Raydium News: RAY Dives 27% as Pump.Fun Teases DEX Launch

Meme coins have been critical to the success of Raydium – the largest decentralized exchange in the Solana ecosystem by total value locked (TVL).

Once these assets gain popularity on Pump.fun and their trading volume exceeds $100,000, they “graduate” and are subsequently listed on Raydium. The latter benefits by collecting trading fees from that point forward.

If Pump.fun launches its own AMM, it may no longer graduate the token to Raydium, but rather move it to this new solution and collect the trading fees themselves.

Including today’s sharp drop, RAY is down 33.1% in the past week and 59.4% in the past 30 days. Comparatively, Solana (SOL), the native asset of the network in which Raydium operates, has retreated by 14% and 40% during those same periods respectively.

Raydium is currently the fifth-largest decentralized application (dApp) in the Solana network with a TVL of $1.38 billion. Its closest competitors would be Meteora and Orca, whose TVL stands at $1 billion and $246 million respectively at the time of writing as per data from DeFi Llama.

A Pump.Fun AMM Would Steal a Large Chunk of Raydium’s Fees

According to data from DeFi Llama, Raydium has collected a total of $1.1 billion in trading fees since the protocol was launched. Comparatively, Pump.fun has collected $575 million.

By capturing a portion of Raydium’s market share in the AMM segment, Pump.fun could rapidly become one of the largest protocols in this ecosystem in terms of collected fees.

Raydium charges a 0.25% fee on swaps and is the dominant AMM in the Solana ecosystem. Hence, an AMM owned and operated by Pump.fun would generate significant income for the latter and would deal a critical hit to Raydium’s trading volumes.

According to CoinGecko, Raydium’s trading volume in the past 24 hours stood at $296 million. This same service indicates that Comedian (BAN), a new meme coin whose market cap has been rising lately, accounted for 8% of the platform’s daily volumes.

Meanwhile, the OSOL/OI trading pair is single-handedly amassing 16% of Raydium’s daily trading activity.

The developing team behind the Solana-based meme coin minting app has been busy lately. On February 14, they launched the Pump.fun mobile app. The protocol makes it even easier for users to launch new tokens on the Solana network and incorporates new features including a watchlist and a portfolio management tool.

RAY Could Offer 33% Gains to Short-Sellers

Today’s drop has found support temporarily at the $3 level as buyers showed up to scoop up RAY at that level.

The token has been on a downtrend since its January peak. Back then, RAY’s price was boosted by the launch of Official Trump (TRUMP) as the launch of the President’s meme coin propelled the platform’s trading volume.

However, as the price of TRUMP collapsed days after its release, so did RAY, as trading activity progressively declined.

For now, whatever RAY does in the next few days would likely indicate whether today’s rumors are true or false.

A drop below the $3 would imply that market participants are taking the Pump.fun threat seriously. Considering that the next area of support lies at the $2 level, such a bearish breakout would result in a downside risk of 33.3%.

A short position following a break below this area of support would offer the highest upside potential at the lowest risk possible. Momentum indicators have sent sell signals way before today’s drop.

For example, the Relative Strength Index (RSI) moved below the signal line 8 days ago, confirming this bearish short-term outlook.