Dialogue Raydium: The biggest beneficiary of the pump.fun effect

Original Title: Raydium's Rise to the Top

Source: Lightspeed YouTube account

Original Compilation: Ismay, BlockBeats

The following is the original content:

Jack Kubanek: Hello everyone, welcome back to another episode of Lightspeed. I’m your host Jack Kubanek, and today I’m joined by Infra, a developer from Raydium. He is an anonymous developer responsible for Raydium's Labs entity. Raydium is a DeFi protocol that has been running on Solana for a while and has recently gained a lot of attention. Infra, thank you so much for joining Lightspeed.

Infra: Thank you for having me, I’m glad to be here.

Jack Kubanek: What does your day-to-day work at Raydium look like?

Infra: A large part of it involves operational oversight, including managing third-party vendors, whether it’s server-side, RPCs, or ensuring bills are paid. There’s also some strategic work, thinking about future program development or smart contract development, as well as community engagement, marketing, branding, and third-party integrations.

Addressing the Issue of Raydium's Fake Trading Volume

Jack Kubanek: It sounds like you just described several different roles, but I think that’s part of the fun of working in the cryptocurrency space. I want to start by discussing a topic that has been talked about recently, which we initially reported in the Lightspeed newsletter, regarding the DeFi trading volume on Solana, where Raydium is currently the largest decentralized exchange by volume. I’ll throw out some data, and then we can analyze it one by one, explaining to the audience what these numbers mean, where this trading volume comes from, and so on.

This data comes from Dune Analytics’ Solana DEX dashboard, provided by Andrew Hong. In the past 30 days, Raydium’s trading volume reached $40 billion, with $14 billion coming from the SOL/USDC pool. To provide some context, from June to now (we are recording in early August), Raydium has accounted for 50% to 60% of the trading volume on Solana’s decentralized exchanges. According to data from DeFi Llama, Raydium has collected $63 million in fees from trading in the past 30 days.

At the same time, there’s a milestone that may not have much practical significance, but people are still discussing it, which is that Solana has surpassed Ethereum in certain usage metrics. Ryan Connor, a research analyst at BlockWorks, pointed out that Solana’s DEX trading volume has exceeded that of Ethereum in the past 30 days. This means that in the past month, the trading volume through Solana’s decentralized exchanges has been greater than that of Ethereum. This data is significant because it’s not just a fleeting 24-hour phenomenon, but has persisted for a month.

Dan Smith, another research analyst at BlockWorks and my previous podcast host, mentioned that in a statistic he created called "Total Economic Value" (TEV), Solana is also nearly catching up to Ethereum and its L2 ecosystem, although this may have changed in recent days.

As these charts began to circulate, people in the Solana community started celebrating, perhaps mocking Ethereum supporters, as these metrics were favorable to Solana. Meanwhile, Ethereum supporters began pointing out that Raydium is the dominant decentralized exchange on Solana, where in standard liquidity pools, some tokens have very high trading volumes but low liquidity.

In the past 24 hours, trading volume reached tens of millions of dollars, but liquidity was very low. Typically, these could be some type of rapid pump-and-dump behavior, possibly occurring on platforms like pump.fun. They accuse this of being essentially wash trading, where one person makes themselves appear as multiple users trading, making their meme coin look more legitimate and attracting more buyers, which is predatory behavior.

So, please forgive my monologue at the beginning of the podcast, but this is the situation we are currently seeing. Now, Infra, I want to ask you, when you noticed that Raydium's trading volume was hitting all-time highs, Solana's DeFi trading volume was also increasing. What did you find when you delved into this data? What story do you see behind these numbers?

Infra: I think it’s important to provide more context. Personally, I’m not gloating over these numbers, but I understand why many in the Solana community are very excited about it. When you think about the progress Solana DeFi has made over the past two years, for example, around this time last year, Raydium’s daily trading volume was only a few million dollars, which was before the FTX collapse when trading volumes were still in the hundreds of millions. That’s quite a significant pullback.

Raydium’s cumulative trading volume has reached $250 billion, as you mentioned, with $40 billion achieved in the past month. So, I’m not sure if it’s the best way to link this excitement to the so-called "reversal of Ethereum DeFi," but I do think it’s understandable that people are excited about it.

