"Two days surged by 57%, Messari: trading volume increased a hundredfold annually, what is the largest DEX Raydium on Solana surging in?"

Just as Bitcoin continues to hit new all-time highs, the market is thriving. Solana is also keeping up, recently surpassing the $200 mark. The largest decentralized exchange on Solana, Raydium, saw its token RAY surge by as much as 57% in just two days, leaving holders ecstatic. This article will analyze the research report on Raydium for the third quarter of 2024 by the crypto research organization Messari, exploring the features and data of Raydium. research report

In March, Raydium Officially Overtakes Orca to Become Solana's Largest DEX

Raydium is an AMM decentralized exchange (DEX) on Solana, where liquidity providers can earn trading fees when trading on liquidity pools. RAY holders can also stake RAY to earn additional RAY tokens. The protocol was launched in 2021 with investments from backers including Coinbase Ventures.

Raydium offers Concentrated Liquidity Market Maker (CLMM) pools, which allow liquidity to be concentrated within specific price ranges. Raydium also provides the Burn & Earn feature, allowing token teams creating liquidity pools to permanently lock CLMM liquidity. The concept of "burning pools" often mentioned during meme coin hype refers to this. However, the Burn & Earn feature enables creators of liquidity pools to earn rewards while relinquishing tokens, increasing their willingness to burn tokens.

Until March 2024, Orca led Solana's trading volume as the first company to offer concentrated liquidity pools, which provide lower slippage for traders and higher fee income for liquidity providers. However, this design amplifies the risk of impermanent loss. Solana introduced CLMM in November 2022, and as of March 6, 2024, surpassed Orca in daily average trading volume.

Messari Optimistically Expects Raydium to Sustain High Trading Volume

Regarding trading volume, the daily average trading volume in the third quarter of 2024 showed a significant 133x increase compared to the third quarter of 2023, reaching $785 million. However, this number decreased by 14% compared to the second quarter's $918 million. Since the first quarter of this year, the daily average trading volume has been over a hundred times that of Q3 of the previous year for three consecutive quarters, indicating a potential normalization of this trading volume level for Raydium.

This growth can be largely attributed to meme hype, where pump.fun simplified the token issuance process, allowing users to start trading by selecting token names, codes, and images. Once a token reaches a market value of $69,000 on pump.fun, it automatically appears on Raydium and opens a $12,000 liquidity pool.

Venture capitalist Adam Cochran: "Meme hype is ending" - Data reveals pump.fun's token issuance success rate is only 1.4%

Meme Coins Account for 15% of Trading Volume on Raydium

Looking at the trading content, meme coins are the second-largest asset in terms of trading volume on Raydium, aligning with the previous description. In the third quarter, Raydium's total trading volume was approximately $96.963 billion, with the following distribution:

Native assets: 72.81%
Meme coins: 15.26%
Stablecoins: 10.00%
Governance tokens: 0.52%
Liquidity staking tokens: 1.00%
Gaming tokens: 0.04%
Others: 0.37%

However, stablecoins and liquidity staking tokens are the only tokens showing increased trading volume. Stablecoin trading volume grew by 19% to $9.7 billion in the last quarter, while liquidity staking token trading volume increased by 24% to $970 million. In contrast, the top two tokens by trading volume, native SOL and meme, experienced a decrease. Native SOL trading volume decreased by 12% to $70.6 billion, and meme trading volume dropped by 53% to $15.6 billion.

Raydium Rises to Third-Largest Exchange, Quarterly Trading Volume Up by 130%

Raydium's share of DEX trading volume increased by over 130% to over 10% in the third quarter. Among the top six DEXs in the third quarter, only Aerodrome on the Base chain saw a larger increase in trading volume than Raydium. Raydium's trading volume surpassed Orca in the third quarter, making it the third-largest DEX, following PancakeSwap and Uniswap.

Messari's report highlights that Raydium's success not only demonstrates the protocol's advantages but also reflects Solana's increasing trading volume. In the third quarter, Solana's DEX trading volume ranked second only to Ethereum, making it the second-largest public chain by trading volume.

Ray Token's Circulating Market Cap Increases by 4%, Team Tokens Fully Unlocked

Regarding the Ray token, in the third quarter, the circulating market cap of the Ray token increased by 4% to $486 million. At the same time, Solana's circulating market cap increased by 6%. Of the 5.55 billion maximum supply of RAY, about 34% or approximately 1.887 billion are mining reserves, supplying around 1.9 million annually. The team and community received about 25.9%, fully unlocked in February 2024.

Additionally, Ray has three functions:

Staking RAY to earn RAY tokens as rewards: The current annualized return for staking RAY is around 5%.

RAY liquidity provider rewards: Raydium rewards liquidity providers in specific pools with Ray tokens.

Governance: Proposals on Raydium require at least 1 million RAY, with each token equivalent to one vote for active proposals. By the end of the third quarter, two proposals had been made.

Protocol Revenue Hits All-Time High, Some Revenue Used for Token Buybacks

Protocol revenue in the third quarter increased by 5% to a record high of $16 million. These funds are used to buy back RAY from the open market, but due to RAY's price outpacing protocol revenue, the amount of RAY repurchased in the third quarter decreased by 7%.

12% of liquidity pool revenue is used for RAY buybacks, while the remaining 88% is proportionally distributed to liquidity providers in AMM V4 pools. CLMM and CPMM pools allocate 84%, with the remaining 4% going to the treasury. Earnings from CLMM and CPMM pools are automatically swapped for USDC and held in the protocol's treasury. Additionally, by the end of the third quarter this year, Raydium had generated over 161,000 SOL in liquidity pool creation fees.

On Raydium, liquidity pool creators can choose the type of pool based on trading fees:

Standard AMM V4: 0.25%
Concentrated Liquidity CLMM: 0.01%, 0.02%, 0.03%, 0.04%, 0.05%, 0.25%, 1%, 2%
Constant Product CPMM: 0.25%, 1%, 2%, 4%

Multiple Upgrades and Partnerships in the Third Quarter Maintain Raydium's Competitiveness

Regarding protocol advancements, in July, Raydium introduced a rebate mechanism familiar to Chinese users. Referrers can copy their unique trading link Blinks, and upon completion of a transaction through the Blink link, referrers receive a 1% SOL reward. In August, more detailed fee tiers were added for CLMM and CPMM liquidity pools, followed by the introduction of Burn & Earn in September, and the launch of Teleport for cross-chain Ethereum to Solana in October.

Key external partnerships include collaborations with Moongate on July 6, allowing users to log into Raydium using Apple, Google, or Ethereum accounts. On July 12, a partnership with fiat gateway Moonpay enabled users to purchase cryptocurrencies through traditional payment methods.

In conclusion, Messari believes that Raydium's current trading volume levels will be sustained. Multiple upgrades and partnerships have enhanced user experience, and features like Burn & Earn and Blink profit-sharing have increased its competitiveness.