Pumpfun, a token launch platform based on Solana, might be developing its own automated market maker (AMM). This could significantly impact the memecoin and microcap token market on the Solana network.
Pumpfun’s New AMM Capabilities
An automated market maker (AMM) allows users to trade cryptocurrencies directly against liquidity pools rather than traditional order books. Developing its own AMM will enable Pumpfun to keep liquidity within its ecosystem, capture more trading fees, and introduce new financial products such as memecoin perpetuals and lending.
Risks to Raydium’s Business
If Pumpfun fully integrates its AMM, there might be less need for new tokens to move to Raydium, allowing the platform to control its liquidity pools and charge higher fees. This shift could reduce Raydium's trading volume by 30-50%, with RAY token price already dropping 30%.
New Features or New Risks
Pumpfun’s AMM could introduce memecoin perpetuals, lending pools, and custom reward mechanisms. However, these features could increase risks involving security concerns, regulatory scrutiny, and trust issues, particularly highlighted by recent $1.4 billion hacks mentioning Pumpfun.
If Pumpfun's AMM is successful, it could change the memecoin market on Solana, forcing other DEXs like Raydium and Orca to adapt by introducing new incentives and products to remain competitive.
