Pump.fun has deployed its own decentralized exchange (DEX) called PumpSwap, a significant development in the Solana memecoin trading market. The new exchange will serve as the new primary exchange for Pump.fun’s bonded tokens, simplifying the process of trading.
Starting March 20, all memecoins that pass through the liquidity bonding procedure on Pump.fun will be migrated directly to PumpSwap. Memecoins had formerly been redirected to Raydium, which became Solana’s leading DEX in part due to memecoin trading volumes.
Removing Migration Friction
Pump.fun explained that its new DEX is similar to Raydium V4 and Uniswap V2 but with a more seamless experience. The company further noted that token migrations were one of the key friction points, which used to slow down the momentum of a coin and complicate the user experience.
“With PumpSwap, migrations are instant and free,” Pump.fun tweeted on X (formerly Twitter), emphasizing the simplicity of the platform’s method.
Raydium Strikes Back with LaunchLab
Pump.fun’s action comes on the heels of Raydium’s reveal of its own memecoin launchpad, LaunchLab, apparently in an attempt to counter Pump.fun’s monopoly. The flip in the two platforms from being partners to being competitors will reshape Solana’s decentralized finance (DeFi) landscape, especially as memecoin volumes decline from January highs.
Individuals and businesses are willing to compete because consumers gain in the end,” Alon, a co-founder of Pump.fun, had said during an interview on March 20.
New Players Enter the Market
In addition to Raydium, several new protocols like Daos.fun, GoFundMeme, and Pumpkin are also fighting for their share of Solana’s memecoin space. In order to remain in the running, PumpSwap will include revenue-sharing features like GoFundMeme, where a percentage of protocol revenue will be provided to creators of memecoins.
“If successful, millions of dollars will go towards matching creators with their communities and rewarding better launches,” Pump.fun said.
Slumping Memecoin Activity
Despite the innovation, memecoin activity on Solana has come to a grinding halt. on Feb. 27 reported that successful memecoin launches on Pump.fun had dropped by 80% from levels in January. This decline followed a series of memecoin scandals that doused retail traders’ enthusiasm.
Pump.fun’s fee revenues have also declined, dropping from over $4 million daily in January to just over $100,000 as of mid-March, according to Dune Analytics.
Solana’s Explosive Growth
Memecoins were among the main drivers of Solana’s 2024 growth, with the chain’s value locked (TVL) rising from $1.4 billion to over $9 billion, according to DeFiLlama. Raydium was among the biggest gainers, with trading volumes of the token going up from $245 million to over $2 billion throughout the year.
In an effort to expand its market share further, Raydium launched last week a leveraged perpetual futures trading platform and aimed to dethrone Jupiter, the other Solana DeFi protocol making heavy market hitters.
The Future of Solana’s Memecoin Ecosystem
With Pump.fun and Raydium now head-to-head competitors, Solana’s DeFi landscape is poised to change some more. Whether PumpSwap will be able to become the go-to platform for memecoin trading remains to be seen, but one thing is certain: competition is heating up, and users are the ones who will benefit from the battle for dominance.
