Raydium Token Plunges As Pump.fun Eyes Competing AMM Feature On Solana

Raydium’s token (RAY) suffered a sharp decline on February 24 amid growing speculation that memecoin launchpad Pump.fun is developing its own automated market maker (AMM) feature. The potential competition could challenge Raydium’s dominance in Solana DEX services.

The rumor emerged from X (formerly Twitter) user “trenchdiver,” who claimed Pump.fun is testing AMM liquidity pools. This technology allows users to trade cryptocurrencies directly against liquidity in smart contracts, eliminating the need for a traditional counterparty.

Trenchdiver also shared a link to a beta interface branded with Pump.fun’s logo, suggesting that the project is well underway.

Pump.fun’s Bonding Curve Bridges Meme Coins to Raydium Trading

Currently, when meme coins launched on Pump.fun attract sufficient trading activity, they transition to Raydium for further trading through a process called the “bonding curve.”

However, if Pump.fun launches its AMM, it could retain these tokens within its own ecosystem, potentially undercutting Raydium’s role.

“It seems they plan to have Pump tokens graduate to their own pools instead of relying on Raydium,” trenchdiver stated. This shift could enable Pump.fun to extract more fees or implement rewards for its token holders.

Supporting these claims, on-chain data from February 20 shows Pump.fun adding its first test token, Snowfall (CRACK), to its AMM liquidity pool.

Named after the 2017 television series depicting the 1980s crack epidemic, the token’s market cap skyrocketed to $5.4 million within an hour of trenchdiver’s post, according to DEX Screener.

However, the token experienced significant volatility, with its market cap dropping to $1.8 million after a 40% price decline.

Pump.fun has yet to officially confirm any AMM development plans, but market reactions were swift. Tyler Warner, a podcast host, noted that Raydium’s token “fell off a cliff” following the news, sliding 25% to $3.22 in 24 hours, as per CoinGecko data.

Meanwhile, RAY is currently trading at $3.09, down by over 28% in the past day. According to analysts, if RAY fails to hold above the immediate support of $3.15, it may test the $3.00 level. Breaking below $3.00 could open the door for further declines toward $2.85.

Solana Surpasses Ethereum As Top Ecosystem for New Developers

As reported, Solana has overtaken Ethereum as the top destination for new developers in 2024, breaking Ethereum’s eight-year dominance in the space.

Solana saw 7,625 new developers join its ecosystem this year,
surpassing Ethereum’s 6,
456.
The surge was driven largely by increased developer activity in Asia,

Solana’s momentum began in July,
when it officially outpaced Ethereum in onboarding new developers for the first time since 2016.
This trend continued through
the remainder of
2024,
with Solana’s developer activity growing by
83%
year over year,

Key Takeaways

Raydium’s token dropped 25% amid rumors of Pump.fun developing its own AMM feature.
Pump.fun’s potential AMM could undercut Raydium by retaining memecoins in its ecosystem.
Pump.fun has amassed over $500 million in fees since January 2024,
reflecting rapid growth.

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