Question 1

What is Raydium (RAY)?

Accepted Answer

RAY is the native SPL token of Raydium, a decentralised exchange and liquidity protocol built on Solana. Raydium launched in February 2021 with an automated market maker (AMM) that integrated with the Serum order book, later OpenBook. This order book integration has since been deactivated and current AMM v4 swaps are executed through the AMM's liquidity pools rather than being routed to OpenBook.

Raydium now supports several types of liquidity pools. Its AMM v4 and CPMM pools use a constant-product model, while its concentrated liquidity market maker (CLMM) lets liquidity providers allocate assets within selected price ranges. CPMM is the recommended option for new constant-product pools, while AMM v4 remains operational. Raydium also provides token launches through LaunchLab, where tokens can trade on a bonding curve before liquidity migrates to a Raydium CPMM pool once a specified threshold is reached. Perpetual futures are accessible through the Raydium interface and are powered by Orderly Network.

RAY has a maximum supply of 555 million tokens. Of this amount, 34%, or 188.7 million RAY, was allocated to mining reserves for reward programmes. The token's mint authority has been disabled, preventing the creation of RAY beyond its fixed supply. RAY emissions from the mining reserve currently amount to around 1.9 million tokens per year, with the exact distribution depending on individual staking and farming programmes.

Question 2

What is Raydium (RAY) used for?

Accepted Answer

RAY is used within Raydium for staking, governance and as an asset in liquidity pools. RAY holders can stake the token through Raydium to receive rewards distributed by the protocol. RAY can also be paired with other assets in Raydium liquidity pools, where liquidity providers may earn a share of trading fees and, where applicable, additional rewards.

Through Raydium's Solana Realms governance system, holders can deposit RAY to gain voting power and participate in proposals. Raydium states that 1 million RAY is required to create a proposal and that the governance configuration uses a threshold equivalent to 1% of the token supply. This system has been used for community votes, including the remediation plan following the December 2022 exploit. Raydium describes its token-based governance as limited, with some protocol controls remaining under a multisig.

RAY is also connected to Raydium's trading fees through token buybacks. The protocol allocates 12% of trading fees from CLMM, CPMM and Standard AMM v4 pools to buying RAY. For CLMM and CPMM pools, 84% of the trading fee goes to liquidity providers, 12% to RAY buybacks and 4% to the treasury. Standard AMM v4 allocates 88% to liquidity providers and 12% to RAY buybacks. The 12% buyback allocation applies to the trading fee rather than the total value of each transaction. RAY purchased through this process is held at a publicly identifiable protocol address.

RAY is not required to make swaps, provide liquidity or launch tokens through Raydium. Its role is separate from the protocol's main transaction and liquidity functions.

Question 3

Who created Raydium (RAY)?

Accepted Answer

Raydium was created by a pseudonymous team whose early members used the names AlphaRay, XRay, GammaRay, StingRay and RayZor. The team included contributors working across strategy, business development, software development, marketing, trading and security.

The team began working on Raydium after participating in decentralised finance during 2020 and launched the protocol on Solana in February 2021. Raydium initially worked with Serum to combine AMM liquidity with Serum's central limit order book. Serum's order book infrastructure was later succeeded by OpenBook, but Raydium has since removed the order book integration from its AMM v4 architecture.