Pump.FunRaydium tokens dropped nearly 30% after it was reported that it was developing its own AMM

The decentralized exchange Raydium in the Solana ecosystem, whose native token RAY has recently plummeted 22% due to market rumors, is allegedly because the meme coin launch platform Pump.Fun is testing its own automated market maker (AMM) system. This move could potentially shift trading volume from Raydium to Pump.Fun, posing a challenge to Raydium's market position.

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Pump.Fun Rumored to Test AMM, RAY Token Plunges

Within the past 24 hours, the price of Raydium's RAY token dropped by 29.4% to $3.07, with the community speculating that the reason is the rumor of Pump.Fun developing its own AMM system.

Crypto KOL @EasyEatsBodega posted this morning that he discovered Pump.Fun is internally testing a new website or feature called "amm.pump.fun", which could mean the platform will no longer rely on Raydium as the default exchange for its launched tokens, thereby impacting Raydium's trading fee revenue.

Well, it's a wrap. https://t.co/q8PvbjiTAd

Already live it looks like.

Gonna be messing around with this for sure to figure out if there's any edge on this side of things

Also still waiting for a more formal announcement before I really get into liquidity providing on Pump… https://t.co/KJ9VtkVvu6 pic.twitter.com/L6IbWz7W9w

— Easy (@EasyEatsBodega) February 24, 2025

• Meme coin liquidity can be directly provided on Pump.Fun
• The migration of on-chain and off-chain liquidity will be faster, as no third party is involved
• The internal system may be able to prevent front-running or other issues
• Raydium without Pump.Fun's trading volume is certainly risky
• If Pump.Fun launches its own token in the future, I think this AMM could become a very profitable mining ground, as the platform's trading volume is quite considerable

(Pump.fun Rumored to Launch Token? Team Denies Rumor but Hints at Properly Rewarding Users - Good Things Take Time)

As of now, Pump.Fun has not responded to this, and Raydium has also not commented on it, but the market reaction already reflects the market's concerns about this news.

Without Pump.Fun, What Next for Raydium?

It is well known that Raydium has long benefited from its ecosystem collaboration with Pump.Fun, as when meme coins on Pump.Fun reach a $69,000 market cap, they will migrate to Raydium's market for trading, with the platform also collecting a 0.25% trading fee.

Presto Research analyst Min Jung stated:

If Pump.Fun develops its own AMM, Raydium's trading volume may decrease in the future, thereby reducing its fee revenue. The platform is now keeping liquidity and revenue within itself, rather than passing it on to Raydium, which is a blow to RAY.

Currently, the fee to launch a token on Raydium is 6 SOL, and if Pump.Fun launches its own AMM, it may attract users with more competitive fees, posing a serious threat to its market position.

Can Pump.Fun Pull it Off?

The crypto community has also raised questions about this, with user @riddle245 believing that "the drop in Raydium is not surprising, but whether Pump.Fun can attract enough liquidity is still a question."

The Block data shows that Pump.Fun has already accumulated over $500 million in trading fee revenue, with its peak daily revenue exceeding $10 million.

(Solana DApp Revenue Soars to $365 Million in November! Meme Coin Platform Pump.fun Contributes $109 Million)

However, only 1.4% of Pump.Fun tokens have successfully migrated to Raydium, and less than 100 tokens have a market cap exceeding $1 million, indicating that while Pump.Fun's influence is large, its conversion rate is extremely low.

How Should Raydium Respond?

Currently, Pump.Fun's AMM test website is still in the early testing stage, and the specific fee structure and other details have not yet been announced.

For Raydium, Pump.Fun's transformation may force it to seek new development directions, as Min Jung stated:

Raydium may be able to maintain its position through other DeFi services, but this transformation will undoubtedly put pressure on it.

In the coming weeks, whether Pump.Fun will officially launch its AMM and its impact on the Solana ecosystem will be the focus of market attention.