Pump.fun, the most lucrative protocol on Solana, is aiming to capture a larger slice of the DeFi landscape on the blockchain.
This highly sought-after memecoin launchpad has recently introduced a token swapping feature backed by its own liquidity pools, named PumpSwap. This service positions Pump.fun squarely against Solana’s array of automated market makers (AMMs) which facilitate on-chain token exchanges.
Rather than transition popular memecoins to Raydium, a well-established hub for Solana’s DeFi activities, Pump.fun will now provide initial liquidity for promising tokens directly through PumpSwap. The in-house operation is intended to lower launch expenses, as the founders indicated, and will reshape how Pump.fun generates its historically impressive profits.
The founders are confident that PumpSwap can become the central hub for open trading infrastructure on Solana, supporting all tokens, according to information they shared during the launch. They have secured partnerships with several token projects, which will now utilize PumpSwap’s infrastructure for their liquidity.
While it’s unclear if PumpSwap leverages some undisclosed technological edge to attract users—namely, profit-driven token traders and yield-seeking liquidity providers—its creators have been tight-lipped when questioned about it.
The service boasts a significant advantage in distribution. Over the past year, the surge of memecoins from Pump.fun has influenced much of the crypto landscape, particularly on Solana. The significant profits it has generated have compelled on-chain analysts to think differently about revenue-producing protocols.
On Tuesday, Pump.fun reported $1 million in revenue. Although this amount pales in comparison to the profits from the previous year, it still surpasses the figures reported by many leading crypto initiatives, including Ethereum. This level of profitability might cultivate a competitive advantage for PumpSwap.
Raydium stands to lose the most, as a large portion of its trading volume over the past year has stemmed from pools initially seeded by Pump.fun’s mechanism. Future activity will now shift to PumpSwap. However, Raydium’s newly launched memecoin launchpad might mitigate the downturn by allowing it to attract its own flow of memecoins.
Token creators could eventually benefit as well. PumpSwap plans to implement revenue-sharing, allowing them to earn a portion of the protocol’s 25 basis point fee on trades, as disclosed by the founders. However, they did not specify the potential revenue flow to creators or set a timeline for this feature’s launch.