Rebranding is a common phenomenon in the cryptocurrency space, often involving updates to brand identity and communication strategies. However, it’s rare for a rebrand to introduce an entirely new product.

Yesterday, the well-known Solana lending protocol Solend underwent a rebrand to become Save, a name that suggests enhanced security. Yet, the new offering from Save hints at both risk and excitement.

In addition to new assets like SUSD and SaveSOL, Save has launched a platform for shorting memecoins—dumpy.fun (X: @dumpydotfun). The name says it all: While Pump.fun sparked a bull run with memecoins, dumpy.fun is clearly intended to counter this by enabling shorting of memecoins and driving a bear market frenzy.

Solend (Now Save) Describes dumpy.fun:

In a blog post about dumpy.fun, Solend (now Save) stated: “Memecoins have reached a fever pitch, but the rush to cash in and exploit opportunities is harming the community. dumpy.fun is a platform for shorting memecoins, allowing users to profit from corrections. It leverages the deepest on-chain liquidity and serves as a better alternative to perpetual contracts. dumpy.fun is powered by Save.”

Given that the product is not yet officially live, we reviewed the product design white paper to understand how shorting memecoins works.

Shorting Designed with On-Chain Contract DEX Model

“Anything that rises must eventually fall” — Newton.

The white paper for dumpy.fun begins by using this classic gravity theory to suggest that memecoins will eventually drop to zero, leading to the creation of a platform specifically for shorting memecoins: dumpy.fun.

Platform Nature: This is not a traditional decentralized exchange (DEX). Instead, it functions as a specialized financial tool platform for shorting, combining lending and trading features.

Operational Mechanism:

1. Integration with Lending Platforms: dumpy.fun utilizes other platforms (such as Solend, now Save) for lending operations. Lending is also Save’s core business.
2. Token Swap via Jupiter: The platform uses Jupiter for token swaps. This design allows users to short assets without directly holding them.
3. Funding for Shorting: Since all activities are on-chain, where does the funding for shorting come from? dumpy.fun answers this by leveraging funds from depositors on Save and attracting deposits by offering higher interest rates on its own platform. The interest earned from depositors comes from:
   • Interest paid by borrowers: Shorters pay interest to borrow assets.
   • Trading Fees: The platform may charge a fee from trades.
   • Liquidation Fees: Part of the liquidation fees when shorters are liquidated may be allocated to depositors.

Example of How dumpy.fun Works:

Let’s say we want to short WIF.

1. Deposit Collateral: You deposit 100 USDC as collateral.
2. Borrow WIF: The platform borrows WIF tokens worth 100 USDC (from Save or its own liquidity pool). Assuming the current WIF price is 1 USDC, you borrow 100 WIF.
3. Sell Borrowed WIF: The platform immediately sells the 100 WIF on the market for 100 USDC. \
   Current situation:
   • You owe the platform 100 WIF.
   • The platform holds your 100 USDC collateral and 100 USDC from selling WIF.
4. Wait for Price Changes: Assume WIF’s price drops by 50%, now 1 WIF is worth 0.5 USDC.
5. Close Position: You decide to close your position. The platform uses 50 USDC from its 100 USDC to buy 100 WIF (since now 1 WIF is worth 0.5 USDC).
6. Repayment and Settlement: The platform repays the 100 WIF you borrowed with the 100 WIF it bought.
   • The remaining 50 USDC is your profit.
   • The platform returns your initial 100 USDC collateral.

Final Outcome:

• You earn a profit of 50 USDC.
• Your original 100 USDC collateral is safely returned.
• dumpy.fun automates this process, eliminating the need for manual execution of each step, and integrates multiple platforms (like Save for lending and Jupiter for trading) to facilitate this function.

PVP Intensifies: The Risks of Opening Positions with Unpredictable Outcomes

If most memecoins are destined to zero, wouldn’t continuously shorting them be a guaranteed profit?

Clearly, dumpy.fun doesn’t support this idea. Instead, it aims to create a more intense PVP battle. To this end, the platform features a “Squeeze Explorer” interface, which displays the liquidation thresholds for short positions.

For those unfamiliar with contracts, “squeeze” refers to a situation where the price of an asset being heavily shorted suddenly rises, forcing short sellers to quickly buy the asset to cover their positions, which in turn pushes the price even higher.

This design effectively reveals the current short positions and the amount of capital needed to force a short squeeze to everyone.

So, if you are a bull or a strong player betting on a particular memecoin, and you notice that a significant amount of capital is shorting it, you might calculate the potential to counteract and drive up the price to squeeze the shorts.

In the context of dumpy.fun: If a large number of users are shorting a memecoin (such as WIF), and other users (perhaps by checking the “Squeeze Explorer”) decide to collectively buy the coin, it could lead to a similar short squeeze scenario, causing the token price to rise rapidly.

Short sellers could face significant losses, while those driving the squeeze might see substantial gains.

Clearly, mindless shorting won’t work here. The “Squeeze Explorer” encourages a more intense and strategic PVP battle. Opening a position could be a gamble with unpredictable outcomes.

With the shorting mechanism in place, the PVP for memecoins is set to become even more intense, if not brutal.

Dumpy’s own tweet reflects this sentiment:

“Next time someone talks shit about your coin, tell them to put their money where their mouth is.”

This seems to be a provocation—if you don’t believe in a memecoin, stop talking and open a short position. The underlying message is that the platform sets up a challenge to see whether the bears or the bulls come out on top.

But one thing we all know: The outcome of the competition on stage is uncertain, but the one setting up the stage always wins.

DUMP: The Platform Token

With the launch of the platform, it will also introduce its own token, DUMP.

Key Features:

a) Governance Rights: Holders can participate in the platform’s decision-making process.

b) Fee Sharing: A portion of the transaction and liquidation fees generated by the platform will be distributed to DUMP holders. This creates a passive income stream and incentivizes long-term holding.

c) Collateral: DUMP can be used as collateral for trading or borrowing on the platform. This enhances the token’s utility and demand.

d) Liquidity Mining: Users can earn additional DUMP tokens by providing liquidity. This helps to increase the platform’s liquidity and stability.

The platform may also implement a token buyback and burn mechanism. A portion of the transaction fees could be used to repurchase and burn DUMP, creating deflationary pressure.

Currently, the product is not yet live, and DUMP has not undergone its Token Generation Event (TGE).

The dumpy.fun website only offers an option to join a waiting list by submitting an email. Interested users can visit the project’s Telegram channel for more information.

At present, the official Telegram community has initiated a vote on memecoins, allowing the community to decide which coins will be listed and available for shorting.

A Reminder: Buying memecoins can be fun, and shorting them can be just as enjoyable. But let’s hope you aren’t the source of others’ fun.

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