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Documentation Index

Fetch the complete documentation index at: https://docs.filter.fun/llms.txt

Use this file to discover all available pages before exploring further.

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The question

Is filter.fun a pyramid scheme?
It’s a fair question. Anything that involves new participants and a payout structure is going to draw the comparison. We’re going to answer it directly, on the substance, by working through the four canonical tests.It is not a pyramid scheme. Here is why.

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The four-prong analysis

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1. Hierarchical recruitment?

A pyramid scheme requires a recruiter chain — every participant earns by bringing in new participants below them. Returns to a level depend on the existence of a level below it.filter.fun has no recruiter chain. There is no upline, no downline, no referral commission on someone else’s launch, no payout that scales with how many people you bring in. The protocol does not know who introduced whom. If you launch a token, you earn from your token’s trading fees and champion bounty if you win — both functions of your token’s market performance, not of recruitment depth.Verdict: not present.

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2. Growth-dependent?

A pyramid scheme requires perpetual growth. The math only works if more new entrants keep arriving. When growth stalls, the lower levels can’t be paid and the scheme collapses.filter.fun’s mechanics work at any field size from 4 to 12. The deferred activation gate explicitly prices the floor: a season with fewer than 4 reservations aborts and refunds. Beyond that floor, the system does not require any growth — just a steady supply of weekly cohorts. If participation declined to a stable steady state of 6 tokens per week forever, the protocol would still work as designed (filter the bottom 3, fund 1, distribute the LP).There is no level of past participation that has to be paid out by future participation. Each season closes its own books at hour 168.Verdict: not present.

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3. Returns from new members or from product?

This is the load-bearing test under most regulatory frameworks. Pyramid schemes route returns from new members to old members. The new entrants’ money pays the prior entrants’ returns; nothing is produced.filter.fun’s distributions come from a specific, observable source: the LP that filtered tokens unwound when their HP fell. That LP is WETH posted by traders who traded those tokens in the open market — not money collected from new participants and routed to old ones. The trading fees that accumulate into the season-wide accumulator come from voluntary swaps between traders, again in the open market.When a token gets filtered, its LP gets converted to WETH and split via a deterministic 45/25/10/10/10 distribution. None of that flow is “new entrants paying old entrants” — it’s the residual liquidity of failed tokens being reallocated to filtered-token holders, the winner’s pool, the mechanics budget, and the treasury.Verdict: returns flow from market activity, not from a pyramid structure.

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4. Sustainability — most participants lose by design?

Pyramid schemes hide their failure mode. They sell the impression that everyone wins. The hidden truth is that most levels lose; only the top levels collect.filter.fun explicitly publishes the failure rate. Most tokens are filtered. Six of every twelve at the cut. Five more at settlement. One wins per week. We say so on the homepage, the launch page, the risk page, and at the bottom of the page you’re reading. There is no hidden expectation; the protocol’s name is filter.fun.The sustainability question becomes simpler when most-participants-lose is part of the explicit design. The system is sustainable because it doesn’t promise that most participants win — and the participants who do lose are made partly whole through the rollover mechanic, which is itself transparent and rule-based.Verdict: explicit, not hidden.

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What it actually is

filter.fun is a weekly token-launch tournament with deterministic settlement. Most launches die. Winners get permanent backing. Spectators trade transparently. Filtered-token holders are partly compensated through rollover. Every flow is public, on-chain, and rule-based.It shares surface features with other competitive tournaments — entry fees, elimination, payouts to winners — and shares no structural features with pyramid schemes.

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What it is not

  • Not yield-bearing. No one earns interest on a deposit. No staking pools. No “guaranteed” anything.
  • Not requiring new entrants to pay old ones. Every season closes its own books at hour 168 from its own pot. Past seasons don’t draw from future ones.
  • Not concealing the loss expectation. The whole pitch leads with it: most get filtered. We tell you on the way in.
  • Not a security under Howey. Participation does not reflect an investment contract; there is no expectation of profits derived from the efforts of a third party. Holders who buy tokens trade in an open market between counterparties; the protocol is a mechanical settlement layer, not a managed enterprise.

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Cross-references

  • Risk disclosure — the broader risk surface, including market risk, smart-contract risk, and protocol-design risk.
  • HP methodology — the protocol is mechanical in the strict sense: HP is a pure deterministic function of indexer state.
  • Settlement — exactly where the WETH goes at hour 168.