The DeFi Engine of the Solana Ecosystem: How Raydium Is Leading DEX Innovation and the Creator Economy

In 2021, when Raydium acts as Solana When the first Automated Market Maker (AMM) was born, it carried an ambition: to aggregate fragmented liquidity, making decentralized trading faster, cheaper, and more efficient.

Four years later, Raydium has become an unshakable liquidity infrastructure in the Solana ecosystem, with monthly trading volume surpassing that of Ethereum’s traditional DEX at one point, capturing 60.7% of the total trading volume in Solana DEX.

AMM + Order Book: Raydium’s core innovation

The founding team of Raydium is composed of a group of Wall Street quantitative trading veterans and blockchain developers. The founder, known as AlphaRay, pointed out the pain points of DeFi at the time in an interview: high transaction fees, fragmented liquidity, and single functionality.

Their solution is groundbreaking - building a hybrid model AMM on Solana. Raydium not only provides its own liquidity pools, but also deeply integrates with Serum (now OpenBook)’s central limit order book.

This means that users’ trades can simultaneously access the liquidity of the AMM pool and order book, obtaining better prices and lower slippage. The funds of liquidity providers are also not idle, as the system automatically converts them into limit orders on the order book, improving capital efficiency.

Despite the high volatility of long-tail assets such as Meme coins, Raydium temporarily disabled liquidity sharing with the order book. However, its technical framework has laid the foundation for efficient token exchange on Solana.

Growing Together with Solana: Beneficiaries and Promoters of a Thriving Ecosystem

2024 is the year of Solana’s outbreak. SOL Price With an increase of up to 680%, the number of active on-chain addresses and daily trading volume have surpassed other mainstream public chains. Raydium is at the core of this growth.

As a underlying trading protocol, the trading volume of Raydium is deeply tied to the prosperity of the Solana ecosystem:

• Solana’s low transaction costs and high throughput (65,000 TPS, 400ms block time) provide fertile ground for high-frequency DeFi interactions
• Ecological projects explode: from Drift (Perp DEX), Jito (liquidity mining) to Jupiter (aggregator), the market value of multiple protocol tokens has exceeded 1 billion US dollars
• TVL jumped to the third place on the public chain: The total locked value of Solana surged from $427 million in November 2023 to $8.4 billion, accounting for 7.04% of the total market value of the cryptocurrency market.

Raydium meets diverse trading needs with its multi-pool design (standard AMM / constant product CPMM / concentrated liquidity CLMM), ranging from mainstream currency pairs to long-tail Meme coins, with liquidity depth ranking first among Solana DEX.

Meme Coin Craze: Raydium’s Power Law

In early 2024, the meme coin frenzy on Solana brought unprecedented growth engine to Raydium. The key driver was a strategic partnership with the launchpad platform pump.fun.

When the token market value issued on pump.fun reaches $69,000, the platform will automatically inject $12,000 liquidity into Raydium. This mechanism has brought about a virtuous cycle:

pump.fun issuance → Raydium pool creation → attract traders → more project options for issuance → further enhancement of Raydium liquidity.

The data reveals a startling reality: over 90% of the tokens generated by pump.fun are traded on Raydium, making it undoubtedly the meme coin trading center on Solana.

But Raydium was not “kidnapped” by Meme coins. Among its trading volume, mainstream trading pairs such as SOL-USDC account for over 50%, while “native tokens” (non-Meme coins) contribute to over 70% of the trading share. This reflects its liquidity diversification and resilience to volatility.

Token Economy: RAY’s Value Capture Mechanism

RAY, as the native governance token of Raydium, has a constant total supply of 5.55 billion coins, with its distribution balancing long-term incentives and protocol development:

• 34% is allocated for liquidity mining incentives (released gradually over 36 months)
• 30% investment in ecological development fund
• 20% allocated to the core team (locked for three years)
• 8% for initial liquidity construction

The protocol has designed a clear value feedback mechanism: 12% of each transaction fee is used to repurchase RAY tokens, directly increasing the scarcity of tokens. In addition, users can obtain governance rights and additional income by staking RAY (current APR is about 4.45%).

LaunchLab: Reshaping the Solana creator economy

On June 23, 2025, Raydium announced the launch of LaunchLab - a no-code token issuance platform, marking its strategic transformation from a trading protocol to a multi-dimensional ecosystem platform.

LaunchLab solves the technical barriers to traditional token issuance, allowing creators to achieve it without programming:

• Customize token supply and fundraising parameters
• Setting the vesting period and token lock-up mechanism
• Enable the ‘Burn & Earn’ fee sharing model
• Return 10% of trading fees to early users

Its economic model design is particularly sophisticated, adopting a 1% fixed transaction fee divided into three parts: 50% returned to creators and traders, 25% repurchased RAY, 25% supporting platform operations. This structure deeply binds the interests of creators, users, and the protocol.

LaunchLab is seen as a strong response from Raydium to the new PumpSwap by pump.fun, aiming to regain the dominance of Solana’s secondary market.

Technical Upgrades and Challenges: The Evolution of V3

To cope with the increasing number of users and trading demands, Raydium continues to optimize its technical architecture. The V3 version launched in 2024 brings significant improvements:

• Significantly reduce pool creation costs: from 0.4 SOL in V2 to 0.15-0.2 SOL
• Introducing a more efficient CPMM protocol pool
• Simplify the operation process and become the default trading interface on the official website

However, challenges still exist. In the early stages of V3, there were issues with transaction delays (up to 40 minutes) and indexing problems (difficulties in displaying on platforms like DexScreener), affecting user experience and trader participation willingness. This reflects the complexity of building robust infrastructure on rapidly developing public chains.

Future Outlook: Multi-Chain Expansion and Ecosystem Integration

With Solana establishing its position as a top-tier public chain, Raydium’s future growth will focus on two dimensions:

• Deepen internal integration of Solana: Expand cooperation with NFT and GameFi projects, enhance RAY’s application scenarios within the ecosystem
• Explore Cross-chain Liquidity: While currently heavily reliant on Solana, cross-chain functionality may open up a broader market for Raydium.
• Developer ecosystem expansion: Attract third-party development teams to join its ecosystem through LaunchLab open APIs and modules

Raydium founder AlphaRay once emphasized, “Our goal is to connect all platforms and liquidity, becoming the preferred choice for projects to issue coins on Solana.” This vision is gradually being realized through the improvement of the product matrix.

With the launch of the LaunchLab no-code issuance platform yesterday, Raydium is no longer satisfied with just being the largest ‘token shopping center’ on Solana. It is transforming into the engine of a creator economy, allowing anyone to issue tokens as easily as creating a social media account.

From Serum’s liquidity partner, to pump.fun’s Meme coin engine, and now to LaunchLab’s no-code platform - Raydium’s strategy has always been clear: to become an indispensable “shovel seller” in every Solana ecosystem wave.