GuShiio.com Raydium (RAY), the mainstream DEX agreement on Solana, plunged today, as a direct result of pump.fun appearing to be testing its own AMM liquidity pool.
Author: Azum, Odaily Planet
Raydium (RAY), the mainstream DEX agreement on Solana, plunged today, directly caused by the fact pump.fun com appears to be testing its own AMM liquidity pool,The market speculated that this move may cause pump.fun tokens to no longer pool in Raydium after breaking out of the “internal market” in the future, but to be directly intercepted in the pump.fun agreement, which in turn will lead to a reduction in Raydium’s trading volume and a reduction in corresponding revenue and repurchase levels.
The logical line for RAY to fall (readers familiar with the relevant logic can skip it)
Simply review the relationship between Raydium and pump.fun.
As the most mainstream meme token Launchpad platform on Solana today, pump.fun’s token issuance requires two stages: “internal disk” and “external disk”. After the issuance of tokens, they will first enter the “intra-market” trading stage. The Bonding Curve, which relies on the pump.fun protocol itself, will conduct matching. When the transaction volume reaches US$69000, it will enter the “extra-market” trading stage. At that time, liquidity will be transferred to Raydium, a pool will be established on this DEX and transactions will continue to be open.
Let’s take a look at Raydium and RAY.
Raydium currently charges a 0.25% fee from each transaction, of which 0.22% is allocated to Raydium’s liquidity providers (LPs) and 0.03% is used for RAY’s repurchase and ecological support. In short, Raydium’s trading volume will indirectly affect RAY’s price through fee income.
So the current situation is that if pump.fun builds its own AMM, liquidity will not migrate to Raydium in the future, thereby reducing the latter’s transaction volume and handling fees, which will in turn affect the value performance of RAY.
How much does Raydium rely on pump.fun?
There has been a lot of analysis in the market today, but it seems that no one has carefully sorted out how much Raydium relies on pump.fun in terms of trading volume. To this end, we queried some data sources on Defillama and Dune, and the conclusions are shown in the figure below.
It can be seen from the above figure that the trading volume of pump.fun tokens above Raydium in the past 14 weeks has roughly fallen to around 20%, which means that if pump.fun really uses its own AMM to intercept Raydium in the future (regardless of autonomous liquidity migration activities due to uncertain platform rate differences), Raydium is expected to experience a reduction in trading volume of around 20%.
Is it oversold?
Back above the market, OKX prices show that RAY fell to a low of US$2.82 today, corresponding to a drop of more than 30%(the data was pulled too late, and in hindsight, there is indeed a certain oversold at this time), while the current price has gradually recovered to US$3.15, corresponding to a drop of 25.43%.
Considering that SOL itself has also experienced a 5.8% decline, RAY’s current decline is basically within a reasonable range, that is, the market has already priced in pump.fun ‘s must-cutting behavior in advance.
Finally, let’s end with the words of Fluid COO DMH:
RAY’s plunge once again proves to us that “distribution technology” has countless examples from the traditional world (Microsoft) and the crypto space (Metamask) that if you have enough user bases, your product is less important.
