Pump.fun Launches PumpSwap to Challenge Raydium

Pump.fun has unveiled its own decentralized exchange, PumpSwap, a Solana-native platform designed to streamline trading for memecoins that graduated from pump.fun and some other SOL-based tokens. This marks a significant shift in Solana's memecoin trading landscape, as PumpSwap could potentially displace Raydium as the primary trading venue for the leading L1 network.

What is PumpSwap?

PumpSwap is Pump's new native DEX, built on an Automated Market Maker (AMM) model, similar to Raydium V4 and Uniswap V2, allowing users to provide liquidity and trade tokens efficiently. The platform charges a 0.25% trading fee, allocating 0.20% to liquidity providers and 0.05% to the protocol. However, Pump.fun has hinted at a new Creator Revenue Sharing Model, which would distribute a portion of protocol revenue to coin creators, potentially generating millions in incentives for token developers and 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 Pump.fun must have a liquidity pool created before trading.

Security is also a major focus for PumpSwap. The platform underwent nine independent security audits before launch, and Pump.fun plans to open-source the PumpSwap code to ensure transparency. Additionally, a $2 million audit competition is being hosted to encourage developers to test for vulnerabilities.

Starting on March 20, memecoins that successfully bootstrap liquidity, or “bond,” on Pump.fun will now migrate directly to PumpSwap, as announced in a post on X. Previously, bonded Pump.fun tokens were directed to Raydium, which had become Solana’s most popular DEX due to its thriving memecoin activity.

According to Pump.fun, PumpSwap aims to create a more seamless trading experience by eliminating major friction points. The company noted that token migrations previously slowed momentum and complicated onboarding for new users. With PumpSwap, migrations now happen instantly and at no cost.

Increased Competition in Solana’s DeFi Ecosystem

The launch of PumpSwap intensifies competition within Solana’s decentralized finance ecosystem. Just days before Pump.fun’s announcement, Raydium disclosed its plans to introduce LaunchLab, a memecoin launchpad designed to rival Pump.fun’s services. The shift from partnership to direct competition between the two platforms is set to reshape the memecoin trading landscape, especially as trading volumes have declined significantly from their January highs.

Source: Phantom

Before PumpSwap, tokens launched on Pump.fun had to migrate to Raydium for trading. This process slowed momentum, introduced unnecessary complexity, and limited control over liquidity. Pump.fun 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 Pump.fun will automatically transition to PumpSwap without requiring manual intervention. This shift could impact Raydium, which has benefited from high trading volumes driven by Pump.fun tokens. With a large chunk of liquidity potentially moving to PumpSwap, Raydium might lose its dominance over Solana’s memecoin market.

“We welcome competition because users win at the end of the day,” Alon, one of Pump.fun’s co-founders told Cointelegraph on March 20.

Other emerging protocols, such as Daos.fun, GoFundMeme, and Pumpkin, are also vying for market share in the Solana memecoin space. In response to these competitive pressures, PumpSwap plans to implement one of GoFundMeme’s standout features: revenue sharing with memecoin creators.

“A percentage of protocol revenue will be shared with coin creators,” Pump.fun announced. “If it succeeds, millions of dollars will go towards aligning creators with their communities and incentivizing higher-quality launches.”

Declining Memecoin Activity

Despite the excitement surrounding PumpSwap, the memecoin market has faced challenges. After peaking at $206 billion in trading volume in January, memecoin trading fell to $99.5 billion in February, largely due to the LIBRA scandal. Pump.fun itself has seen declining revenue, earning 588,478 SOL ($60M) in January but experiencing a 50% drop the following month. Nevertheless, it remains Solana’s largest protocol by Daily Revenue, earning approximately $7 million weekly.

The overall memecoin sector has faced a notable downturn, with prices plummeting as the broader crypto market experienced a significant crash in Q1 of 2025. The downturn has led to decreased investor confidence and heightened volatility, impacting even the most popular memecoins.

According to DefiLlama, Pump.fun volume has been down since January, and successful memecoin launches on the famous launchpad have also plummeted by approximately 80% since January, following a series of memecoin-related scandals that dampened retail enthusiasm. Consequently, according to the Dune data, Pump.fun’s average daily fee revenue dropped from over $4 million in January to around $1 million by mid-March.

Source: DefiLlama

The overall boom in Solana’s ecosystem, driven by memecoins, saw the chain’s total value locked in the protocol (TVL) surge from $1.4 billion to over $9 billion in 2024. Raydium was among the biggest beneficiaries, as its success was closely tied to the massive influx of graduated memecoins from Pump.fun. This led to daily trading volumes soaring to over $47.5 billion at the beginning of 2025. However, as Pump.fun’s trading volumes declined in February 2025, Raydium experienced a similar downturn, highlighting its dependence on Pump.fun’s token migrations and overall market activity.

To counteract declining activity, Raydium launched a leveraged perpetual futures trading platform in January to compete with Jupiter, another leading Solana DeFi protocol.

Looking Ahead

As Pump.fun and Raydium double down on their respective strategies, the memecoin sector on Solana remains in flux. PumpSwap’s entry signals a major shift in the competitive landscape, promising more innovation and potentially reshaping the memecoin trading ecosystem.

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

With heightened rivalry and evolving user preferences, it remains to be seen which platform will emerge as the dominant player in Solana’s vibrant, yet unpredictable, DeFi market.