What I want to say is that the discussion around this so-called "wash trading" or this topic has indeed surprised me. Especially those who dominate this discussion, I’m a bit taken aback. Clearly, if they’re not outsiders, they’ve been in this space for a long time and should have participated in meme coin trading on Ethereum.

They remember a few years ago when they saw new pools popping up on Dextools, with trading volumes skyrocketing on Uniswap. There were warnings about contract permissions and other issues on Dextools. This situation is like a trading war between bots, especially in the initial minutes. So either these people have a poor memory, or they feel that "the moon is always round abroad."

I saw an interesting tweet a few days ago from Prophet of Meta Downy. He said that crypto Twitter is like one person digging a hole, ten people watching him dig, and then a hundred people guessing what the hole will do. This is just a very playful way to express that there are many issues to be resolved in this space, and there’s a lot we can improve.

However, opinions can only go so far, so if anyone has suggestions on how to address these issues, we’re all ears. If you work in this space, you know how to identify or question these trading volume metrics or how to incentivize these behaviors, we’re very open to discussions in any case.

But what I want to say is that in a low-fee environment like Solana, this behavior is more cost-effective, and people do engage in it.

We can recall a few years ago when Solana didn’t have priority fees, people were just frantically pushing trades because the transaction costs were so low, posing no risk. While these numbers may be gamified, I think this statement might just be based on a bad week. Because today, I browsed Raydium’s list of popular pools and found these numbers to be much healthier. The top 30 or top 40 pools each have millions of dollars in TVL, with daily trading volumes reaching tens of millions.

A few weeks ago, I tweeted about the incentive mechanisms behind this phenomenon. I think a large part of the reason is these third-party UIs that people use to look for new meme coins or new pools. These UIs have a "hot token list," but the process of generating this list is a black box. No one really knows how these hot token lists’ APIs work and how these lists are generated. Trading volume is one factor; you can pay someone to a Telegram bot to inflate trading volume, but I don’t think this situation is as widespread as people say. I think we should focus more on the Total Economic Value (TEV) you just mentioned.

How to Prevent Pool Deployments from Garbage Trading?

Jack Kubanek: Yes, I think the last point you mentioned is very noteworthy, which I also stumbled upon in my reporting. There are indeed incentives to manipulate the "hot token lists" on these meme coin platforms because these platforms don’t have the carefully curated algorithms like TikTok. In fact, when you visit platforms like pump.fun, they display some tokens in a certain order.

Infra: There are indeed incentive mechanisms that encourage those looking to profit from launching meme coins to manipulate these metrics to get onto those hot token lists. I spent some time investigating and found that there are indeed some so-called "trading volume bots." You can pay someone to create seemingly natural trading volume, making your meme coin project look more legitimate.

Jack Kubanek: This might not be a good thing, but as you said, it’s also a double-edged sword of low fees in Solana. Low fees bring more trading volume and experimentation, but they also lead to an increase in garbage trading, as the cost of running a trading volume bot and conducting a large number of fake trades is lower, making a meme coin appear more legitimate.

Infra: Regarding the issue of garbage trading, back after last year’s Breakpoint, WIF launched in early November, and at that time, garbage trading volume surged. By the end of 2023, Raydium saw a spike in garbage trading volume from the perspective of pool creation.

Before Breakpoint, we were launching only about 100 pools a day, but that number quickly soared to 7,000 to 8,000, and it continued for 30 days.

When you observe these phenomena, you’ll find that some pools are created by liquidity deployers who wait for bots to come in and swap, then quickly withdraw liquidity, which is essentially a "rug pull" scam.

Looking back at the data, let’s see how much these malicious actors can earn on average from these pool deployments. We found that they might only earn one SOL on average. So we considered how to raise their upfront costs to curb this garbage trading behavior.

Thus, Raydium introduced a pool creation fee. When you consider the open market fees required to create a pool, along with this pool creation fee, which is around 1 to 1.5 SOL, it’s already substantial enough to significantly curb this behavior.

In the past six months, the number of pools we launch daily has stabilized at a more sustainable and realistic number, around a thousand.

