable Cost


The concept of maximum tolerable cost leverages the aggregation of multiple token lifecycles within each market cap (MC) bin to systematically analyze cost distributions derived from realized trades. This approach enables assessment of cost variance and the estimation of an upper bound of cost that traders were willing to endure post hoc, reflecting their behavioral tolerance under varying liquidity conditions. We establish the baseline cost as the median cost within each bin, and calculate the upper bound using interquartile range $IQR = \text{IQR} = Q_3 - Q_1$, where $Q_3$ and $Q_1$ are the 75th and 25th percentiles, respectively. This upper bound, $C_{max} = C_{median} + \text{IQR}$, captures the top range of realied cost by traders, providing a statistically sound threshold for trader tolerance. Notably, cost variation within this framework is predominantly driven by slippage, which is deterministically calculated based on AMM pool dynamics (e.g., $\text{slippage} \propto 1/\text{depth}$, while fees remain constant and thus do not contribute to the observed variance.

![Screenshot 2025-09-13 at 1.55.41 PM](https://hackmd.io/_uploads/SkyIgVmoxg.png)


The figure above captures the variance and maximum realized tolerable cost within each market cap bin. The steady drop in the upper bound with increasing market cap is consistent with token lifecycle dynamics, where traders are less sensitive to token volatility in the earlier stages (high slippage). 


## Creator Fee Analysis and Optimization

### Methodology

To evaluate the role of creator fees in Pump.fun's revenue model and ecosystem dynamics, we analyzed historical token creation rates across three primary venues: Pump.fun, Bags, and Bonk, spanning January 2024 to August 2025. The core hypothesis posits an upper bound on the aggregate rate of new token creations in the memecoin ecosystem, driven by exogenous factors such as market sentiment and user interest, rather than venue-specific fees. Instead, creator fees primarily influence market share allocation—higher fees attract more launches to a platform, redistributing the fixed pool of creations without expanding the total output. This invites a market share analysis segmented by market cap bins, allowing us to assess fee sensitivity across token maturities.

Data used in this analysis includes sources Pump.fun's internal trade and LP event tables for creation volumes and revenues, supplemented by Bags competitor data on historical trading volume, token launches, and fee-derived revenues. For each venue, we computed daily token creation rates, aggregated by market cap bin, and derived creator revenue as the product of launches and effective royalty rates. Market share was calculated as the proportion of total creations per venue within each bin, with revenues *normalized by pool count* to account for platform scale. This segmentation reveals how fees drive competitive positioning, particularly for small-cap tokens where creators seek higher royalties.

![Screenshot 2025-09-13 at 2.46.59 PM](https://hackmd.io/_uploads/SkTGtuQoge.png)


#### Calculation Method

The following outlines the methodology to determine optimized creator fee rate for Pump.fun that matches Bags' creator revenue per launch, leveraging average trading volumes and current fee structures from both platforms. Calculations are repeated for each market cap bin. Variables are defined as follows:

* $R_B$: Bags' average creator revenue per token launch (in USD).
* $f_B$: Bags' creator fee rate (decimal, e.g., 0.01 for 1%).
* $V_B$: Bags' average trading volume per token launch (in USD).
* $R_P$: Pump.fun's current average creator revenue per token launch (in USD).
* $f_P$: Pump.fun's current creator fee rate (decimal, e.g., 0.0005 for 0.05%).
* $V_P$: Pump.fun's average trading volume per token launch (in USD), typically higher than \( V_B \).
* $f_P^*$: Optimized Pump.fun creator fee rate 

**Step 1: Compute Bags' Creator Revenue per Launch**  
  Calculate the target revenue using Bags' fee rate and average volume: $$ R_B = f_B \times V_B $$
**Step 2: Compute Pump.fun's Current Creator Revenue per Launch**
  Estimate current revenue for comparison:  
  $$
  R_P = f_P \times V_P
  $$

**Step 3: Identify Revenue Gap** 
  Quantify the shortfall to understand the adjustment needed:  
  $$
  \text{Gap} = R_B - R_P
  $$

**Step 4: Solve for Optimized Pump.fun Fee Rate**  
  Set the new rate to achieve equivalent revenue using Pump.fun's higher volume:  
  $$
  f_P^* = \frac{R_B}{V_P}
  $$

  


### Results

The above analysis yields a shortfall for Pump.fun of 70-80 bp.

It confirms that creator fees are a critical driver of protocol revenue, as they directly tie to trading activity post-launch. On average, tokens achieve *90%* of their lifetime value (LTV) *within 2.3 days* of creation, with the median under 1 day, implying that creator revenue accrues rapidly during the initial hype phase. This short lifecycle underscores the dependency of protocol revenue on new token influxes, as traders rapidly rotate into fresh launches, generating fees that flow to creators (and indirectly to the protocol via volume). Figure X illustrates the time-to-90% LTV distribution, highlighting the front-loaded nature of revenue capture.

