The RAY token of Raydium has suffered due to rumors of Pump.fun developing its own automated market maker (AMM), potentially threatening Raydium's standing in the Solana ecosystem.
Pump.fun's New AMM
Reports suggest that Pump.fun, known for its meme coins, is actively testing its AMM liquidity pools at amm.pump.fun. According to user @trenchdiver101, the tests are aimed at migrating pump tokens to these new pools. This shift may allow Pump.fun to extract additional fees on the Solana network or introduce new incentives for token holders. Onchain data shows that the first token, $CRACK, has already been added to the AMM, marking the beginning of the migration.
Market Reaction and Impact on Raydium
Raydium has long been the go-to platform for decentralized trading on Solana. Projects typically pay about 6 SOL to transition from Pump.fun to Raydium. However, only 1.4% of projects launched on Pump.fun have migrated to Raydium, with less than 100 surpassing a $1 million market cap. Analysts believe that the new pools by Pump.fun might reduce future swap volumes on Raydium and decrease its fee revenue.
Pump.fun's Response and Future Prospects
At the time of going to press, representatives from Pump.fun have declined to comment on the rumors. Earlier this month, co-founder Alon Cohen dismissed speculation about a new PUMP token launch, urging users to rely only on official updates from the project.
The introduction of a new AMM by Pump.fun could significantly impact the current DeFi ecosystem on Solana by reducing transaction activity and Raydium's market share.
