Pump.fun Develops AMM Liquidity Pools Amid Rising Memecoin Demand

• Pump.fun’s AMM may cut Raydium’s market share as memecoin liquidity shifts, impacting Solana’s DEX landscape.
• The AMM could bring new financial tools like memecoin lending, but security risks loom with alleged links to past exploits.
• Raydium’s token, RAY, dropped 20% amid fears of liquidity loss as Pump.fun moves towards self-sufficiency in the memecoin market.

Pump.fun is developing its own automated market maker (AMM) liquidity pools, signaling a major shift in Solana’s decentralized exchange (DEX) ecosystem. The platform, known for launching memecoins , has begun testing these pools at amm.pump.fun. 

Consequently, the initiative aims to transition pump tokens away from Raydium , allowing Pump.fun to capture more fees or introduce new rewards for token holders. Notably, the first test token added to the AMM liquidity pool is $CRACK.

Pump.fun’s AMM Could Disrupt Raydium’s Market Share

Currently, only 1.4% of tokens launched on Pump.fun migrate to Raydium. Hence, an in-house AMM could retain more liquidity within Pump.fun’s ecosystem. The move comes as memecoins dominate the DEX market, generating substantial trading volume. According to DeFiLlama , Pump.fun has already amassed over $500 million in total swap fees.

If Pump.fun fully transitions to its AMM, Raydium’s trading volume could drop by 30% to 50%. As a result, Raydium’s market position may suffer. Investors have already reacted negatively, causing Raydium’s native token, RAY, to drop 20% in the past 24 hours, as per CoinGecko data .

Potential for New Features and Security Concerns

Beyond liquidity control, the development could open doors for new financial products. The X community speculates that memecoin perpetuals and lending features may follow. Besides, the move aligns with the broader trend of Solana-based projects aiming for greater self-sufficiency .

However, the development raises security concerns. Onchain investigator ZachXBT suggests that the Lazarus Group , the entity behind the $1.4 billion Bybit hack, may be linked to scams on Pump.fun. Recently, the attacker received $1.08 million from the Bybit exploit and moved USDC to Solana , consolidating funds across multiple wallets. These wallets allegedly have ties to past memecoin scams.

Additionally, the Lazarus Group is suspected of involvement in the $29 million Phemex hack in January. The Solana network has seen multiple rug pulls, with the Libra (LIBRA) token collapse wiping out $4 billion in investor funds. Consequently, while Pump.fun’s AMM could revolutionize memecoin liquidity, it must also address security risks to maintain investor trust.