Solana Showdown: Pump.fun Vs Raydium 🤼♀️
Hello, y'all. Happy Saturday.
The crypto world is witnessing what happens when business partners become fierce rivals, practically overnight.
Solana's memecoin ecosystem is experiencing an untimely infighting episode as two titans – Pump.fun and Raydium – have declared war on each other.
In just 48 hours, we saw Raydium announce LaunchLab, its own token launchpad, followed immediately by Pump.fun launching PumpSwap, a native decentralised exchange (DEX) that cuts Raydium out of its ecosystem entirely.
What makes this power struggle particularly fascinating is its timing – erupting just as the once-booming memecoin market shows clear signs of fatigue. Solana network revenue has plunged 95% since January's peak, and daily DEX volumes - more than 93%.
In today's Wormhole, we dive into this high-stakes battle, exploring how a partnership that helped drive Solana to new heights has dissolved into a fight for survival, and what it means for the future of decentralised trading on Solana.
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The Partner Breakup
Since early 2024, Pump.fun and Raydium operated in perfect symbiosis. Pump.fun democratised token creation, allowing anyone to launch a memecoin for pennies through its bonding curve system.
When these tokens reached the magical $69,000 market cap threshold, they "graduated" to Raydium – Solana's premier DEX – where they could be freely traded in the wider market.
A perfect arrangement that worked brilliantly for both parties.
Pump.fun focused on what it did best: onboarding millions of new users and facilitating token creation
Raydium captured massive trading volume and fees without having to build a token launchpad
The Numbers Story
Pump.fun tokens accounted for 41% of Raydium's swap fee revenue over the past month, as per Blockworks Research. Some put this figure even higher, at 43.5%.
The stakes? A revenue stream worth several tens of millions of dollars each month and control over Solana's memecoin future.
With Pump.fun facilitating over 8.65 million token launches and attracting 15 million addresses, Raydium reaped the rewards – earning more than $80 million in trading fees from memecoin activity alone.
But this system had friction points. Every token graduation required:
A significant 6 SOL migration fee (approximately $950 at current prices)
A time-consuming migration process that could take hours
Complexity that confused new users and disrupted token momentum
Result? A minuscule portion of tokens created on Pump.fun graduated to Raydium.
These pain points created an opening for disruption – one that both parties have now aggressively exploited.
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The Current Clash
The simmering tensions boiled over in a dramatic 48-hour period that completely transformed the Solana ecosystem.
On March 18, Raydium announced LaunchLab – its own permissionless token launch platform designed to directly compete with Pump.fun. This didn’t come out of nowhere; the announcement followed reports that suggested Pump.fun was considering launching its native DEX.
LaunchLab introduced several features that improve upon Pump.fun's model.
The message was clear: Raydium was no longer content to merely collect trading fees – it wanted Pump.fun's market share too.
Pump.fun wasted no time responding. On March 20, it launched PumpSwap – a native DEX that effectively ends its dependency on Raydium.
The market immediately recognised the significance of this manoeuvre. Within five minutes of the PumpSwap announcement, Raydium's RAY token plunged 7.6%, extending its losses to nearly 9% for the day.
What began as whispers in February, when Pump.fun was first spotted testing AMM features, has now erupted into an all-out DeFi war. Both platforms are battling for the same creators, the same traders, and most importantly, the same fee revenue.
Memecoin Market Context
This power struggle couldn't come at a more precarious time for the Solana memecoin ecosystem. Both combatants may be fighting over a rapidly shrinking pie.
The memecoin market on Solana has experienced a dramatic reversal of fortune since its euphoric January peak. Consider these sobering statistics:
Solana network revenue has plummeted 93% since January
Transaction fees have collapsed 83% in the past month alone
Even the token graduations from Pump.fun to Raydium have dried up.
“Fewer tokens are reaching the threshold. Active wallets in the average 30 minutes was like 6-7k wallets at peak hours. Now down by 30-40%," Bambino, an agency founder and developer, said on X.
The weekly graduation percentage is moving only southwards - from a high of 1.67% in November to 0.63% currently.
What's driving this dramatic slowdown? Several factors have converged.
Remember the high-profile political memecoin scams?
Read: Game, Set and Death for Memecoins?💀
Investment firm Bernstein has already predicted market liquidity will move away from "useless memecoins" toward DeFi, gaming, and NFTs.
What’s intriguing is to see if Pump.fun and Raydium are fighting over the last passengers on a sinking ship – or whether their innovations can revitalise memecoin interest.
Who Holds the Edge?
As this DEX war unfolds, both contenders bring significant, yet different strategic advantages to the battlefield.
