The mainstream DEX protocol Raydium (RAY) on Solana plummeted in the past two days, and the direct trigger was that pump.fun seems to be testing its AMM liquidity pool. The market speculated that this move may lead to the future pump.fun tokens that will break out of the "inside market" Then, the pool will not be built on Raydium, but will be directly intercepted into the pump.fun protocol, which will lead to a shrinking Raydium transaction volume and a reduction in revenue and repurchase magnitude.
$Ray's logic line to fall (readers familiar with the relevant logic can skip)
A brief look at the relationship between Raydium and pump.fun.
As the most mainstream meme token Launchpad platform on Solana, the token issuance of pump.fun needs to go through two stages: "inner disk" and "outer disk". After the token issuance, it will first enter the "intra-trading" trading stage, which will rely on the Bonding Curve of the pump.fun protocol itself for matching. When the transaction volume reaches US$69,000, it will enter the "foreign-trading" trading stage, and liquidity will be moved to Raydium , build a pool on this DEX and continue to open transactions.
Let’s take a look at Raydium and RAY.
Raydium currently charges a 0.25% handling fee from each transaction, with 0.22% being allocated to Raydium’s liquidity providers (LPs) and 0.03% being used for RAY’s repurchase and ecological support. In short, Raydium’s transaction volume indirectly affects the price of RAY through fee income.
So the current situation is that if pump.fun builds its own AMM, liquidity will not be moved to Raydium in the future, thereby reducing the latter's transaction volume and handling fees, which will affect the value performance of RAY.
How much does Raydium rely on pump.fun?
There have been a lot of analysis in the above part of the market today, but no one seems to have carefully sorted out how much Raydium relies on pump.fun in terms of trading volume. To do this, we checked some data sources on Defilama and Dune, and the conclusion is shown in the figure below.
From the above figure, the transaction volume of pump.fun tokens on Raydium in the past 14 weeks has roughly fallen by about 20%, which means that if pump.fun really intercepts Raydium through self-built AMM in the future (not Considering autonomous liquidity migration activities due to uncertain platform rates differences), Raydium is expected to see a volume reduction of around 20%.
Is it oversold?
Back to the market, OKX market showed that RAY fell to $2.82 at the lowest today, corresponding to a drop of more than 30% (the data was too late, and afterwards, there was indeed a certain oversold at this time), and the current price has gradually recovered to $3.15. Corresponding to a drop of 25.43%.
Considering that SOL itself also saw a 5.8% decline, RAY's current decline is basically in a reasonable range, that is, the market has priced in pump.fun's betrayal in advance.
Finally, let’s end with Fluid COO DMH:
RAY's plunge once again proves to us "distribution" >>> technology, the traditional world (Microsoft) and the crypto field (Metamask) have countless examples that if you have enough user base, your Products aren't that important. #solana
