PumpSwap: A New Decentralized Exchange (DEX) Built on Solana
Overview
Pump.fun, a popular meme coin launcher, has unveiled PumpSwap, a decentralized exchange (DEX) built on Solana. This new platform promises frictionless token migrations with zero fees and enhanced liquidity, positioning itself to challenge Raydium, Solana’s dominant DEX.
What PumpSwap Brings to the Table
In a post on X, Pump.fun stated that the new service is intended to resolve one of the main pain points for users of its platform: token migrations. Previously, tokens graduating from the meme coin launchpad to Raydium faced a fee of 6 SOL, or approximately $950. Now, the process will be instant and free, allowing projects to maintain their momentum without added complexity.
The DEX will operate on a constant product automated market maker model, similar to Raydium V4 and UniSwap V2. Users can create or add to liquidity pools and easily trade all PumpSwap-supported tokens.
Another feature of the platform is the upcoming Creator Revenue Sharing model. Pump.fun plans to give a portion of the protocol’s revenue to token creators, encouraging higher-quality launches. This initiative could channel millions into supporting meme coin developers and their communities.
Each trade on PumpSwap incurs a 0.25% fee, with 0.20% going to liquidity providers and 0.05% retained by the protocol. However, the fee structure will adjust once the revenue-sharing program launches to include creators.
Token Integration
PumpSwap has partnered with major token projects that have bridged to Solana, including Pudgy Penguins’ PENGU, Coinbase’s cbBTC, and Aptos’ APT. This strategy directly threatens Raydium’s dominance, with data from DefiLlama showing its total value locked (TVL) dropping to $1.157 billion, down from a high of $2.969 billion in January.
Raydium’s Reaction
Raydium, the leading DEX on Solana, didn’t take the news lying down. On March 19, reports emerged that it was also building a meme coin launcher to rival Pump.fun. RAY’s price shot up 28% on this occasion, going from $1.60 to $2.05. PumpSwap’s launch has since shaken the token, pushing it down 13% from a high of $1.87 to a low of $1.62. However, it has since clawed back some value and is currently trading at $1.73, 7% below its price from 24 hours ago.
Frequently Asked Questions
Q: What is PumpSwap?
A: PumpSwap is a decentralized exchange (DEX) built on Solana, offering frictionless token migrations with zero fees and enhanced liquidity.
Q: What is the purpose of PumpSwap?
A: PumpSwap aims to resolve the main pain point of token migrations, allowing projects to maintain their momentum without added complexity and encouraging higher-quality launches through its Creator Revenue Sharing model.
Q: How does PumpSwap’s trading fee structure work?
A: Each trade on PumpSwap incurs a 0.25% fee, with 0.20% going to liquidity providers and 0.05% retained by the protocol. The fee structure will adjust once the revenue-sharing program launches to include creators.
Q: Has Raydium reacted to the launch of PumpSwap?
A: Yes, Raydium has responded to the news by launching its own meme coin launcher, which has led to fluctuations in its price.
