Inside Pump.fun's Plan to Dominate Solana DeFi Trading

Solana's most profitable protocol Pump.fun is gunning for an even greater share of the chain's DeFi economy.

The massively popular memecoin launchpad on Thursday unveiled a token swaps service powered by the protocol's liquidity pools. Called PumpSwap, it puts the project in direct competition with Solana's coterie of automated market makers (AMMs) that facilitate on-chain token trades.

Instead of "graduating" highly-traded memecoins to Raydium, a longtime hub for Solana DeFi pools, Pump.fun will now seed promising tokens' launch liquidity in PumpSwap. This fully in-house setup will cut down on launch costs, the founders told CoinDesk, and alter the way Pump.Fun generates its historically astronomical revenue.

Pump.Fun's founders believe PumpSwap can become the beating heart of permissionless trading infrastructure on Solana for all tokens, according to launch documents reviewed by CoinDesk. They've brokered deals with a number of token projects who will now set up their liquidity on PumpSwap's rails.

If the AMM is leaning on some undisclosed technological advantage to woo users – profit-hungry token traders and yield-chasing liquidity providers – from Solana's established trading outposts, then Pump.Fun's founders wouldn't say. CoinDesk asked them as much – repeatedly.

What the service has going for it, at least in the minds of its backers, is distribution. For nearly a year now Pump.Fun's explosion of memecoins has set the agenda for much of crypto, and especially Solana. Its profit windfalls reshaped the way on-chain researchers think and talk about revenue-generating protocols.

On Tuesday Pump.Fun saw $1 million in revenue. The sum is a relative pittance compared to the platform's previous year mining gold in the trenches. But it also trounces the numbers posted by many major crypto projects, including Ethereum itself. Such profits yield a mindshare dividend that could give PumpSwap its competitive edge.

Raydium is set to be the biggest loser. Much of its trading volume over the past year has occurred in pools first seeded by Pump.Fun's graduation mechanism. It will miss out on future activity now flowing to PumpSwap. That said, Raydium's newly-unveiled memecoin launchpad could blunt the pain by giving Raydium its own stream of memecoins.

Creators of tokens, meanwhile, may eventually capture a win. PumpSwap will eventually enable revenue sharing to give them a slice of protocol's 25 basis point fee on trades, the founders said. But they declined to say how much would flow to creators, or when the switch would flip.