TLDR
- Raydium’s RAY token dropped 22% in 24 hours, with an additional 5% decline, following speculation about Pump.fun developing its own automated market maker (AMM) system
- A test version of an AMM was discovered at “amm.pump.fun,” showing swap, deposit, and withdrawal functions, though no official announcement has been made
- Pump.fun has collected over $550 million in total fees since March 2024 and processed $2.4 billion in trading volume in the past two weeks
- Currently, projects pay 6 SOL (around $950) to move their tokens to Raydium’s trading pools, but only 1.4% of tokens launched on Pump.fun progress to Raydium
- The potential launch of Pump.fun’s own AMM could redirect trading volume away from Raydium’s platform, affecting its fee revenue and market position
Raydium’s native token RAY experienced a sharp decline on Sunday, dropping 22% over 24 hours to reach $3.28, with an additional 5% decrease in the following hour. The price movement came after crypto watchers discovered evidence of Pump.fun testing its own automated market maker (AMM) system.
The discovery centers around a test version of an AMM at “amm.pump.fun,” which displays features for buying, selling, depositing, and withdrawing funds. This marks the first time Pump.fun has shown interest in developing its own trading infrastructure, departing from its current model of redirecting tokens to Raydium’s platform.
Pump.fun currently operates as a token issuance platform on the Solana blockchain, allowing users to create new tokens with minimal capital investment. The platform charges less than $2 for token creation, letting users determine token supply, theme, and associated meme imagery.
The relationship between Pump.fun and Raydium has been established through a graduation system. When tokens launched on Pump.fun reach a market capitalization of $69,000, they become eligible to move to Raydium’s trading pools. This transfer requires projects to pay 6 SOL, approximately $950, to access Raydium’s more liquid trading environment.
Min Jung, an analyst at Presto Research, explained to Decrypt that Raydium has benefited from this arrangement through its 0.25% fee on token swaps. However, data shows that only 1.4% of tokens launched on Pump.fun actually progress to Raydium’s pools, with fewer than 100 achieving a market capitalization above $1 million.
The test site’s security certificates appear legitimate and connect to the Pump.fun platform, based on internal testing by Decrypt. However, the test AMM’s branch domain did not show up in standard domain name services lookups, suggesting it remains in development.
Pump.fun has demonstrated strong financial performance since its launch in 2024. The platform has collected over $550 million in total fees and processed $2.4 billion in trading volume during the past two weeks alone. More than 8 million tokens have been created on the platform since its inception.
Technical Analysis
Technical examination of the test site revealed references to a fee structure in Section 4 of its terms and conditions. While specific fee parameters remain undefined during the testing phase, this suggests Pump.fun could implement competitive trading fees to match Raydium’s current rates.
Neither Pump.fun nor Raydium has officially responded to requests for comment about the situation. The lack of public statements from either platform has left market participants speculating about the potential impact of this development.
Despite the current market reaction, Raydium maintains a diverse trading ecosystem beyond Pump.fun tokens. The exchange supports various major markets, including Solana (SOL) to stablecoin trading pairs, contributing to its average daily trading volume of $500 million.
At its peak, Pump.fun processed over $5.3 million in daily fees, establishing itself as one of the most profitable crypto applications in recent times. The platform has achieved this without issuing its own token, setting it apart in an industry where many businesses rely on token sales for revenue.
The emergence of a new AMM could allow Pump.fun to redirect tokens to its own liquidity pools instead of Raydium’s. This potential shift has prompted market speculation about future revenue streams and competition between the platforms.
Some tokens launched on Pump.fun have achieved substantial market capitalizations, with examples like fartcoin (FART) reaching billions in value. This demonstrates the platform’s ability to generate successful projects despite the low progression rate to Raydium’s pools.
The discovery of the test AMM comes during a period of steady growth for Pump.fun, which has launched thousands of new tokens while maintaining consistent fee revenue. The platform’s success in token issuance suggests it has built a user base that could support an independent trading system.
If implemented, Pump.fun’s AMM would create a new option for tokens launched on its platform, potentially affecting the established flow of projects to Raydium’s trading pools. The market’s reaction reflects this uncertainty about future trading volumes and fee distribution between the platforms.
