Pumpfun launches its own DEX called PumpSwap amid falling revenue

Token launchpad Pump.fun has announced PumpSwap, a native decentralized exchange (DEX) built on Solana. The launch comes amid a nearly 60% monthly revenue decrease.

The new DEX will launch tokens after completing their bonding curve instead of creating a liquidity pool on Raydium. As a result, the new migration system removes the previous 6 SOL migration fee. 

Pump.fun shared the rationale for the launch in a March 20 X post:

“From day 1, our goal was to create the most frictionless environment for trading coins. 

Migrations were a major point of friction – they slow a coin’s momentum and introduce needless complexity for new users

Mow, migrations happen instantly and for free”

PumpSwap AMM

PumpSwap V1 is an automated market maker (AMM) similar to Raydium V4 and Uniswap V2.

It facilitates trading by using a constant product formula. Users can create liquidity pools at no cost, contribute to existing pools, and trade all tokens listed on the platform.

PumpSwap also incorporates a fee structure similar to other decentralized exchanges. Each trade incurs a 0.25% fee, with 0.20% allocated to liquidity providers and 0.05% to the protocol. 

The announcement also cited a forthcoming Creator Revenue Sharing model, which will adjust the fee distribution and allocate a portion of protocol revenue to token creators. This initiative seeks to align incentives between token creators and their respective communities while supporting the development of higher-quality projects.

Pump.fun highlighted that security measures have been a priority in developing PumpSwap. The platform has undergone nine independent audits from security firms, and plans to open-source the PumpSwap program in the long term to further enhance transparency and security.

Falling revenue

The memecoin craze cooled off in February following the LIBRA memecoin fiasco. On Feb. 14, Argentine President Javier Milei endorsed the token by saying it would fund small ventures in the country.

The token soared right after and reached a $4.5 billion market cap before collapsing 95% in the two following days. LIBRA’s price crashed by 95% in the following two days, despite two wallets profiting over $10 million with the price action.

The scandal raised questions about heavy insider trading activity in the memecoin sector, which has contributed significantly in driving away investors, who were already spooked by market sentiment.

The monthly trading volume associated with memecoins plunged from nearly $206 billion in January to $99.5 billion in February.

This movement is reflected in Pump.fun’s revenue stream. From Jan. 15 to Feb. 14, the launchpad recorded 588,478 SOL in revenue, according to a Dune dashboard by user evelyn233. 

However, for the following 30 days, the SOL-denominated revenue fell more than 50% but Pumpfun remains the seventh largest protocol on Solana in terms of revenue.

Although it is not certain if the memecoin mania will come back, Pump.fun seems to be filling the hole left in its revenue generation means.

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