However, creator fees do not appear to influence the total token creation rate across the ecosystem. Aggregating Pump.fun, Bags, and Bonk, the combined daily creation output remains relatively constant over time, unaffected by individual venue fee changes, suggesting an exogenous upper bound (e.g., ~10,000-20,000 creations/day ecosystem-wide). Instead, fees dictate market share: higher creator royalties shift launches toward competitive platforms. For instance, Bags' 1% creator fee has captured disproportionate revenue, with Bags creators earning 10-20x more per launch in small-cap bins despite similar of lower volumes. 

The figure below depicts the market share evolution, showing a shift from Pump.fun to Bags in low-cap segments. In high cap bins, Pump.fun retains significant share due to superior liquidity, but creator revenue gaps persist.

![Screenshot 2025-09-13 at 7.13.51 PM](https://hackmd.io/_uploads/ryafsuQoxx.png)



#### Fee Adjustment Recommendation 

These findings imply that while creator fees do not expand the overall token supply, they significantly influence distribution and, by extension, platform revenue through increased launch activity. The rapid LTV realization emphasizes the need for competitive royalties to capture early trading volumes, where ~80% of fees are generated. The observed market share erosion toward Bags—driven by their higher fees—highlights a vulnerability: Pump.fun's lower royalties may deter creators, reducing its ecosystem dominance and protocol revenue in the long term. To close the revenue gap, Pump.fun could raise creator fees to 0.7-0.8% (70-80 basis points) on average for each MC bin, balancing attractiveness without matching Bags' 1% (leveraging Pump.fun's higher volumes for equivalent creator earnings). 

The figure below shows the per market cap fee required to closer the shortfall relative to Bags.

![Screenshot 2025-09-13 at 7.22.35 PM](https://hackmd.io/_uploads/SJ2rTu7ilx.png)


This adjustment would likely reclaim 10-15% market share in small-cap bins, boosting launches and total revenue by 20-30%, while maintaining LP incentives. Future A/B tests could validate this, ensuring no adverse effects on trader retention or liquidity depth.

## LP Fee Recommendation and Optimization

### Methodology

To optimize liquidity provider (LP) fees within the Pump.fun ecosystem, we analyzed the relationship between total value locked (TVL) and trading costs, focusing on slippage as a key determinant of trader experience. The methodology leverages historical LP return data and trade-level statistics from January 2024 to August 2025, encompassing approximately 3,000 swap-stage pools. The core principle based on AMM curve traversal posits that slippage, a function of pool depth (TVL), is inversely proportional to trading costs. Thus, LP fees must balance provider incentives with trader affordability. We segmented the analysis by the 50 market cap percentile bins to capture varying liquidity dynamics across token maturities. For each bin, we modeled the TVL-slippage relationship, then *back-calculated* the required LP fee to sustain historical LP yields at specific TVL levels. By combining these LP fees with associated slippage costs, we derived a total cost function, minimizing it in log-space to identify the optimal fee structure that enhances liquidity while minimizing trader burden.

Data preprocessing included filtering out invalid trades (e.g., zero reserves) and normalizing TVL across bins to ensure comparability. Historical LP returns, derived from fee earnings per pool, were aggregated by bin and correlated with TVL snapshots. Slippage was estimated from AMM trade data. This bin-specific approach allows for tailored recommendations, balancing the tradeoffs between LP compensation and trader costs across the ecosystem.

### Mathematical Formulation

The optimization process is grounded in the following mathematical framework:

- **Slippage Cost Model**: Within the AMM framework, slippage $S$ is approximated as a function of TVL, $S \approx k / \text{TVL}$, where $k$ is a pool-specific constant (derived from historical data). Note that the elasticity of slippage to TVL is completely deterministic within the AMM framework. 
- **LP Fee Requirement**: The required LP fee rate $f_{LP}$ to maintain historical yield $Y$ at a given TVL is back-calculated as $f_{LP} = Y / \text{TVL}_{\text{avg}}$, where $\text{TVL}_{\text{avg}}$ is the average TVL per bin over the period.
- **Total Cost Function**: Total trader cost $C_{\text{total}}$ is the sum of slippage and LP fee costs, expressed as $C_{\text{total}} = S + f_{LP} \cdot V$, where $V$ is the trade volume. 
- **Optimization in Log-Space**: To find the minimum, we minimize $\ln(C_{\text{total}}) = \ln(S) + \ln(f_{LP} \cdot V)$, substituting $S = k / \text{TVL}$ and solving $\frac{\partial \ln(C_{\text{total}})}{\partial \text{TVL}} = 0$. This yields an optimal TVL where the marginal decrease in slippage equals the marginal increase in LP fee cost, informing the recommended $f_{LP}$.

