Raydium’s token (RAY) fell by more than 25% on Feb. 24 after rumors surfaced that memecoin launchpad Pump.fun is testing its own automated market maker (AMM). The speculation raised concerns that Pump.fun’s new feature could reduce Raydium’s trading volume, potentially taking away revenue from Raydium.
The rumors started when an onchain investigator, known as “trenchdiver” on X, claimed that Pump.fun was developing and testing an AMM liquidity pool.
An AMM allows traders to buy and sell crypto against a liquidity pool, rather than needing another person to trade with. Raydium currently plays a key role in this process by hosting Pump.fun tokens once they complete their initial trading phase.
However, if Pump.fun launches its own AMM, it may keep its trading fees instead of relying on Raydium.
Onchain Investigator Reveals Evidence of Pump.fun Testing New Liquidity Pools
To support the claim, trenchdiver shared a link to a Pump.fun-branded AMM interface, which showed that the feature is in beta testing.
Additionally, an onchain transaction from Feb. 20 appeared to show Pump.fun testing the feature by adding a token called Snowfall (CRACK) to its liquidity pool.
The token, seemingly inspired by the 2017 TV series “Snowfall”, saw a massive surge in value. It peaked at $5.4 million within an hour of trenchdiver’s post but quickly dropped 40%, bringing its market value down to $1.8 million.
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Experts Say Pump.fun’s AMM Could Bring Higher Fees and More Revenue
If Pump.fun successfully launches its own AMM, Raydium could lose a major source of revenue. Shoal Research founder Gabriel Tramble explained that Raydium currently charges a 0.25% fee on swaps. Pump.fun could set a higher fee and double its revenue if traders continue using its platform.
Tramble also noted that many traders, often referred to as “degens”, are used to paying high trading fees, suggesting that Pump.fun could profit from its own AMM without losing users.
Meanwhile, podcast host Tyler Warner described Raydium’s situation as “falling off a cliff”, referring to its steep price decline.
Despite the rumors, Pump.fun has not made any official statements about launching its own AMM pools.
However, DefiLlama data shows that since its launch in January 2024, Pump.fun has already collected over $500 million in fees, proving its growing influence in the market.
