Edit: 2 days After this post Red Panda Mining made a video about this exact situation: Here is the video:

https://www.youtube.com/watch?v=qOSQNaXQGME

I made some edits to original post to make it more accurate. The below situation is normal for any L1 coin. Doge had something similar in the past and it was solved overtime. So, no need to panic. I am adding PepeLord's Message from Discord which explains the situation :
"Just put yourself in Litecoin pool position, he is highly highly invested in Pepecoin, and can see how much this can bring him in profit in future, there's almost a zero chance he dumps all 5 Billion at once, he wants ot make a huge profit too, this is his future as well"

1. A Big Mining Pool Is Selling Off Large Amounts of Pepecoin
   • One large pool (litecoinpool.org) has been accumulating huge amounts of pepecoin—about 3.5 million a day.
   • Instead of distributing pepecoin to their miners, the pool is selling them on the market for profit, ~3 million a day (they have huge amount of pepecoin accumulated in their wallet).
2. Price Swings & Community Impact
   • These daily sell-offs partially cause the pepecoin price to fluctuate between 0.0009 and 0.0011.
   • The constant dumping stifles market growth and threatens decentralization: if one entity keeps hoarding and dumping pepecoins, they can eventually manipulate the market or hold too much power. For now it looks like it is not causing any big issue.
3. Proposed Solution if we detect some emergency related to this situation: Out-Hashing
   • The community believes the only way to counter the pool’s influence is to gain more total mining power (i.e., out-hash them).
   • By having enough hashing power, the community can reduce the pool’s control over the network.

Deeper Explanation about the Cause: Merged Mining (LTC, DOGE, & PEPECOIN)

Merged Mining Basics

• Litecoin (LTC) and Dogecoin (DOGE) are merge-mined using the same Scrypt-based hardware.
• When mining LTC, you also receive DOGE payouts. LTC rigs often rely on these DOGE rewards to stay profitable.

LTC Halves; DOGE Doesn’t

• Litecoin halves its block rewards on a set schedule (similar to Bitcoin), periodically reducing the new coins minted.
• Dogecoin no longer halves its rewards; this creates a steady supply that helps subsidize LTC mining profitability.

Other Merge-Mined Coins (Including Pepecoin)

• Various smaller Scrypt coins can also be merge-mined alongside LTC and DOGE.
• Most of these coins become unprofitable quickly or get abandoned. Pools often convert their value into extra LTC or DOGE for simplicity.
• Pepecoin, however, is currently profitable enough that some pools keep the pepecoins for themselves instead of passing them on to miners, making a huge profit by selling them.

Why You Often Only Receive LTC and DOGE

• Because LTC and DOGE are stable and have stood the test of time, most pools focus on them.
• Smaller coins, if profitable, are typically folded into LTC or DOGE payouts. But in Pepecoin’s case, at least one big pool is pocketing the pepes rather than sharing the rewards.

In short: A major pool is merge-mining Pepecoin, hoarding and selling it for profit, causing price swings and threatening decentralization. The Pepecoin community’s best move is to out-hash that pool to reclaim network control and maintain a healthier market.

I collected these from our discord server and summarized for people who are not using discord. We are working on a solution right now and there will be more updates.