PumpFun, the popular Solana-based token launchpad, has announced its decentralized exchange, PumpSwap. The new platform aims to streamline token migrations and enhance liquidity for newly launched assets.
What is PumpSwap?
PumpSwap is a decentralized exchange designed for trading meme coins and other Solana-based assets. It uses an Automated Market Maker (AMM) model similar to Raydium V4 and Uniswap V2. The platform charges a 0.25% trading fee, with 0.20% allocated to liquidity providers and 0.05% to the protocol. PumpFun is working on a new revenue-sharing model for creators that could incentivize token developers with significant rewards. At launch, PumpSwap supports notable tokens such as USDe, PENGU, SEI, Jupiter (JUP), and Wormhole (W).
Why PumpSwap?
Previously, tokens launched on PumpFun had to migrate to Raydium for trading, creating friction and slowing down momentum. PumpFun acknowledged this issue and seeks to resolve it with PumpSwap, where token migrations reportedly happen instantly and for free. This shift could impact Raydium, as a significant portion of liquidity may move to PumpSwap.
Memecoin Market: Can PumpSwap Revive It?
Despite excitement around PumpSwap, the memecoin market is struggling. Memecoin trading fell from $206 billion in January to $99.5 billion in February following the LIBRA scandal. PumpFun itself faces revenue declines but remains Solana’s seventh-largest protocol by revenue. The introduction of PumpSwap may improve the situation by providing incentives for participation and retaining liquidity within its ecosystem.
The launch of PumpSwap may shift the dynamics in the memecoin market and strengthen PumpFun's position in the Solana ecosystem. With this new platform, PumpFun aims for long-term growth by providing more convenient conditions for developers and users.
