The token launchpad Pump.fun has introduced PumpSwap, a homegrown decentralized exchange (DEX) operating on the Solana blockchain. This launch occurs in the context of a nearly 60% decline in monthly revenues.
The new DEX will facilitate token launches upon completion of their bonding curve, rather than establishing a liquidity pool on Raydium. This new approach eliminates the previous 6 SOL migration fee.
Pump.fun outlined their reasoning for this launch in a March 20 post:
“From the very beginning, our aim has been to create the most seamless environment for trading coins.
Migrations were a significant source of friction – they impede a coin’s growth and add unnecessary complexity for newcomers.
Now, migrations occur instantly and free of charge.”
PumpSwap AMM
PumpSwap V1 operates as an automated market maker (AMM), similar to Raydium V4 and Uniswap V2.
It enables trading through a constant product formula, allowing users to create liquidity pools without incurring costs, contribute to existing pools, and trade all tokens listed on the platform.
Furthermore, PumpSwap adopts a fee structure akin to other decentralized exchanges. Every trade incurs a 0.25% fee, with 0.20% going to liquidity providers and 0.05% allocated to the protocol.
The announcement also highlighted an upcoming Creator Revenue Sharing model, which will modify the fee distribution, directing a portion of protocol revenue to token creators. This initiative aims to harmonize incentives between token creators and their communities while fostering the development of higher-quality projects.
Pump.fun emphasized that enhancing security has been a key focus in the development of PumpSwap. The platform has undergone nine independent security audits from various firms, and there are plans to eventually open-source the PumpSwap program to further promote transparency and security.
Decreased Revenue
The enthusiasm surrounding memecoins began to wane in February, following the LIBRA memecoin incident. On February 14, Argentine President Javier Milei endorsed the token, claiming it would finance small initiatives within the country.
The token experienced a sharp rise immediately afterward, reaching a market cap of $4.5 billion, only to plummet 95% in the subsequent two days. Despite this, two wallets managed to profit over $10 million during the volatility.
This incident raised concerns regarding widespread insider trading in the memecoin space, which has significantly deterred investors already uneasy about market conditions.
The monthly trading volume for memecoins fell from approximately $206 billion in January to $99.5 billion in February.
This trend is mirrored in the revenue of Pump.fun. Between January 15 and February 14, the launchpad reported 588,478 SOL in revenue, according to a Dune dashboard.
However, during the next 30 days, SOL-denominated revenue dropped by over 50%, yet Pump.fun continues to rank as the seventh largest protocol on Solana regarding revenue.
While it remains uncertain if the memecoin frenzy will revive, Pump.fun appears to be addressing the gap left in its revenue strategies.
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