Now we face a new problem, which is the nature of dealing with permissionless software. So sometimes it does happen that someone can launch a WIF/SOL pool, and that pool can trade billions of dollars. But whenever this happens, someone will try to find ways to manipulate the system for economic gain.

Are Bots Real Users?

Jack Kubanek: I also want to hear your thoughts on bots. There has been increasing discussion about how much of the trading volume is generated by bots rather than natural users. Especially when natural users are buying meme coins on Solana and performing various operations, how does the source of trading volume look? What are your thoughts on this situation? Your software is being used by bots rather than humans.

But there’s also a viewpoint that bots are users too. For instance, bots can be a legitimate use case for software, generating revenue for businesses. So how do you view bots? Or where do you stand in the debate about developing software for bots versus natural users?

Infra: This is a question we, and the entire Solana ecosystem, have been dealing with for the past three years. This goes back to the time of Raydium’s IDO when there were major token launches, and people were incentivized to be the first to enter the pool to trade. So we’ve made a lot of improvements in addressing this issue.

About two and a half months ago, Raydium launched a new constant product market-making program. The simplest change is that the pool opening time occurs in the next block. Therefore, what we’ve seen in some launches is that people bundle pool creation and trading in the same transaction. Create a pool, and immediately trade in that pool. If successful, the token is considered a successful launch; if not, you can retry in other ways.

However, I do think bots often get a bad rap. There are many bots in the ecosystem that actually play different roles. For example, there are liquidation bots in lending platforms that need to swap assets in liquidity pools. On the other hand, users are more familiar with pool snipers, MEV, and other forms of front-running or sandwich trading, which are more severe.

We see that Helius is developing a new terminal interface that incorporates some MEV protection mechanisms. We also see more resources being invested in this area, whether through Jito transaction packages or using trusted RPC endpoints.

Overall, liquidity attracts liquidity. When you are a pool deployer, your ultimate goal is to get people to buy these tokens. In fact, in Raydium V4 pools, despite having newer and better programs available, these pools currently dominate Solana’s block space, and there are many bots stationed in these pools, which means that once a pool is deployed, there are buyers. If you’re launching a new token, that’s exactly the outcome you want.

What Led to Raydium's Dominance in Solana DEX?

Jack Kubanek: Why is Raydium’s trading volume continuously increasing? I did a bit of research on the data. Around this time last year, Raydium ranked third in trading volume, neck and neck with the second place, primarily through the capital volume conducted via decentralized trading protocols on Solana. Orca ranked first, while Lifinity was essentially on par with it. You mentioned some possible wash trading, bot activity, and meme coin situations. But in your view, what has driven Raydium to capture such a large share of the growth in DeFi trading volume on Solana?

Infra: In short, I think there are two main important reasons. First, Raydium has always placed a strong emphasis on building permissionless infrastructure, while many other teams have chosen to implement whitelisting programs through UI. This means that any token can be used to create a Raydium pool without any restrictions. Then, these tokens can be traded directly on Raydium’s UI, whereas some aggregators or other decentralized trading platforms on Solana may have some whitelisting program restrictions.

Another reason is that when the overall trading volume in the market declines, especially during 2023 and its first half, improving capital efficiency becomes particularly important. Everyone is trying to do more with less capital. This is also why we see Orca’s Whalepools product outperforming Raydium. Similar to Orca, Raydium also has concentrated liquidity products, but we lagged behind when the market launched. So most of this year has been spent catching up to that gap. We have indeed seen that gap significantly narrow.

But I think many people overlook or did not anticipate that constant product pools are a very good product for many different users. First, from the perspective of liquidity providers, this product is very easy to use. Second, from the perspective of pool deployers, especially for meme coins, this product is very suitable for long-tail assets.

These assets have prices ranging from zero to infinity, and as prices rise, liquidity expands, so not much upfront capital is needed. Moreover, the most important point is that you can destroy these LP tokens, thereby relinquishing the right to withdraw the underlying assets from the pool. Almost all major token launches on Solana, whether BOME, WIF, or POPCAT, have chosen to deploy in constant product pools, destroying these LP tokens, so users know that this liquidity will always exist.

So I think this is a combination of permissionless infrastructure and the alignment of simplified and re-optimized product market fit. The resurgence of this product is very interesting and worth observing.

