- Pump.Fun tests AMM liquidity pool to get hold of more fees and retain token liquidity.
- The platform could stop routing tokens to Raydium, impacting the RAY token price.
- This move signals a shift toward vertical integration in the Solana token ecosystem
Raydium (RAY) token has nosedived 31% after the news that Pump.Fun, the Solana-based token issuance platform, is reportedly developing its own automated market maker (AMM). RAY fell from a 24-hour high of $4.30 to as low as $2.87. The platform, which currently routes tokens to Raydium after reaching specific market capitalization thresholds, could soon retain liquidity within its own ecosystem.
Analyst BTCmask also tweeted that since RAY has failed to hold at the $4.5 level, it is likely to bounce back around the $2 level. The development came to light through the discovery of “amm.pump.fun,” a URL showing a swap interface with buy, sell, deposit, and withdrawal functions. This move by one of crypto’s most profitable applications, having generated over $550 million in fees since March 2024, could change token trading dynamics on Solana.
Currently, Pump.Fun operates with a model wherein users can create tokens for under $2, selecting supply, theme, and meme imagery. When these meme coins reach a $69,000 market capitalization, a portion of liquidity automatically moves to Raydium, accompanied by token burning to manage supply.
The introduction of an in-house AMM would fundamentally alter this process. Rather than directing traffic to Raydium, Pump.Fun could capture additional value through transaction fees while potentially introducing new mechanisms to benefit token holders. This strategy aligns with the platform’s proven revenue generation model, which notably operates without a native token.
Recent performance metrics show Pump.Fun’s market position, with $2.4 billion in trading volume over just two weeks and more than 8 million tokens issued since its 2024 launch. Some tokens, like fartcoin (FART), have achieved multi-billion dollar market capitalizations.
Related: Franklin Templeton Has Filed for Solana ETF with the SEC
The introduction of an AMM would add Pump.Fun to a growing list of platforms seeking to vertically integrate their services. This could set new standards for token issuance and trading infrastructure on Solana. This development could influence how future platforms approach liquidity management and fee generation in the ecosystem.
However, due to the shift, the transaction flow has reduced on Raydium weakening its dominance in Solana’s DeFi space. If Pump.Fun’s AMM model succeeds, Raydium may need to innovate or adjust strategies to retain liquidity, thereby maintaining its position in the market amid growing competition.
