- Pump.fun tests its own AMM to reduce reliance on Raydium and increase transaction fees.
- The new AMM may help meme tokens migrate while rewarding long-term token holders.
- Pump.fun blocked a hacker linked to the $1.46B Bybit attack from laundering funds.
Pump.fun is making a bold move in the Solana ecosystem. The platform is developing its own automated market maker (AMM) liquidity pools. The platform is currently testing the feature on its testnet. This move may allow some meme tokens to migrate from Raydium to Pump.fun’s own liquidity pools. It could also help the platform extract more transaction fees or create a system to reward token holders.
On-chain analyst trenchdiver101 first reported the development. The testnet is accessible through Pump.fun’s AMM link, where a token named $CRACK has been added as a test asset. This suggests that the platform may gradually move away from Raydium, which currently provides external liquidity for trades initiated on Pump.fun.
Pump.fun operates with an internal and external trading system. Initially, trades occur in Pump.fun’s internal market. When the internal market lacks liquidity, transactions are routed externally to Raydium. In this model, Pump.fun acts as a traffic provider for Raydium but must pay fees whenever trades move to the external market. These fees ultimately go to Raydium’s liquidity providers.
Raydium is a major AMM platform within the Solana ecosystem. It serves as a key liquidity source for DeFi users and projects on Solana. Its Total Value Locked (TVL) remains among the highest in the ecosystem. However, Pump.fun’s decision to introduce its own AMM could reduce its reliance on Raydium and help the platform retain more revenue.
According to DeFiLlama, Pump.fun has already processed over $500 million in swap fees. Approximately 1.4% of tokens launched on Pump.fun later migrate to Raydium. By establishing its own AMM, Pump.fun may encourage more projects to stay within its ecosystem. This move comes as meme tokens continue to dominate trading volumes across decentralized exchanges.
Related: SOL DEX Volume Crashes 24.96%—Is a Liquidity Shift Coming?
Despite the advantages, Pump.fun faces challenges in ensuring stable liquidity. Meme tokens often experience extreme volatility and pump-and-dump schemes. The platform is working on strategies to foster long-term communities instead of just short-term speculation.
Pump.fun has also taken steps to prevent misuse of its platform. Recently, it blocked a hacker associated with the $1.4 billion Bybit hack from transferring stolen funds. On-chain investigator ZachXBT discovered that the hacker was using Pump.fun to trade meme coins. These assets are sometimes used in money laundering activities.
Following the news of Pump.fun’s AMM development, Raydium’s token $RAY dropped by over 25% in 24 hours. Investors may be reacting to the potential loss of transaction fees and liquidity. It remains to be seen how Raydium will respond to Pump.fun’s expansion.
