A new decentralized exchange (DEX) called PumpSwap has been introduced by Pump.fun, which could potentially replace Raydium as the main platform for trading memecoins on Solana (SOL).
Beginning March 20, memecoins that successfully establish liquidity, or “bond,” on Pump.fun will transition directly to PumpSwap, as announced in a post on X.
Previously, memecoins that were bonded on Pump.fun had migrated to Raydium, which became the most popular DEX on Solana primarily due to trading activity surrounding these coins.
Pump.fun states that PumpSwap “operates similarly to Raydium V4 & Uniswap V2” and is built “to offer the most seamless trading experience for coins.”
“Migrations created a significant hurdle – they hindered a coin’s momentum and added unnecessary complexity for newcomers,” noted Pump.fun.
“Now, migrations occur instantly and without cost.”
Raydium’s trading volumes skyrocketed in 2024, largely thanks to memecoins. Source: DeFiLlama
Increased Rivalry
This launch follows closely after Raydium announced its plans to create its own memecoin launchpad, named LaunchLab, to compete directly with Pump.fun.
The shift from collaboration to competition between Pump.fun and Raydium could significantly alter the landscape of Solana’s decentralized finance (DeFi) ecosystem, particularly as trading volumes for memecoins have drastically decreased since January.
“We embrace competition because ultimately, users benefit,” said Alon, a co-founder of Pump.fun, on March 20.
Other emerging protocols, including Daos.fun, GoFundMeme, and Pumpkin, are also looking to claim a portion of the memecoin market on Solana.
PumpSwap intends to incorporate one of GoFundMeme’s most appealing aspects — sharing revenue with creators of memecoins.
Shortly, “a portion of the protocol’s revenue will be allocated to coin creators,” Pump.fun mentioned.
“If this is successful, it could direct millions of dollars towards aligning creators with their communities and encouraging better-quality launches.”
Pump.fun’s fee revenues have dropped significantly from January’s highs. Source: Dune Analytics
Declining Memecoin Engagement
A report on February 27 highlighted that successful memecoin launches on Pump.fun decreased by around 80% from the highs seen in January, after a wave of scandals related to memecoins dampened retail traders’ enthusiasm.
This decline resulted in Pump.fun’s average daily fee revenue falling from over $4 million in January to just above $100,000 by mid-March, according to data from Dune Analytics.
Memecoins were a primary driver behind remarkable growth on Solana in 2024, with the total value locked (TVL) in the chain jumping from approximately $1.4 billion to upwards of $9 billion that year, according to DefiLlama.
Raydium benefitted significantly, with daily volumes rising from around $245 million to over $2 billion throughout 2024, as indicated by DefiLlama data.
In January, Raydium introduced a leveraged perpetual futures trading platform aimed at competing with Jupiter, another leading DeFi protocol on Solana.