Memecoin DEX PumpSwap Makes a Significant Impact, Attracting 700K Wallets and Facilitating 30M Swaps

Since its launch on March 20, PumpSwap has made a significant impact in the decentralized exchange (DEX) space. The platform has generated $5.4 million in protocol fees

Since its launch on March 20, the PumpSwap decentralized exchange (DEX) has made significant progress on the Solana blockchain, generating $5.4 million in protocol fees, attracting 700,000 active wallets and facilitating over 30.59 million swaps, according to Dune Analytics data.

As of March 30, Raydium still holds the majority market share at 74%, but PumpSwap has quickly gained ground, capturing 8% of Solana’s total DEX trading volume.

Why Is PumpSwap Gaining Traction?

PumpSwap was developed by Pump.fun to streamline memecoin trading and liquidity provision. Before its launch, memecoins created on Pump.fun migrated to Raydium after completing the bonding curve process. This extra step added complexity and transaction costs for users.

To streamline the process, PumpSwap integrates trading, liquidity and token creation into a single platform. Unlike traditional order-book-based exchanges, it employs a constant product automated market maker (AMM) model, similar to Raydium v4 and Uniswap v2. This structure ensures more efficient and seamless trading for users within the Solana ecosystem.

Previously, Pump.fun charged a six-SOL migration fee when moving assets to Raydium. However, PumpSwap is utilizing a more sustainable revenue model that has a 0.25% trading fee. The 0.25% trading fee is split up with 0.20% for the liquidity providers and 0.05% supporting the protocol. This way, liquidity providers are incentivized, and the protocol can financially sustain itself. The model will become even more refined with new features coming to PumpSwap, including aspects like Creator Revenue Sharing.

Early adoption of PumpSwap received a significant boost from its integration with MEXC, a leading global crypto exchange. On March 25, MEXC announced support for PumpSwap in its DEX aggregator. The partnership allows MEXC’s 34 million users and the tokens they own, in 170 countries, to directly access and trade PumpSwap-listed tokens via the MEXC app and website.

The integration is expected to be beneficial to PumpSwap and will help boost its visibility and liquidity, ultimately attracting new users and benefiting the overall ecosystem. The provision of a direct access trading function means that with MEXC’s support, it is also the aggregator to support PumpSwap, furthering its growth.

Market Trends

While PumpSwap enjoys strong use, it faces challenges from broader market conditions. Through the first two months of 2023, Solana DEX trading volume dropped from $258 billion in January to $50 billion in March, as reported by DefiLlama. A declining memecoin trading frenzy has dampened overall trading volume across Solana-based exchanges.

Nevertheless, both PumpSwap and Raydium are preparing for a potential market recovery.

Raydium has released its LaunchLab incubator as part of its strategy to encourage new projects and liquidity incentives. PumpSwap’s ongoing iteration of improvements, price changes and strategic partnerships could make it a larger and larger player within the Solana DEX ecosystem.