Pump.fun, a Solana-based platform for launching tokens, is rumored to be developing its own automated market maker (AMM). This potential move comes as blockchain researcher trenchdiver101 has revealed that Pump.fun is testing an AMM on a private testnet. A new liquidity pool, amm(.)pump(.)fun, has been spotted under internal tests.
Following this news, the token CRACK saw a surge in valuation to $5.4 million within an hour, according to DEX Screener. If Pump.fun goes through with this development, it could significantly alter the landscape of memecoin and microcap token trading on Solana.
**What is Pump.fun’s AMM?** An AMM allows users to trade cryptocurrencies directly against liquidity pools instead of traditional order books.
Currently, when a memecoin gains traction on Pump.fun, it usually moves to Raydium for further trading. With an in-house AMM, however, Pump.fun could:
– Retain liquidity within its own ecosystem
– Capture more trading fees, potentially doubling revenue under current market conditions
– Introduce new financial products like memecoin perpetuals and lending.
**What are the potential consequences of this shift?**
Pump.fun’s AMM could drastically impact Raydium, which currently leads in Solana-based token trading volume. If Pump.fun fully implements its AMM, it may reduce the need for new tokens to move to Raydium. This would give Pump.fun control over liquidity and higher fees. Raydium faces a potential threat with a 30-50% decline in trading volume if this occurs.
**Could this be a boon or a risk for Solana?**
A successful implementation of the AMM could usher in new features, such as memecoin perpetuals and lending. However, it also brings potential risks like security concerns, regulatory scrutiny, and trust issues, which require careful management. If not prioritized, these risks could lead to rug pulls, flash loan attacks, or liquidity drain risks.
**Why is Solana a battleground for memecoin liquidity?**
Solana’s DeFi sector thrives on memecoins, with Pump.fun playing a key role in token launches. Over $500 million in swap fees have been generated by Pump.fun alone. A built-in AMM would allow it to retain liquidity and monetize trading volume. **What does this mean for other DEXs?**
If Pump.fun succeeds, other Solana DEXs like Raydium, Orca, and Drift Protocol may need to adapt their strategies.
Raydium could consider reducing fees or offering incentives.
Orca might need to adjust its approach to the new landscape.
Drift Protocol needs to explore new products for competition.