PumpFun has introduced its new decentralized exchange PumpSwap on Solana, aiming to reduce friction in token migrations and improve liquidity.
What is PumpSwap?
PumpSwap is a decentralized trading platform on Solana designed to facilitate trading of meme coins and other SOL assets. It operates using an Automated Market Maker (AMM) model, similar to Raydium V4 and Uniswap V2. The platform charges a 0.25% trading fee, with 0.20% going to liquidity providers and 0.05% supporting the protocol. PumpFun is also considering a Creator Revenue Sharing Model to incentivize new project developers.
Why PumpSwap?
Before PumpSwap, tokens launched on PumpFun had to migrate to Raydium for trading, which complicated the process and limited liquidity control. With PumpSwap, migrations occur instantly and free of charge, removing major user barriers. This shift might impact Raydium, which formerly captured high trading volumes due to PumpFun tokens.
Can PumpSwap Revive the Memecoin Market?
Despite PumpSwap's launch, the memecoin market is struggling. After peaking at $206 billion in January, memecoin trading volumes fell to $99.5 billion in February. The introduction of PumpSwap is seen as a strategic move to maintain growth by offering liquidity incentives and revenue sharing.
The launch of PumpSwap by PumpFun could be a crucial step in cementing its place in the DeFi market, offering new opportunities for meme coins and strengthening its ecosystem.