Jack Kubanek: It sounds like meme coins play a significant role in this story, based on the examples you provided. One of the main use cases for Raydium is providing liquidity for these meme coins, which are also one of the main stories behind Solana’s recent leaps in various metrics. Therefore, the combination of the two makes sense.

Infra: Indeed. Furthermore, I believe meme coins have also positively impacted other parts of the Raydium ecosystem. The most obvious example is concentrated liquidity products.

When you have so much trading flow, like the trading volume naturally generated through Raydium pools, and third-party platforms using Raydium’s routing program, liquidity providers in other parts of Solana will realize that, okay, a lot of trading volume is happening on Raydium, and we might not be able to capture that trading volume by providing liquidity elsewhere. If you look at the SOL/USDC, sole USDT, especially those 0.01% P-level concentrated liquidity pools, they are almost entirely naturally generated, and they didn’t exist a few months ago. Now these pools have daily trading volumes approaching $100 million.

So, meme coins contribute significantly to the constant product pools, while also being very helpful in kickstarting the liquidity of concentrated liquidity products. We are very focused on being more competitive on assets with larger trading volumes through these products.

Reflecting on Raydium's Rise

Jack Kubanek: Okay, I think we can shift to discussing the history of Raydium. As far as I know, from some due diligence I’ve done, it seems that Raydium’s team hasn’t frequently appeared on podcasts since 2021.

Infra: I’ve done one podcast, and it’s been a while; I’m a bit shy and nervous. However, I did a few podcasts last summer, but none as high-profile as Lightspeed.

Jack Kubanek: You did very well. Anyway, Raydium isn’t a protocol that frequently appears on podcasts; it has a rather interesting origin story involving FTX, similar to some projects that have been around on Solana for a while. From what I understand, Raydium was initially a market-making service on Serum, which is the decentralized trading platform built by FTX on Solana. Can you take me back to Raydium’s early days, its connection with FTX, and how you’ve transformed since 2022?

Infra: Okay, I’ll try to be concise. Raydium was the first AMM launched on Solana and the first hybrid AMM. So what is a hybrid AMM? In the early days, it would place idle liquidity into constant product pools and then place orders on the underlying order book market (which was Serum at the time, now OpenBook). Those orders would follow the base fee layer of the Raydium pool and be quantified and spaced according to the Fibonacci sequence.

The hybrid AMM was like an aggregator before Jupiter emerged because it could source liquidity from Serum. If the price was better, it could self-arbitrate, keeping the prices between the two protocols closely linked. But ultimately, I think this was a very interesting user experience in early 2021. Basically, for any given asset, you could paste the market ID into any graphical user interface, and it would automatically populate all the open orders, including buy and sell orders from the order book itself, some orders from AMM, and others from different users. Any user could create limit orders on these pools, either filled by other users or by AMM.

Of course, after FTX, concerns about Serum arose. At that time, Serum’s position in the ecosystem also changed. Fee adjustments and the subsequent forking of Serum V3 into OpenBook V1 greatly relied on people running command events in these markets to ensure the order book functioned as expected, so the user experience regressed at that time.

After the FTX collapse and concerns about Serum, a group of Solana developers, mainly Mango Max and several other teams that were using Serum as the underlying infrastructure at the time, about a dozen teams, decided to fork Serum and launch OpenBook. Raydium also migrated all its new pool creations and some old liquidity pools to OpenBook and continued to use it. I think this is one of the projects that could only be realized on Solana, but many people might not know it exists.

Jack Kubanek: Can you quickly explain what OpenBook is?

Infra: Sure, OpenBook is the community fork of Serum. Many different decentralized trading platforms and some specialized protocols running on Solana are using it. The idea is to make OpenBook a community-operated project that can serve as the foundational layer for Solana DeFi. Its code has been completed and battle-tested, so it has seen widespread use throughout 2023.

Later, another order book project called Phoenix was also launched, offering some different technical solutions to the problems OpenBook was addressing. Now, OpenBook has grown into an independent team, evolving from a community project into something larger, and in the past few months, they have launched a new version of their order book.

Jack Kubanek: The reason you forked Serum is that, despite FTX’s misconduct, the technology of Serum itself was actually quite good. It worked well for traders, so you felt it was necessary to continue a version of that technology, right?

