PumpSwap is a decentralized exchange (DEX) built on the Solana blockchain, launched by the memecoin platform Pump.fun on March 20, 2025. It aims to streamline token trading by eliminating migration fees and providing instant liquidity for newly created tokens through an automated market maker (AMM) system. ^[4]

Overview

PumpSwap represents Pump.fun's strategic expansion into the decentralized exchange space, designed specifically to address friction points in the token trading process. The platform was developed to create a more seamless environment for trading meme coins and other tokens on the Solana blockchain ^[1]. By integrating token launching and trading into a single ecosystem, PumpSwap eliminates the previous requirement for projects to create separate liquidity pools on external platforms like Raydium, which had imposed a 6 SOL migration fee on creators. ^{[1] [2]}

The launch of PumpSwap came during a period of declining revenue for Pump.fun, with the platform experiencing a nearly 60% monthly decrease in revenue prior to the DEX launch. This decline coincided with a broader cooling of the memecoin market following controversies like the LIBRA memecoin incident in February 2025, which saw a token endorsed by Argentine President Javier Milei crash by 95% amid allegations of insider trading ^[1].

Key Features

Automated Market Maker (AMM)

PumpSwap V1 functions as an automated market maker similar to Raydium V4 and Uniswap V2, utilizing a constant product formula to facilitate token trading. The platform allows users to:

• Create liquidity pools at no cost
• Contribute to existing pools
• Trade all tokens listed on the platform
• Benefit from instant migrations without fees

As Pump.fun explained in their announcement:

"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. Now, migrations happen instantly and for free" ^[4].

Fee Structure

PumpSwap implements a fee structure comparable to other decentralized exchanges:

• 0.25% fee on each trade
• 0.20% allocated to liquidity providers
• 0.05% directed to the protocol

This structure incentivizes liquidity provision while generating sustainable revenue for the platform ^[1].

Creator Revenue Sharing

A distinctive feature of PumpSwap is its planned Creator Revenue Sharing model. This initiative will adjust the fee distribution mechanism to allocate a portion of protocol revenue directly to token creators. The model aims to:

• Align incentives between token creators and their communities
• Support the development of higher-quality projects
• Create sustainable revenue streams for creators

This approach represents an evolution in DEX tokenomics by recognizing the value that creators bring to the ecosystem ^[1].

Technical Implementation

PumpSwap is built on the Solana blockchain, leveraging its high throughput and low transaction costs. The platform's technical architecture includes:

1. A bonding curve mechanism that automatically creates liquidity for new tokens
2. Seamless integration with the existing Pump.fun token creation platform
3. Smart contract infrastructure that eliminates the need for manual migrations

The platform has undergone nine independent security audits from various security firms to ensure the integrity and safety of its smart contracts. Additionally, Pump.fun has announced plans to eventually open-source the PumpSwap program to enhance transparency and security ^[1].

Market Context

PumpSwap's launch occurred during a significant downturn in the memecoin market. Key market indicators at the time included:

• Monthly trading volume for memecoins had decreased from $206 billion in January 2025 to $99.5 billion in February 2025
• Pump.fun's revenue fell from 588,478 SOL (Jan 15-Feb 14) to less than half that amount in the following 30 days
• Despite the decline, Pump.fun remained the seventh largest protocol on Solana in terms of revenue

The LIBRA memecoin controversy in February 2025 had a particularly chilling effect on the market. After being endorsed by Argentine President Javier Milei, the token reached a $4.5 billion market cap before collapsing 95% in just two days, with evidence suggesting significant insider trading activity ^[1].

Technology

PumpSwap utilizes Solana's blockchain infrastructure to provide high-speed, low-cost trading. Key technological aspects include:

• Integration with Solana's high-throughput blockchain (capable of processing thousands of transactions per second)
• Smart contract architecture similar to established AMMs like Raydium V4 and Uniswap V2
• Constant product formula for determining token prices and facilitating swaps
• Automated liquidity pool creation and management

The platform's technology stack is designed to minimize friction in the token trading process while maintaining security and efficiency ^[3].