Comrades become rivals: Pump.fun and Raydium officially start the battle

Author: Techub Hot News Express Written by: Yangz, Techub News

Nearly a month after the rumor that Pump.fun would develop its own AMM fermented, this Solana ecosystem leading Memecoin issuance platform officially announced the launch of its native DEX - PumpSwap today. Coupled with the news that Raydium will also launch the native Memecoin issuance platform LaunchLab, which was revealed by Blockworks earlier this week, the former "comrades-in-arms" have become "opponents", and the battle for the Solana Memecoin market has officially begun.

Speaking of the relationship between Pump.fun and Raydium, it was actually mutually beneficial and symbiotic at first. Pump.fun's Memecoin issuance mechanism can be roughly divided into two stages. The first is the "internal market" stage, relying on its own Bonding Curve mechanism (simply put, the higher the token price, the more tokens released) to match transactions. When the token reaches $69,000 in trading volume and successfully "graduates", it will enter the "external disk" stage, when liquidity will migrate to Raydium and continue to be open for trading, and Raydium will charge a listing fee of 6 SOL. It can be said that Pump.fun's "internal disk" stage provided early price discovery for the token, and by moving to Solana, the TVL number one DEX, it introduced a natural market balance mechanism for these Memecoins, which to a certain extent helped to alleviate the extreme price fluctuations that may be caused by a single curve model.

Data released by Blockworks Research shows that since the second quarter of last year, a large part of Raydium's revenue has come from the transaction fees of Pump.fun Memecoin, of which the proportion in the fourth quarter of last year reached 53% (Raydium charges a handling fee of 0.25% from each transaction). Although it fell slightly in the first quarter of this year (as of February 23), it still accounted for 44%. In addition, DefiLlama data shows that Raydium's daily trading volume in 2024 soared from about US$245 million to more than US$2 billion, thanks to the craze of Solana Memecoin last year and the popularity of Pump.fun.

So why did this pair of partners who once "helped each other" "travel separately"?

Pump.fun said in today's official tweet, "From day one, our goal has been to create the most frictionless token trading environment. The migration of token liquidity will slow down the momentum of the token and bring unnecessary complexity to new users. Now, the migration can be done immediately and for free." In addition, it is also investing in creating a more sustainable ecosystem, and in the future "a certain percentage of the protocol revenue will be shared with the token creators" (currently, each transaction on PumpSwap charges a 0.25% handling fee, of which 0.2% is allocated to liquidity providers and 0.05% is allocated to the protocol. After the creator income sharing function is launched, the fee distribution will change). Simply put, Pump.fun's move is intended to implement its original intention of "frictionless transactions" while ensuring that "fat water does not flow to outsiders' fields."

Raydium's anonymous core contributor Infra also revealed in an interview with Blockworks that the protocol had actually started to develop LaunchLab "a few months ago", but because they did not want the Pump.fun team to feel that Raydium was in direct competition with them, they had been shelving the project. It was not until the news broke in the market that Pump.fun would develop its own AMM that Raydium realized that if it did not take action, it would probably "eat up the mountain." Infra also pointed out that the popularity of Pump.fun is partly due to the solid infrastructure provided by Raydium, but it does not regard LaunchLab as a killer of pump.fun, "just to provide an alternative for teams that do not want to develop programs from scratch and Pump.fun users who like to use Raydium's AMM v4 for liquidity pool migration." Although neither side has explicitly stated that they want to confront their former "comrades-in-arms", considering the fact that a series of scandals have caused the Solana Memecoin ecosystem to fall into a downturn, the market has long known that "separate travel" is nothing more than "All about money". DeFiLlama data shows that compared with the peak of about 15.38 million US dollars at the end of January this year, the current transaction fees of Pump.fun have dropped to the level of 1 million US dollars, and Raydium's transaction fees have also dropped from the level of 30 million US dollars to 600,000 to 700,000 US dollars.

In my opinion, this is a "survival battle" for traffic and users under the shrinking Memecoin market. With the retreat of the Solana ecosystem Memecoin craze, both sides are facing the pressure of sharp decline in revenue and user loss. But the problem is that with CZ bringing BNB Chain ecosystem Memecoin to the forefront and Solana itself facing "external troubles", how much space is left for them in the current Memecoin market? A head-on confrontation between the two against the backdrop of Solana's declining traffic may only be a war of attrition.

The popularity of the Memecoin market is highly dependent on emotion-driven. Once the money-making effect fades, users tend to quickly turn to other hot spots. If PumpSwap and LaunchLab cannot provide enough attraction in this battle, it is likely to be in vain. Of course, one thing that cannot be ignored is that PumpSwap has not limited itself to Memecoin. It has now expanded to support token transactions of multiple popular projects including PENGU, APT and TRON, trying to expand its influence. As for LaunchLab, in addition to providing linear, exponential and logarithmic combined curves to match the demand and price of tokens, and allowing third-party user interfaces to set their own fees, whether it will bring other new mechanisms still needs to wait for Raydium's further announcement and market feedback.

In the end, who can win this battle for survival depends not only on their subsequent actual performance, but also on the overall direction of the Solana ecosystem. If Solana’s Memecoin narrative can heat up again, perhaps we will witness Raydium breaking Pump.fun’s dominance in the “Solana Memecoin” field; or, Pump.fun will take advantage of the momentum and further consolidate its leading position.