Raydium Responds to Pump.fun’s AMM Test With “LaunchLab,” Aiming to Retain Market Share

Raydium Protocol is launching LaunchLab, a permissionless bonding curve program designed for token launches on Solana. The move comes amid growing tensions with Pump.fun, which recently began testing its own automated market maker (AMM)—a shift that could see it move away from using Raydium’s liquidity. This development has raised concerns about the impact on Raydium’s trading volume and revenue, prompting the protocol to respond with its own solution.

LaunchLab: More Than Just Another Pump.fun?

Raydium contributor 0xINFRA clarified that LaunchLab is not a copy of Pump.fun but a more flexible and composable platform. While its initial proof-of-concept (PoC) user interface may resemble Pump.fun’s for familiarity, it introduces a range of customization options that set it apart.

LaunchLab will offer multiple bonding curve models, including linear, exponential, and logarithmic curves, allowing teams to tailor their token launches to different market dynamics. It will also support various quote tokens, such as SOL, jitoSOL, and stablecoins, providing greater flexibility in liquidity provision. Additionally, LaunchLab will integrate Raydium’s LP locker for Fee Key NFTs, ensuring liquidity remains locked and swap fees continue to benefit the issuer forever.

Investor Sentiment Shifts as Raydium Reclaims the Narrative

The announcement has been well received by traders and investors. Richard Galvin, CEO of DACM, remarked that Raydium was always in a strong position to launch a competing platform, adding that Pump.fun’s move to develop its own AMM effectively forced Raydium to respond.

He noted that Raydium’s approach offers a less extractive model, benefiting the broader crypto ecosystem by feeding trading fees back into liquidity providers and token buybacks. In contrast, Pump.fun’s revenues ultimately flow to the centralized exchange Kraken, where they are converted into cash and removed from the ecosystem.

Following the news, $RAY surged from $1.60 to $2.09, a 30.6% increase, before stabilizing at $1.84 at press time.

This marked a shift in investor sentiment after weeks of decline, as Raydium’s token had fallen from $4.30 to $1.48 since Pump.fun began testing its AMM last month. At the time, the market had priced in concerns that Raydium might lose a significant revenue stream, which could weaken its buyback mechanisms. The introduction of LaunchLab has restored some confidence, signaling that Raydium is actively adapting to the changing landscape.

Can Raydium’s Buyback Engine Keep Running?

Pump.fun’s influence on Raydium’s trading activity has been substantial. According to data from Solanafloor’s data Journalist Ario, Pump.fun accounted for 43.5% of Raydium’s total trading volume in the last 90 days, with its related tokens making up 62.7% of all Raydium trades on January 30.

The current system sees these tokens migrate to Raydium once they complete their bonding curve, at which point they receive $17,000 worth of SOL liquidity. This liquidity is permanently locked, with LP tokens burned, ensuring continued trading activity on Raydium’s AMM.

This model has been a key driver of Raydium’s revenue, helping the protocol generate over $144 million in fees in 2024 alone. Additionally, Raydium has conducted $161.1 million in $RAY buybacks, using a portion of its trading fees to purchase its own token from the market. With Pump.fun now developing its own AMM, this revenue stream is under threat, making LaunchLab a strategic move to retain users and sustain protocol earnings.

A High-Stakes Battle for Solana’s Token Launch Market

The battle for dominance in Solana’s token launch space is far from settled. If Pump.fun fully transitions away from Raydium, it could consolidate its position as a one-stop platform for both token launches and liquidity provision. However, if LaunchLab gains traction, Raydium could maintain its standing as the go-to liquidity provider for new tokens.

Neither protocol has announced a launch date for their respective platforms, leaving the market to anticipate how this competition will unfold. For now, Raydium has made its stance clear: it is not backing down.