Raydium's RAY token plummeted Sunday amid speculation that meme coin launchpad Pump.fun is preparing to launch its own automated market-making system.
RAY is now down 22% in the last 24 hours, to $3.28. It has also dropped 5% within the hour. GeckoTerminal.
Pump.fun is yet to reply to Decrypt's Raydium representatives have not publicly addressed the situation nor returned requests for comments. Raydium's representatives have not publicly addressed the situation nor returned requests for comment.
The sharp decline follows the discovery of an apparent test version of an AMM that could redirect significant trading volume away from Raydium's platform.
"Raydium has benefited significantly from Pump.fun, as graduated tokens have historically migrated to its AMM, where it charges a 0.25% fee on swaps," Min Jung is an analyst with Presto Research. Decrypt.
A market maker is an automated system which uses liquidity pools and algorithms to set prices for assets based on demand and supply, and replaces traditional order books.
The users deposit money into a shared pool, the prices are adjusted algorithmically by formulas, maintaining balance. This allows for continuous trading, without intermediaries.
Based on Decrypt's internal testing, the site's security certificates appear legitimate and point to the Pump.fun platform, although the test AMM's branch domain did not reflect using a lookup tool for domain name services (DNS).
The potential shift threatens Raydium's position as the default trading venue for new Solana tokens.
"If Pump.fun is indeed developing its own AMM, this could reduce future swap volumes on Raydium, leading to lower fee revenue," Jung said.
At present, the project pays 6 SOLs (approximately 950 dollars) "graduate" their tokens to Raydium's more liquid trading pools.
The footer of Pump.fun’s test site refers to section 4 in the terms and conditions. Charge structureAs the site is still in testing, it’s not clear what parameters will be implemented.
Pump.fun's rise has been meteoric, with the platform processing over $5.3 million in daily fees at its peak.
However, only 1.4% of tokens launched on the platform currently progress to Raydium's pools, with Less than 100 These are those companies with a market capitalization of more than $1 million.
Sebastian Sinclair is the editor
