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The Solana 
$161-based token issuance platform Pump.Fun is rumored to launch its automated market maker (AMM) system, aiming to enhance trading efficiency and offer users new earning opportunities. Although no official announcement has been made, hints about the AMM have surfaced through a link associated with the platform. This new system may streamline token transactions and provide users with additional profit avenues.
How Will the AMM System Work?
AMM is a market model that enables token transactions through smart contracts. Unlike traditional exchanges, where buyers and sellers match for transactions, the AMM system calculates prices using algorithms. This allows for trading without the need for a counterparty.
The product developed by Pump.Fun, “amm.pump.fun,” will incorporate not only trading functions but also deposit and withdrawal features. This represents a significant innovation for a system that allows for low-cost token creation on the platform. Users will be able to customize the tokens’ features, quantities, and visuals during transactions.
Impact on Raydium and Market Reactions
Previously, when the tokens created on Pump.Fun reached a market value of $69,000, a portion of the liquidity was transferred to the Solana-based decentralized exchange Raydium. However, with the introduction of the new AMM system, tokens might now be directed towards Pump.Fun’s own pools instead of Raydium.
This shift could explain the approximately 25% decline in the value of Raydium’s native token, RAY, over the past 24 hours. Trader @trenchdiver101 commented on the development, indicating that the plan is to direct Pump tokens to internal pools, potentially generating more transaction fees on Solana or creating reward mechanisms for token holders.
Raydium supports various assets, including Pump.Fun tokens, Solana, and stablecoins, reaching a daily trading volume of $500 million. This highlights the important role both platforms play in liquidity management.
Despite not having officially launched a token, Pump.Fun has quickly become a leading platform, accumulating over $550 million in transaction fees since March 2024 and executing $2.4 billion in volume within just two weeks. More than 8 million tokens have been created by users, with some tokens appreciating significantly in value.
The developing AMM system may offer transaction fees and reward mechanisms that could create additional income for users. This move by Pump.Fun is seen as a step to improve liquidity management and trading efficiency on the platform.