Infra: Yes, that’s the simple idea.

Jack Kubanek: Okay, I interrupted you, but you just mentioned how Raydium has evolved to where it is today after creating the order book?

Infra: I mentioned product-market fit; Raydium has actually gone through two to three transformations. The first was the integration of the order book, which became a differentiating factor. But later, with the arrival of what we call the "meme coin craze," many markets were not suitable for using OpenBook or the order book. There are some technical factors to discuss, but the main issue is that these meme coins are long-tail assets, and the minimum order sizes and price tiers for all orders need to be set in advance, and no one knows what the final trading price will be. The underlying market of AMM also cannot configure orders in a reasonable way for users.

Meanwhile, OpenBook launched its v2 version, which is a completely different program. Raydium’s AMM v4 version (the constant product pools most people use on Solana) has changed these pools to state 6, meaning they support native trading within the pool, as well as adding and removing liquidity trades, and this liquidity is no longer shared with other places.

Jack Kubanek: Right, hybrid AMMs can share liquidity or not share liquidity. This feature being turned off is because its use case has exceeded the original demand. Indeed, making markets or creating liquidity for meme coins is very challenging, which may be part of the reason. Can you explain the challenges of completing orders for these highly volatile liquidity tokens that may only exist for a day?

Infra: First, it’s important to remember that constant product pools are passive market makers. But the orders that Raydium places on OpenBook or the then Serum, whether for market-making or trading, are similar to orders completed through AMM. It’s just replicating that long-tail liquidity elsewhere. So if you’re using the GUI of OpenBook or Serum, you can see the orders there. Or if you’re a protocol that needs to liquidate, you can use liquidity from the order book, in addition to liquidity from the pools. Therefore, its complexity is not as sophisticated as the market-making strategies you see on centralized exchanges, but it does support atomic swaps.

If there’s a large swap to be made in a Raydium pool, it can draw liquidity from OpenBook, then complete the swap natively within the pool, update the price, and then place orders again. There used to be a UI developed by Skynet called OpenSerum. You could go in and see any market and see Raydium’s orders being placed and replaced in real-time, along with all the other liquidity in the market. I think that’s one of the easiest ways to understand how this system works.

Ultimately, we decided to move away from this system. This program has been around on Solana for quite a while, almost four years. It’s a pre-anchored program that contains a lot of cumbersome code related to Serum and OpenBook. It also doesn’t support Token 2022. Therefore, at the end of 2023 and the first half of 2024, we spent a lot of effort developing a new constant product pool to meet Solana’s current technical standards while being able to support some new updates, especially Token 2022.

Jack Kubanek: That makes sense. I’m curious, in your overview of Raydium, you mentioned that initially you optimized for trading on Serum, and now many of the pools on Raydium are meme coin pools. I wonder, from November 2022 to today, when did you realize that meme coins would drive a lot of activity, and that you really needed to optimize for this user behavior?

Infra: The point when that shift became more apparent had three main factors. The first is what I mentioned earlier, when we saw the number of pools created skyrocketing overnight from a few hundred to seven or eight thousand, it really exposed that Raydium’s DApp infrastructure was not sufficient to handle the growth of this activity. So if you were using Raydium at the end of last year, you were using what we call the second version of the DApp. In fact, we had been developing the third version of the DApp for about a year. At that time, we realized we had to roll out this new version immediately.

In the process, a lot of things happened behind the scenes, like enabling the system to support the load expansion capacity for this growth. You could say Raydium’s second version of the application was like a Leaning Tower of Pisa built on a bowl of spaghetti. It was teetering under the heavy load and was almost unusable.

Another factor is that meme coins often break the original structure in many program developments. Particularly, they usually have many decimal places. When AMM was initially designed, it was meant to support tokens A and B with six or five decimal places, which determined how the LP tokens looked. So when you interact with these programs, the system internally performs many calculations. If you suddenly use tokens A and B with 15 decimal places, it can throw the entire system into chaos.

The first time this happened was actually before November 2023, around the time Bonk launched, which was early 2023. There was a preliminary small-scale meme craze at that time. For most of the following time, this craze appeared intermittently. And at the beginning of 2024, this activity significantly increased, and so far, I believe there are no signs of slowing down.

