- Pump.fun’s AMM may cut Raydium’s market share as memecoin liquidity shifts, impacting Solana’s DEX landscape.
- The AMM could bring new financial tools like memecoin lending, but security risks loom with alleged links to past exploits.
- Raydium’s token, RAY, dropped 20% amid fears of liquidity loss as Pump.fun moves towards self-sufficiency in the memecoin market.
Pump.fun is developing its own automated market maker (AMM) liquidity pools, signaling a major shift in Solana’s decentralized exchange (DEX) ecosystem. The platform, known for launching memecoins, has begun testing these pools at amm.pump.fun.
Consequently, the initiative aims to transition pump tokens away from Raydium, allowing Pump.fun to capture more fees or introduce new rewards for token holders. Notably, the first test token added to the AMM liquidity pool is $CRACK.
Pump.fun’s AMM Could Disrupt Raydium’s Market Share
Currently, only 1.4% of tokens launched on Pump.fun migrate to Raydium. Hence, an in-house AMM could retain more liquidity within Pump.fun’s ecosystem. The move comes as memecoins dominate the DEX market, generating substantial trading volume. According to DeFiLlama, Pump.fun has already amassed over $500 million in total swap fees.
If Pump.fun fully transitions to its AMM, Raydium’s trading volume could drop by 30% to 50%. As a result, Raydium’s market position may suffer. Investors have already reacted negatively, causing Raydium’s native token, RAY, to drop 20% in the past 24 hours, as per CoinGecko data.
Potential for New Features and Security Concerns
Beyond liquidity control, the development could open doors for new financial products. The X community speculates that memecoin perpetuals and lending features may follow. Besides, the move aligns with the broader trend of Solana-based projects aiming for greater self-sufficiency.
However, the development raises security concerns. Onchain investigator ZachXBT suggests that the Lazarus Group, the entity behind the $1.4 billion Bybit hack, may be linked to scams on Pump.fun. Recently, the attacker received $1.08 million from the Bybit exploit and moved USDC to Solana, consolidating funds across multiple wallets. These wallets allegedly have ties to past memecoin scams.
Additionally, the Lazarus Group is suspected of involvement in the $29 million Phemex hack in January. The Solana network has seen multiple rug pulls, with the Libra (LIBRA) token collapse wiping out $4 billion in investor funds. Consequently, while Pump.fun’s AMM could revolutionize memecoin liquidity, it must also address security risks to maintain investor trust.
