Raydium plunges 25% amid Pump.fun AMM rumors

Raydium's (CRYPTO:RAY) token experienced a sharp decline on February 24, reportedly plummeting 25% to $3.22, following speculation that memecoin launchpad Pump.fun is developing its own automated market maker (AMM) feature.

The rumor originated from the X account "trenchdiver," who posted on February 24 that Pump.fun was testing its own AMM liquidity pools.

This feature would allow users to trade crypto directly against liquidity in a smart contract, potentially reducing Raydium's business.

Currently, Pump.fun tokens launch on Raydium for further trading once they reach a certain level of activity.

According to trenchdiver, Pump.fun might transition tokens to its own pools to increase fee extraction or reward token holders.

A February 20 on-chain transaction allegedly shows Pump.fun adding its first test token, Snowfall (CRACK), to its AMM liquidity pool.

Snowfall's value surged to $5.4 million an hour after trenchdiver's post but has since experienced significant volatility, with its market capitalisation dropping to around $1.8 million.

Pump.fun has not officially confirmed plans to launch its own AMM pools.

Tyler Warner noted on X that Raydium was "falling off a cliff" after the news.

Gabriel Tramble suggested that Pump.fun could potentially double its revenue with its own AMM pools by charging higher swap fees than the standard 0.25% fee on Raydium.

DefiLlama data indicates that Pump.fun has collected over $500 million in fees since its launch in January 2024.

 At the time of reporting, the Raydium (RAY) price was $3.13.