PumpFun Introduces PumpSwap to Challenge Raydium

PumpFun, the popular Solana-based token launchpad, introduced its own decentralized exchange (DEX), PumpSwap. 

With PumpSwap, PumpFun aims to eliminate friction in token migrations, reduce reliance on third-party DEXs, and enhance liquidity for newly launched tokens. 

But will this move challenge Raydium’s dominance? And can it revive the fading memecoin hype?

What is PumpSwap?

PumpSwap is a Solana-native decentralized exchange built to streamline trading for meme coins and other SOL-based assets. It operates similarly to Raydium V4 and Uniswap V2, using an Automated Market Maker (AMM) model where users provide liquidity and trade tokens.

The platform charges a 0.25% trading fee, allocating 0.20% to liquidity providers and 0.05% to the protocol. However, PumpFun has hinted at a new Creator Revenue Sharing Model, which would distribute a portion of protocol revenue to coin creators. If implemented successfully, this could generate millions in incentives for token developers, potentially raising the quality of new projects.

On launch, PumpSwap supports several notable tokens, including:

• USDe (a stablecoin)
• PENGU (from Pudgy Penguins)
• SEI
• Jupiter (JUP)
• Wormhole (W)

Users can trade these tokens immediately or create liquidity pools for newly launched tokens. However, tokens that weren’t launched on PumpFun must have a liquidity pool created before trading.

Per reports, PumpFun underwent nine independent security audits before launch and plans to open-source the PumpSwap code to ensure transparency. Additionally, PumpFun is hosting an audit competition with a $2 million reward, encouraging developers to test for vulnerabilities.

Why PumpSwap 

Before PumpSwap, tokens launched on PumpFun had to migrate to Raydium for trading. This process slowed momentum, introduced unnecessary complexity, and limited control over liquidity. PumpFun acknowledged this issue, stating that migrations were a “major point of friction” that hindered user experience.

Now, with PumpSwap, token migrations reportedly happen instantly and for free. Tokens that complete their bonding curve on PumpFun will automatically transition to PumpSwap without requiring manual intervention.

This shift could impact Raydium, which has benefited from high trading volumes driven by PumpFun tokens. With a large chunk of liquidity potentially moving to PumpSwap, Raydium might lose its dominance over Solana’s meme coin market.

The Memecoin Market: Can PumpSwap Revive It?

Despite the excitement around PumpSwap, the memecoin market has been struggling. After peaking at $206 billion in trading volume in January, memecoin trading fell to $99.5 billion in February, following the LIBRA scandal.

PumpFun itself has faced revenue declines, earning 588,478 SOL ($60M) in January, but seeing a 50% drop in the following month. Despite this, it remains Solana’s seventh-largest protocol by revenue.

The introduction of PumpSwap appears to be a strategic move to sustain growth as meme coin hype cools. By keeping liquidity within its own ecosystem and offering revenue-sharing incentives, PumpFun positions itself as a long-term player in Solana’s evolving DeFi space.

PumpSwap’s launch comes just days after Raydium announced LaunchLab, a token generator similar to PumpFun.