Jack Kubanek: Did you just say "a Leaning Tower of Pisa built on a bowl of spaghetti"?

Infra: Yes, that’s basically what I mean. It’s a metaphor we use jokingly internally. If you haven’t used Raydium for a while, I recommend checking out the new version of the DApp. It’s faster, better, and has a smoother user experience. Those bad days of Raydium’s second version are behind us. Now try the new version of the DApp; the trading speed is very fast. The pool page is now very smooth. We’ve rebuilt everything from front-end to back-end.

Collaboration with pump.fun

Jack Kubanek: Since we’ve delved into the aspects of meme coins, I want to discuss another aspect, a partnership that has driven many users to Raydium, which is pump.fun.

You could say pump.fun is one of the hottest applications in the first half of 2024. It has a feature where you can spend $2 to issue a meme coin on pump.fun, with very low risk. If the liquidity of that token reaches a certain level on this bonding curve, simply put, if enough people buy the token, a portion of the liquidity will be placed into Raydium pools, and then it can be swapped on Raydium. So, I’m curious to learn how the collaboration between pump.fun and Raydium began?

Infra: I think these people really love meme coins. When you look at the resources they’ve invested to make the meme coin creation experience more fun, you’ll find that everyone has their own take on pump.fun. When a protocol is as successful as they are, you often see polarized reactions. Some people will love it, and some won’t. But they have indeed done a lot of innovations, like launching a live feature for those who want to issue meme coins. I think that’s just crazy.

As for the origin story of this collaboration, I don’t have much to share. However, I’ve used pump.fun, researched some data, talked to them, and was referred to them. I feel they really know what they’re doing and are working hard to ensure they can occupy a favorable position in the meme coin market.

Jack Kubanek: Yes, I think pump.fun is indeed a great protocol that leverages Raydium’s underlying pool infrastructure to do something different. Many people’s first reaction might be, "Oh, your trading volume all comes from pump.fun." But in reality, the vast majority of those tokens, nearly 99%, never end up on Raydium. And those that do enter Raydium usually have a lot of trading volume at the beginning, but whether they can sustain that volume is another story.

Infra: Pump.fun really solves a problem, which is the initial bot issue. Now, people have the opportunity to buy these tokens before the official launch without having to compete with pool snipers or others on the UI. At the same time, it also acts as a filter for these assets. Once a meme coin reaches a certain level of maturity, that pool is then officially launched. This inadvertently becomes a huge garbage filter for the final listing pools on Raydium. So, I really like this partnership, and I’m glad they chose Raydium to launch this product.

Jack Kubanek: That’s interesting. I remember when we communicated on Telegram, you mentioned that the main trading volume usually occurs on the first day, and then on the second or third day, the trading volume of these meme coins drops significantly. Have you observed any data trends when looking at these tokens from pump.fun to Raydium?

Infra: This is data collected a few weeks ago. Generally speaking, many people are discussing the issues of capital dispersion and dilution, as people quickly jump from one project to another. For some assets, they have a certain persistence, while for others, the persistence is weaker. The general trend at least shows that the trading volume in the first 24 to 48 hours is very high and sustained, and after that, except for a few exceptions, the trading volume usually drops significantly. However, there are also some assets that see their trading volume rise again for various reasons.

How to View Meme Coins?

Jack Kubanek: As we summarize this data, we’re trying to better understand how the market operates. I also want to ask you, as someone who works daily to build infrastructure for trading meme coins, and the data reflects this, I’m curious about your perspective on meme coins? How do you view this trend?

Infra: First of all, I want to say that this is one of the most interesting times I’ve spent on Solana. I believe meme coins have transcended the realm of decentralized trading platforms. Now you can also see these tokens on lending platforms and other primitives. You’ll see teams building infrastructure to short these tokens or use them as collateral for various operations.

I agree with many people’s views that meme coins indeed provide a great way to participate in different social movements or trends. As society generates a massive amount of content every day, this content can be quickly transformed into meme coins. In the long run, I think they may continue to exist.

