Raydium's RAY Token Plunges 22% Amid Pump.fun AMM Launch Rumors

Raydium Token Drops 22% Amid Speculation of Pump.fun's AMM Launch

Raydium's RAY token experienced a significant decline on Sunday, falling 22% to $3.28 over the past 24 hours and a further 5% in the last hour, according to data from GeckoTerminal. The sharp drop comes amidst rumors that meme coin launchpad Pump.fun is preparing to launch its own automated market-making (AMM) system, which could redirect trading volume away from Raydium's platform.

Pump.fun has not yet responded to requests for comment, and Raydium's representatives have not publicly addressed the situation. The potential shift threatens Raydium's position as the default trading venue for new Solana tokens, as projects may choose to graduate their tokens to Pump.fun's AMM instead, reducing swap volumes and fee revenue for Raydium.

An AMM is a system that uses algorithms and liquidity pools to automatically set asset prices based on supply and demand. Users deposit funds into shared pools, and prices adjust algorithmically using formulas to maintain balance, enabling continuous trading without intermediaries. Based on 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).

If Pump.fun is indeed developing its own AMM, this could lead to lower fee revenue for Raydium, as projects may choose to graduate their tokens to Pump.fun's more liquid trading pools. Currently, projects pay 6 SOL (approximately $950) to graduate their tokens to Raydium's pools. The test site's terms and conditions footer refers to Pump.fun's fee structure, meaning the platform could implement competitive trading fees to match Raydium, though specific parameters remain undefined, given how the site appears to still be in its testing phase.

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 a hundred of those going above a $1 million market capitalization. The potential launch of Pump.fun's AMM could change the dynamics of the Solana token ecosystem,