Raydium (RAY) is one of many decentralized autonomous organizations (DAOs) trying to cash in on an automated market maker (AMM).
An AMM is the protocol that powers a decentralized exchange. In essence, an AMM is an autonomous trading mechanism that eliminates the need for a centralized exchange. Raydium leverages the central order book of the Serum (SRM) decentralized exchange. Developers claim Raydium enables lightning fast trades and shares liquidity.
They built Raydium on the Solana (SOL) blockchain. The difference between Raydium and other AMMs is that it uses an established exchange’s order book to provide liquidity rather than in-house liquidity pools. Yet Raydium operates its own liquidity pools to provide liquidity.
The Raydium Ecosystem
Developers claim Raydium is faster and cheaper than other AMMs. Additionally, Raydium uses the liquidity of the entire Serum ecosystem. Moreover, they claim Raydium gives traders more control by offering charts and the ability to set limit orders.
Users can earn RAY tokens while farming liquidity pools and staking. Traders and developers can build Fusion Pools and launch projects on AcceleRaytor. The AcceleRaytor is a launchap for new Solana projects that can access liquidity through Raydium. They claim the AcceleRaytor gives projects access to high liquidity launches on both Raydium and Serum.
Raydium’s swap feature lets users exchange tokens fast through Serum. More advanced trading features are available. They claim you can swap any SPL token through RaydiumSwap. Best Price Swaps determine if liquidity pools or the Serum order book provides the best price.
Raydium’s AMM determines whether liquidity pools or the Serum order book can provide the highest level of liquidity for a project. Hence, the goal of Raydium is to provide projects with the highest amount of liquidity possible. Thus, Raydium is a liquidity protocol. Liquidity means that cash is available to projects that use its ecosystem.
How Raydium Makes Money
Raydium makes money by charging 0.25% fees on swaps made through its liquidity pools. They deposit round 0.22% of the fees to the liquidity pool to reward liquidity providers.
Raydium also charges default fees of 0.22% fees on Serum transactions. Raydium users can add liquidity by clicking on add liquidity.
Raydium farms allow liquidity providers to earn tokens for providing liquidity. Stakers in Raydium farms earn RAY while fusion pool stakers earn project tokens. Each farm connects to a liquidity pool.
Raydium’s Ecosystem farms allow developers to bootstrap liquidity by incentivizing liquidity providers. Ecosystem Farms allow users to crowdsource liquidity from a decentralized community. Those users can swap that liquidity through Raydium and Serum.
Raydium Liquidity Pools
Anybody can create a liquidity pool on Raydium. A liquidity pool is a pool of tokens that provide liquidity for trading.
Once the pool is up and running, the Raydium AMM will place orders for it on the Serum order book. Each Raydium liquidity pool will have a unique Serum market ID. Liquidity pools are tradable on the Raydium Swap interface.
Liquidity pools must contain $10,000 to place orders through the Raydium order book. Currently, Raydium only supports token pairs that contain Tether (USDT), Solana (SOL), Raydium (RAY), Serum (SRM), USD Coin (USDC), and the USDH Hubble Stablecoin (USDH). Each liquidity pool will have an associated AMM ID.
What Value Does Liquidity Have at Raydium?
Raydium (RAY) offers some value. Raydium claimed to have a Total Locked Value of $254.650 million and a Total Trading Volume of $49.904 million on 21 July 2022.
Mr. Market thinks Raydium has some value. CoinMarketCap named it the 14th most trading cryptocurrency on 14 July 2022. Conversely, Raydium was CoinMarketCap’s 188th largest cryptocurrency, with a Coin Price of 87.71₵ on 21 July 2022.
CoinMarketCap gave Raydium a Market Capitalization of $107.120 million, a Fully Diluted Market Cap of $487.987 million, a Total Locked Value of $225.515 million and a 24-Hour Market Volume of $21.412 million on 21 July 2022. They based those numbers on a Circulating Supply of 121.832 million RAY, a Maximum Supply of 555 million Ray and a Total Supply of 555 million RAY.
In contrast, CoinBase gave Raydium a Coin Price of 88₵, a $107 million Market Cap, and a 24-Hour Market Volume of $21.6 million. They based those numbers on a Circulating Supply of 121.8 million RAY on 21 July 2022. Raydium is an unstable cryptocurrency Coin-base gives it an all-time high Coin Price of $16.93.
I think Raydium (RAY) is one cryptocurrency that could thrive in today’s chaotic markets because many DeFi projects and protocols need liquidity. Hence, Raydium is selling a service that is in high demand liquidity. If you want to add a liquidity protocol to your portfolio, I think Raydium is worth examining.