This creates interesting competitive dynamics.
Raydium has the technical infrastructure and liquidity depth but needs to attract creators. Pump.fun has the creators and brand but needs to build liquidity in its new exchange.
The crucial battlefield may be creator incentives. The upcoming "Creator Revenue Sharing" feature on PumpSwap could fundamentally alter the memecoin landscape.
"Earlier, memecoin creators had to dump to profit. Now, they earn from every trade, which could push longer-term projects over quick flips," Arif Kazi, head of BD, Sonic SVM, posted on X.
This innovation addresses a core problem in the memecoin ecosystem – the incentive for creators to pump and dump. By aligning creator success with sustainable trading volume rather than initial price pumps, PumpSwap could foster more durable projects.
However, DeFi history shows how quickly these wars can turn destructive. If both platforms engage in a race-to-the-bottom on fees or aggressive incentive programs to attract liquidity, they risk creating unsustainable economics that harm both businesses.
Implications for Solana
This conflict between Pump.fun and Raydium transcends a simple business dispute – it represents a pivotal moment for Solana's ecosystem evolution.
The silver lining of the memecoin frenzy, despite its current decline, has been its role in battle-hardening Solana's infrastructure.
Messari's research analyst Matthew Nay points to the Trump token launch as evidence: "Solana was able to handle almost $40 billion in volume in a day without going down. That's 10% of what the Nasdaq does in a 24-hour regular trading period."
This massive stress testing has accelerated Solana's maturation.
Where will Solana's DeFi ecosystem direct its focus next if memecoin mania recedes? Some potential avenues emerge.
DeFi Renaissance: Former Ethereum maximalist turned Solana advocate Kain Warwick believes traditional DeFi applications could finally cross the chasm to mainstream adoption. "DeFi is just an obvious one. Like DeFi is the thing that's going to break out... something like Aave — a decentralised lending and borrowing protocol — could get wide adoption."
DePIN (Decentralised Physical Infrastructure): Nay highlights projects like Helium and HiveMapper as "fantastic leaders" bringing real-world utility to blockchain.
Gaming: With the infrastructure improvements from memecoin traffic, Solana is now better positioned to support gaming applications.
Evolved Memecoins: Even as classic animal-themed memecoins fade, Nay sees potential for a new generation with actual utility. For example, creator coins supporting new influencers, giving investors a share of future YouTube earnings – moving beyond "just a random picture of an animal."
However, Solana's current economics present challenges for DeFi growth. Multicoin Capital's Tushar Jain explains that high inflation and staking yields "set a high hurdle rate for people to participate in DeFi." When users can earn risk-free returns from staking, there's less incentive to use DeFi protocols unless they offer significantly higher yields.
Token Dispatch View 🔍
As the dust settles from this week's dramatic announcements, we're witnessing a business rivalry that could reshape Solana's entire DeFi landscape.
In the immediate term, both platforms face critical execution challenges. PumpSwap must build sufficient liquidity without Raydium's established pools and implement its promised creator revenue sharing model. Meanwhile, LaunchLab needs to attract creators away from Pump.fun's ecosystem and leverage Raydium's existing liquidity advantage.
Beyond tactical manoeuvres, this conflict represents the natural evolution of a maturing ecosystem. The Pump.fun-Raydium relationship thrived during crypto's speculative phase, but as the market contracts, their diverging interests have become impossible to reconcile.
This battle erupts just as the memecoin market faces exhaustion, with token graduations plummeting and trading volumes collapsing. While they're fighting for control of the memecoin market, it will be interesting to see if that market will remain relevant enough to justify the struggle.
The most valuable outcome out of this conflict could be how it accelerates Solana's evolution beyond memecoins and how the competition drives innovation. PumpSwap's creator revenue sharing model, for instance, could transform tokenomics by aligning creator success with sustainable trading rather than pump-and-dump cycles.
This moment echoes similar transitions we've seen in crypto – from ICOs to DeFi Summer to NFT booms. Each speculative wave eventually gives way to more sustainable use cases. Perhaps the Pump.fun-Raydium war marks the end of pure speculation and the beginning of utility-focused development on Solana.
For users and creators, this competition should yield better tools, lower fees, and more aligned incentives – assuming the platforms don't destroy each other through unsustainable economics. The wildcard remains whether a Pump.fun token could dramatically shift the balance of power through strategic airdrops and tokenomic incentives.
Ultimately, this clash represents creative destruction at work. While tensions run high and tokens tumble, the ecosystem as a whole stands to benefit from the innovations this competition will drive.
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