Pump.fun, a popular token launchpad, has recently announced the launch of PumpSwap, a native decentralized exchange (DEX) built on the Solana blockchain. This move comes at a time when the platform has experienced a significant decrease in monthly revenue, with figures dropping by nearly 60%.
The new DEX, PumpSwap, will adopt a unique approach by launching tokens after completing their bonding curve instead of creating a liquidity pool on existing platforms like Raydium. This new migration system also eliminates the previous 6 SOL migration fee, making it more cost-effective for users to participate.
In a recent post on March 20, Pump.fun shared their motivation behind the launch of PumpSwap, stating that their goal from the beginning was to create a seamless environment for trading coins. They emphasized that migrations were a major source of friction, slowing down a coin’s momentum and adding unnecessary complexity for new users. With the new system, migrations now happen instantly and at no cost.
PumpSwap V1 operates as an automated market maker (AMM), similar to platforms like Raydium V4 and Uniswap V2. It uses a constant product formula to facilitate trading, allowing users to create liquidity pools, contribute to existing pools, and trade all tokens listed on the platform. The DEX also features a fee structure where each trade incurs a 0.25% fee, with 0.20% going to liquidity providers and 0.05% to the protocol.
Additionally, PumpSwap is set to introduce a Creator Revenue Sharing model, which will adjust fee distribution and allocate a portion of protocol revenue to token creators. This initiative aims to align incentives between creators and their communities while supporting the development of high-quality projects.
Security has been a top priority in the development of PumpSwap, with the platform undergoing nine independent security audits. There are plans to open-source the PumpSwap program in the future to enhance transparency and security further.
The launch of PumpSwap comes at a crucial time for Pump.fun, as the memecoin sector experienced a downturn following the LIBRA memecoin fiasco. This event, coupled with concerns about insider trading activities, led to a decline in trading volume associated with memecoins from January to February. As a result, Pump.fun’s revenue stream saw a significant decrease, but the platform remains one of the top protocols on Solana in terms of revenue.
While the future of memecoins remains uncertain, Pump.fun’s introduction of PumpSwap reflects their commitment to adapting to changing market conditions and finding new revenue streams. As the seventh largest protocol on Solana, Pump.fun continues to innovate and evolve in the dynamic world of decentralized finance.