Solana (SOL)-based token issuance platform Pump.fun is reportedly testing an in-house AMM solution that could replace Raydium.
Pump.fun, a Solana-based memecoin issuance platform, is testing its own automated market maker (AMM) solution that could replace the existing Raydium (RAY), Coindesk reported.
What is AMM?
An automated market maker (AMM) is a system that replaces traditional order books by using algorithms and liquidity pools to automatically determine asset prices based on supply and demand.
Users deposit funds into shared pools and prices are algorithmically adjusted using formulas to maintain balance, enabling continuous trading without intermediaries.
Raydium (RAY) is on the decline!
RAY, Raydium’s native token, has lost nearly 30 percent of its value in the past 24 hours as speculation continues that Pump.fun will launch its own automated market-making system.
What Do Analysts Think?
Until now, memecoins issued on Pump.Fun were automatically listed on Raydium once they reached a certain market value.
Analysts note that Pump.Fun’s creation of its own AMM means that Solana-based tokens will no longer be transferred to Raydium, which could reduce Raydium’s trading volume.
At this point, Presto Research analyst Min Jung noted that the new Pump. Fun AMM could reduce Raydium’s trading volume and reduce commission income.
“If Pump.fun is indeed developing its own AMM, this could reduce future swap volumes on Raydium, leading to lower fee revenues.
Pump.fun may set competitive transaction fees, which could cause Raydium to lose volume. Currently, projects pay 6 SOL (about $950) to move their tokens to Raydium’s more liquid pools.
If Pump.fun creates a system that rivals Raydium’s transaction fees, new projects may choose this platform.”
*This is not investment advice.
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