Raydium's RAY token plummeted Sunday amid speculation that meme coin launchpad Pump.fun is preparing to launch its own automated market-making system.
RAY has dropped 22% over the past 24 hours to $3.28 and is down a further 5% over the past hour, according to data from GeckoTerminal.
Pump.fun has yet to respond to Decrypt's request for comment. Raydium's representatives have not publicly addressed the situation nor returned requests for comment.
The sharp decline follows the discovery of an apparent test version of an AMM that could redirect significant trading volume away from Raydium's platform.
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"Raydium has benefited significantly from Pump.fun, as graduated tokens have historically migrated to its AMM, where it charges a 0.25% fee on swaps," Min Jung, an analyst at Presto Research, told Decrypt.
An automated market maker (AMM) is a system that uses algorithms and liquidity pools to automatically set asset prices based on supply and demand, replacing traditional order books.
Users deposit funds into shared pools, and prices adjust algorithmically using formulas to maintain balance, enabling continuous trading without intermediaries.
Based on Decrypt's 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).
The potential shift threatens Raydium's position as the default trading venue for new Solana tokens.
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"If Pump.fun is indeed developing its own AMM, this could reduce future swap volumes on Raydium, leading to lower fee revenue," Jung said.
Currently, projects pay 6 SOL (approximately $950) to "graduate" their tokens to Raydium's more liquid trading pools.
Section 4 of 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.
Edited by Sebastian Sinclair