As for whether they will maintain their current popularity, I don’t think anyone really knows the answer. However, I also agree that many people in this space have similar feelings, which is that these trades feel a bit like PVP. We’ve discussed that wash trading is a problem, so there will definitely be some people losing money in these trades.

Overall, if I had to summarize, I would say that if this is a yes or no question, I support meme coins. But it’s still a conditional "yes." People do tend to lose money on meme coins. If you’re not willing to bear the risk of investment loss, don’t day trade them.

If I were to defend them, BlockWorks research analyst Ryan Connor once discussed a similar point with me, which is that people also lose money in sports betting, but sports betting platforms still generate huge revenues. So it’s not necessarily required for people to make money for them to continue to find it interesting. I’m also curious whether meme coins can survive in a bear market.

Because what we currently see in the pump.fun world is in a rising price market. More addresses are increasing, but if the current market continues to be volatile, if we enter a bear market, I’m not sure if that will be the case, but it will be an interesting observation point. If the market worsens, will meme coins continue to exist? Or is this merely a bull market phenomenon? I think that’s an open question.

I’ve also discussed this issue with others, and I do believe that whether in a bear market or a bull market, the expectation is usually that trading volume will decline. But I can imagine that in a bear market, there will still be ongoing new tokens or meme coins launched; it’s just that they might not receive as much attention as they do now. As I mentioned earlier, people can create these meme coins with a lot of content. For example, even if the world situation is tense, if you choose any social media platform, you will still see Web2-type memes being created about various events.

I think meme coins are not just a purely speculative tool. Moreover, I’ve been in this space for a while, and looking back at general token launches, especially new assets launched in bear markets, they often perform very well in bull markets. I think part of the reason meme coins have attracted so much attention in this cycle is that many people are already tired of high FDV governance token launches. That’s my view.

Jack Kubanek: That’s an interesting perspective. To be honest, out of personal bias, I’m not particularly interested in meme coins. I don’t hold any meme coins seriously, except for buying some to write the newsletter; that’s my stance. However, if I were to think more deeply about this issue, I believe meme coins have not been fully developed yet, and the infrastructure people use to trade them is still not very mature.

Infra: Recently, a new application was released, and I can’t remember the name, but it allows users to buy meme coins with fiat currency using credit cards and other methods. You could also consider some other ways, like, besides the hot token lists we discussed earlier that incentivize people to inflate trading volume, what if there was an algorithm similar to a "recommended for you" page for meme coins? If you believe in the future of meme coins, then there may be more infrastructure that needs to be built. However, this remains an open question. In any case, as the old saying goes, the way to make money in a gold rush is to sell shovels and picks, and Raydium is indeed in the business of selling "shovels and picks."

Future Development of Raydium

Jack Kubanek: As a conclusion, I want to ask, we’ve talked about future directions. Right now, Solana is still a world of meme coins. If the popularity of meme coins declines, assuming that in three to six months, people are no longer interested in trading them, what will be the next direction for Raydium? What business lines are worth looking forward to after meme coins?

Infra: This question will be answered more formally in the coming months, but currently, we are exploring components for further decentralizing the DApp. This project involves upgrading governance models; it’s a centralized-radiating governance model built into the Raydium DApp, including liquidity mining indicators and bribery mechanisms, while allowing for gradual adjustments to various parameters of the protocol itself over different time intervals, such as global inflation rates, pool creation fees, token buyback and burn ratios, and even fee switches, etc. This is a broader project that has been in preparation for some time, aimed at letting the free market determine the balance of these factors and iterating from there.

Additionally, I think there’s still a lot of support space in lending, especially for deep liquidity long-tail assets. Raydium is also a major oracle provider or issuer for many assets on Solana, so we are continuously working in this area. Overall, these are some of our high-level thoughts.

Another thing to mention is the liquidation issues involved in what we might call "Black Monday" yesterday, especially regarding perpetual contracts and spot trading. From a protocol perspective, this trading method allows you to not worry about getting caught in bad debts or liquidation issues.

Finally, we are also developing additional tools for pool creators, such as locking LP features and separating fees from LP tokens, allowing pool creators to destroy their underlying rights while continuing to earn fees. In the past week or so, we have also been experimenting with introducing new fee layers for these pools to continue expanding the capabilities of liquidity providers.