### Results

The analysis reveals a clear inverse relationship between TVL and slippage, with higher TVL  exhibiting reduced slippage costs. 

The figure below plots the TVL-slippage relationship for the 20-22 percentile bin, showing a power-law decay consistent with AMM dynamics. 

![Screenshot 2025-09-13 at 11.12.44 PM](https://hackmd.io/_uploads/H1UxXnQiex.png)



Back-calculated LP fees to maintain historical yields range from 0.15% in high MC bins to 0.21% in low MC bins, reflecting the need for higher incentives where liquidity is scarce. 

The figure below displays the total cost function in log-space, identifying a minimum for each bin—e.g., an optimal LP fee of 0.15-0.21%. 

![Screenshot 2025-09-13 at 7.31.00 PM](https://hackmd.io/_uploads/BJ8xD5msex.png)

### Discussion

In MC bins, higher fees compensate for liquidity risks, encouraging deeper pools and reducing slippage for traders, though they may slightly elevate total costs. In high MC bins, lower fees (e.g., 0.15% vs the current 0.2% level) leverage existing depth, minimizing trader costs while maintaining LP participation. The identified minima indicate where total cost is minimized, balancing LP incentives with trader affordability—potentially saving traders in effective costs and boosting protocol volume by attracting more trades. 

The bin-specific approach mitigates tradeoffs, ensuring LPs are rewarded proportionally to risk, while the protocol benefits from increased activity. The figure below shows the entire range of optimal LP fees for every MC bin. 

![Screenshot 2025-09-13 at 9.50.16 PM](https://hackmd.io/_uploads/H1qr6i7slx.png)


Future A/B tests could refine these rates, adjusting for real-time TVL fluctuations to maximize long-term liquidity and revenue.

# Summary

This report presents a comprehensive, data-driven analysis of Pump.fun's fee structure, leveraging historical trade and liquidity pool (LP) event data from January 2024 to August 2025 to optimize allocations among the protocol, creators, and LPs. By segmenting tokens into 50 market cap percentiles, we evaluated trading cost dynamics, including slippage and fees, through quasi-experimental models such as elasticity estimation and LP shock assessments. Key findings reveal predominantly inelastic demand for trading (elasticity between -1 and 0 in most bins), with LP shocks inducing minimal cost changes (<1 basis point), and creator fees playing a pivotal role in market share without expanding overall token creation rates. Competitor data from Bags and Bonk highlights revenue disparities driven by fee differentials, while TVL-slippage modeling underscores the need for balanced LP incentives to minimize trader costs. These insights inform targeted adjustments to enhance revenue, creator engagement, and liquidity depth while preserving user affordability.

The results indicate that Pump.fun's ecosystem is resilient to small liquidity fluctuations, with cost variability decreasing post-shock in many bins, suggesting opportunities for fee reallocation without significant trader deterrence. Elasticity analysis shows weak sensitivity in mid-range market caps, corroborating the potential for modest hikes in inelastic segments to boost revenue. Market share dynamics emphasize the competitive pressure from higher creator fees on rival platforms, where Pump.fun's lower royalties have led to share erosion despite superior volumes. Furthermore, LP fee evaluations reveal that current structures may overcompensate in high market cap tokens, allowing reductions that lower overall trading costs while sustaining yields. Collectively, these patterns highlight the value of dynamic, segmented fees to align incentives and drive ecosystem growth.

### Fee Adjustments

Based on these findings, we recommend the following simplified fee adjustments for immediate implementation: 

* Maintain the protocol fee at a flat 5 basis points (bps), providing stability with opportunities for future updates informed by post-adjustment outcomes. 
* Set the creator fee at a flat 75 bps to equalize expected revenue with competing launchpads, eliminating incentives for creators to migrate elsewhere and potentially reclaiming significant market share. 
* For LP fees, adopt a two-tier structure: 20 bps for tokens in the 0-90th percentile market caps to ensure adequate rewards in volatile segments, and 15 bps for the 90-100th percentiles to reflect deeper liquidity, yielding an estimated $6 million+ in reduced trading costs for traders while preserving LP participation. 

Repeating this analysis once the post-September 2025 fee changes accumulate sufficient data will enable validation of these recommendations under real-world conditions, revealing long-term effects on elasticity and revenue. Moreover, the significant variations introduced by these adjustments—effectively serving as natural A/B experiments—will enhance statistical power and significance, facilitating more precise inferences and dynamic fee reallocations tailored to evolving ecosystem behaviors.