Pump.fun, a leading token launchpad on the Solana blockchain, has officially launched its own decentralized exchange (DEX) called PumpSwap. This move positions the platform as a direct competitor to established DEXs like Raydium, which previously served as the primary migration destination for tokens created on Pump.fun.
The introduction of PumpSwap is designed to streamline the token migration process, enhance liquidity, and introduce a creator revenue-sharing model in the near future. This development follows rumors from the previous month about Pump.fun potentially creating its own automated market maker (AMM), which had already impacted Raydium's market performance.
What Is PumpSwap and How Does It Work?
PumpSwap is a native decentralized exchange built by the Pump.fun team to serve as the new migration destination for tokens that complete their bonding curve on the launchpad. Unlike the previous process where tokens migrated to Raydium, PumpSwap now serves as the immediate destination for matured tokens.
Key features of PumpSwap include:
- Instant migrations that eliminate waiting periods
- Zero migration fees (previously 6 SOL per migration)
- Enhanced liquidity provisions for created coins
- Future implementation of creator revenue sharing
The platform aims to address what it identified as major points of friction in the previous migration process. "Migrations were a major point of friction—they slow a coin's momentum and introduce needless complexity for new users," the announcement stated. "Now, migrations happen instantly and for free."
The Impact on Token Migration Process
Previously, when a token on Pump.fun reached a market capitalization of $100,000, it would begin migrating to Raydium to become tradable on the broader Solana ecosystem. This process could sometimes take minutes but in certain edge cases extended to hours, potentially disrupting token momentum.
With PumpSwap, this migration process becomes instantaneous, eliminating any delay between a token completing its bonding curve and becoming available for decentralized trading. The removal of the 6 SOL migration fee also significantly reduces the cost burden for token creators.
Revenue Sharing and Creator Incentives
Pump.fun has generated approximately $600 million in revenue since its launch in January 2024, according to available data analytics. The new DEX opens the possibility for distributing a percentage of protocol revenue back to coin creators through a revenue-sharing model.
While no official date has been announced for implementing this revenue-sharing program, sources familiar with the matter indicate it should be deployed within weeks rather than months. This development could address previous criticisms about the distribution of platform revenues.
Available Trading Options and Partnerships
At launch, PumpSwap supports trading for several major tokens including Pudgy Penguins' PENGU, the USDC stablecoin, and Jupiter's JUP, in addition to tokens created on Pump.fun. For tokens not from listed partners or created outside the Pump.fun ecosystem, liquidity pools must be established to enable trading.
According to Pump.fun co-founder Alon Cohen, "It's the launchpad's choice whether they want their coins to migrate to PumpSwap, and we're more than happy to partner with launchpads looking to tap into Pump's diverse user base."
Security Measures and Audit Competition
Alongside the exchange launch, Pump.fun announced a $2 million audit competition to ensure platform security. The team stated that the platform has already undergone nine security audits prior to launch.
This focus on security comes after last year's incident where a disgruntled employee exploited the protocol, resulting in approximately $2 million in losses. The attacker, who claimed he wanted to "kill" the platform because it had "inadvertently hurt people for a long time," pleaded guilty to related charges but is reportedly seeking to withdraw this plea.
Market Impact and Competitive Landscape
The announcement of PumpSwap immediately affected Raydium's native token RAY, which dropped 7.6% within five minutes of the news and was down nearly 9% on the day of announcement, reaching a price of $1.65 according to market data.
The development creates an interesting competitive dynamic between the two platforms, with reports indicating that Raydium plans to deploy its own token launchpad in response to Pump.fun's move into the DEX space. What was once a complementary relationship has now evolved into direct competition.
"We welcome competition," Cohen told reporters, "because users win at the end of the day."
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Frequently Asked Questions
What is PumpSwap?
PumpSwap is a decentralized exchange launched by Pump.fun that serves as the new migration destination for tokens that complete their bonding curve on the platform. It enables instant migrations with zero fees and provides enhanced liquidity for created coins.
How does PumpSwap benefit token creators?
The platform eliminates the previously required 6 SOL migration fee and enables instant token migrations, preventing momentum loss. Additionally, PumpSwap will soon implement a creator revenue-sharing model that will distribute a percentage of protocol revenue to coin creators.
Can tokens from other launchpads use PumpSwap?
Yes, according to Pump.fun's co-founder, other launchpads can choose to migrate their coins to PumpSwap. The platform is open to partnerships with launchpads interested in accessing Pump.fun's diverse user base.
What security measures has PumpSwap implemented?
The platform has undergone nine security audits prior to launch and is hosting a $2 million audit competition to further ensure platform security and identify potential vulnerabilities.
How has Raydium responded to PumpSwap's launch?
Reports indicate that Raydium plans to deploy its own token launchpad in response to PumpSwap's introduction, transforming the previously complementary relationship between the two platforms into direct competition.
What major tokens are available on PumpSwap at launch?
Initial trading options include Pudgy Penguins' PENGU, USDC stablecoin, Jupiter's JUP, and of course, tokens created on Pump.fun. Other tokens require created liquidity pools to enable trading.