Solana-based platform Pumpfun is testing its own automated market maker (AMM). This initiative could significantly impact the existing token trading landscape on the blockchain.
Why Pumpfun Needs an AMM?
Automated market makers allow users to trade cryptocurrencies directly through liquidity pools. Currently, when a token gains popularity on Pumpfun, it transitions to Raydium. However, with its own AMM, Pumpfun could: - Keep liquidity within its ecosystem. - Fully control trading fees. - Introduce new financial products like meme perpetuals and lending.
Impact on Raydium
If Pumpfun launches its own AMM, this could dramatically reduce Raydium's trading volumes by an estimated 30-50%. This has already impacted RAY's token price, which dropped 30% within 24 hours following the rumors.
"Degens are used to paying high fees for trades," noted Shoal Research founder Gabriel Tramble.
New Features or Risks?
Pumpfun's AMM could bring both new opportunities and risks:
**Potential Features:** - Meme perpetuals with leverage. - Lending pools for meme token collateral. - Custom rewards for liquidity providers.
**Potential Risks:** - Security issues typical of smart contracts. - Regulatory scrutiny of new financial instruments. - Trust issues due to recent Bybit hack connection.
Solana has become the battleground for memecoin liquidity with Pumpfun as a key player. If successful, other Solana-based exchanges like Raydium and Orca will need to adjust to the new landscape.
