TL;DR
- Pump.fun is developing a new AMM that could displace Raydium as the primary liquidity provider on Solana, shifting the dynamics of meme coins.
- The RAY cryptocurrency saw a 28.10% drop in 24 hours due to speculation about the impact of this new AMM.
- Pump.fun has also strengthened its security by blocking money laundering attempts from Bybit hackers using meme coins, reinforcing crypto ecosystem protection.
Pump.fun, a platform known for its focus on meme coins, is revolutionizing the liquidity landscape on Solana with the trial of its own Automated Market Maker (AMM). The test version of amm.pump.fun has generated significant interest, suggesting that it could alter the flow of liquidity across the Solana network and potentially displace Raydium as the primary liquidity provider for newly launched tokens in the ecosystem.
Currently, tokens created on Pump.fun migrate to Raydium to take advantage of its liquidity pools, where providers earn a 0.25% commission for each trade. Of this fee, 0.22% goes to liquidity providers (LPs), and 0.03% is used to repurchase RAY tokens. However, if Pump.fun fully implements its AMM, it could retain those fees within its own ecosystem, enhancing its revenue stream and controlling liquidity more efficiently.
Market Reaction and RAY Token Price Drop
The news of this potential shift has had an immediate impact on the market. The price of the RAY token dropped over 28% in just a few hours, hovering around $3. This sharp decline reflects the market’s expectations of a reduction in Raydium’s commission-based revenue, especially if Pump.fun succeeds in attracting trading volumes to its platform. Although Pump.fun’s AMM is still in the testing phase, analysts already foresee its potential to bring significant disruption to the liquidity dynamics of Solana.
AMM Model with Higher Fees and Community Rewards
Some experts believe that Pump.fun could introduce higher trading fees, ranging from 2% to 3%, along with a reward system for its users. With over $509 million in transaction fees generated since its launch, the platform is well-positioned to solidify its dominance in the meme coin space within Solana if its AMM proves successful. On the other hand, Raydium has been instrumental in the growth of these projects, receiving payments of up to 6 SOL (approximately $950) from projects migrating to its liquidity pools.
In addition to testing its AMM, Pump.fun has intensified its efforts against money laundering, particularly after detecting that stolen funds from the Bybit hack were being used to create a token named QinShihuang on its platform. Upon detection, Pump.fun quickly blocked and removed the token, showcasing its commitment to maintaining the security of the crypto ecosystem.
