$RAY Down 29% As Pump.fun Tests AMM Protocol

pump.fun, Solana’s polarizing no-code token deployer, is tightening its grip on Solana’s meme economy. After reinventing how memecoins are traded in DeFi, pump.fun is expanding its product suite to include an AMM.

pump.fun’s evolution from a launchpad into a fully-fledged DEX sends a stark warning to the ecosystem’s existing DeFi platforms. 

What do we know about pump.fun’s new AMM, and what could its launch mean for Raydium and a future pump.fun token?

Pump.fun Begins Testing AMM

Solana’s eagle-eyed memecoin traders have made a shocking discovery. According to onchain data, pump.fun is testing its native AMM platform, enabling users to trade for graduated memecoins directly through the protocol.

Additionally, pump.fun’s new UI indicates that users can also add liquidity for any existing SPL token. This means that developers can launch tokens directly on the pump.fun DEX in the traditional fashion, pairing tokens with $SOL or stablecoins like $USDC.

At press time, neither pump.fun nor its co-founder alon have confirmed that the protocol is developing an AMM. The pump.fun AMM’s documentation is currently limited to a Privacy Policy and the platform’s Terms of Service.

Based on a test transaction processed by SolanaFloor, pump.fun’s new AMM does not appear to be charging any protocol fees. However, this will likely change as the platform moves out of its beta phase.

$RAY Suffers 29% Pullback Under Redundancy Threats

While its new platform could be an excellent new revenue source for the protocol, pump.fun’s AMM has dealt Raydium a devastating blow. Since the pump.fun AMM has been discovered, $RAY has suffered a 28% price decline on a daily timeframe.

Currently, tokens launched on pump.fun that fulfill their bonding curve are automatically migrated to Raydium. The ‘graduated’ token is paired with $17,000 worth of $SOL in liquidity. These LP tokens are then burnt and permanently removed from circulation.

However, from that moment on, Raydium collects trading fees from all swaps on its DEX. Capitalizing on pump.fun’s viral success, According to TopLedger data, Raydium generated over $144M in protocol fees in 2024.

In a bid to drive sustainable value accrual to $RAY, Raydium operates Solana’s biggest programmatic buyback mechanisms. Directing a percentage of all trading fees to purchase $RAY off the market, Raydium has bought back over $161.1M worth of $RAY tokens.

Arguably, Raydium owes much of its success to pump.fun. While Raydium has dominated DEX market share by volume for many months, that wasn’t always the case. Before pump.fun began migrating tokens to Raydium in January 2024, Orca had commanded the majority of market share every month since July 2022.

With pump.fun now bringing liquidity and trading fees in-house, traders are concerned that Raydium could lose substantial market share. This would ultimately lead to reduced trading volume on the platform and diminishing $RAY buybacks over time.

pump.fun’s new AMM product has re-ignited excitement surrounding the platform’s upcoming airdrop. Network participants are hopeful that pump.fun, like Raydium, will implement a generous buyback mechanism using platform revenue, which crossed the $500M mark earlier this month.

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