TBW - Raydium in 2025: A giant takes stock of the new situation

What you need to know about Raydium

Since 2021, Raydium has occupied a central position among the decentralised finance protocols on Solana. It is based on a hybrid architecture that combines traditional market making automation (MMA) with direct access to Open Book order books. This model reduces transaction costs and optimises order execution, while limiting slippage for users.

Beyond its role as an exchange platform, Raydium has developed a set of tools designed to support projects from their launch. In particular, the protocol facilitates the creation of tokens, their initial distribution and the addition of liquidity from the earliest stages. In the first quarter of 2025, Raydium alone accounted for 47% of the total volume traded on Solana DEX, or around $3.6 billion, ahead of Uniswap on Ethereum for the second month running.

In an environment marked by the rise of ephemeral tokens and viral launchpads such as Pump.fun, Raydium is banking on a more supervised strategy. At its inception, the protocol issued 555 million RAY tokens, with 34% allocated to liquidity incentives over three years. A way of encouraging retention rather than immediate speculation. It remains to be seen whether this model still manages to hold attention in a cycle where fashions change as fast as blocks.

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The need it meets

Raydium stands out among Solana's DEXs for a structure combining a classic AMM and direct access to Open Book order books. This configuration allows users to benefit from both the simplicity of swaps and the precision of limit orders. A transaction can thus mobilise the liquidity of a pool while being executed via an existing order on Open Book, which in some cases enables better execution, particularly during periods of high volatility.

The protocol aims to offer a unified infrastructure covering the main uses of DeFi: swapping, farming, staking and token launch. Everything is accessible from a single interface, with the ambition of reducing the fragmentation of the ecosystem and supporting projects throughout their lifecycle, from creation to listing.

To buck a trend marked by the proliferation of memecoins and instant execution launchpads such as Pump.fun, Raydium launched its LaunchLab in April 2025. This module introduces mechanisms such as vesting, liquidity sequestration and supervised community onboarding. The aim is to structure the emergence of new projects without curbing innovation.

With a TVL of $1.8 billion in May 2025, up 58% since March, Raydium confirms its central role in the Solana ecosystem while seeking to defend a more supervised approach to the development of DeFi.

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Raydium's value proposition

An architecture optimised for LPs and traders

Raydium relies on a hybrid infrastructure that connects its liquidity pools to Open Book's on-chain order book. This configuration allows liquidity providers to contribute to both automated swaps and limit orders. The overall aim is to increase market depth while improving execution quality. For example, a SOL/USDC pool can be used for instant swaps and to feed limit orders, limiting slippage in a busy environment.

Since 2025, Raydium has expanded its offering with the launch of Raydium Perps, a perpetual trading platform built on the Orderly Network infrastructure. This module is aimed at more experienced users, while maintaining a simple interface and low fees. As of May 2025, the platform has recorded more than $550 million in cumulative volume, with an average daily volume of $20 million.

A targeted approach to liquidity with the CLMM

The CLMM (Concentrated Liquidity Market Maker) model, introduced by Raydium, enables LPs to concentrate their funds in defined price ranges. This method improves capital efficiency, increases fee income and reduces slippage. It does, however, involve greater exposure to impermanent loss in the event of a price deviation. Inspired by Uniswap v3, this mechanism takes advantage of Solana's high speeds and low costs, while fitting into a different logic thanks to integration with the order book.

LaunchLab: structuring the launch of tokens

Raydium offers a complete environment, from trading and staking to farming and the launch of new projects. With LaunchLab, launched in April 2025, the protocol introduces a framework designed to provide a better framework for fundraising. Projects can organise IDOs, benefit from initial liquidity via AMM pools, and appear on the order book, boosting their visibility from the outset. This model contrasts with that of instant launchpads, seeking to provide a framework for the launch of new assets.

Controlled costs and rapid execution

Raydium relies on the technical performance of the Solana network, with an average block time of around 400 milliseconds and fees of around $0.0029 per transaction. The protocol charges a commission of 0.25% per swap, split between liquidity providers (0.22%) and RAY token stakers (0.03%), a level slightly lower than the 0.3% charged by Uniswap v3.

In May 2025, Raydium generated around $12 million in revenue from transaction fees over a 30-day period, confirming the effectiveness of its business model.

Team and funding

A pseudonymous team but active in the ecosystem

Raydium was launched in 2020, led by a pseudonymous team but technically recognised in the Solana ecosystem. The project is led by AlphaRay, which came up with the idea of an AMM capable of interacting directly with an on-chain order book, in order to make better use of the network's liquidity. He is supported by XRay (technical manager), GammaRay (product and communications), StingRay (senior developer) and RayZor (security specialist). Despite the use of pseudonyms, the team regularly expresses itself in specialist publications such as IQ.wiki or TokenInsight, ensuring a degree of continuity in public communication.

Funds raised early and an active role in the ecosystem

Even before its launch in February 2021, Raydium is closing a $2 million fundraising round in December 2020, via the sale of 27.75 million RAY tokens (i.e. 5% of the total offering). This round brings together several leading investors in the crypto sector, including Coinbase Ventures, Borderless Capital, Arche Fund, VentureX and Ceras Ventures, accompanied by around ten other funds not all publicly identified.

Raydium is not content to develop its own protocol. Between 2021 and 2022, the project is adopting a strategy of active support for the Solana ecosystem by investing in other initiatives deemed to be structuring for DeFi. These investments include Orderly Network, NEUCHIPS, CyBall and Ancient8. The aim is to strengthen the infrastructure building blocks while exploring external growth opportunities. This integration strategy resulted in January 2025 in the launch of Raydium Perps, in partnership with Orderly Network.

Raydium tokenomics

The role of the RAY token in the protocol economy

The $RAY token forms the economic foundation of the Raydium protocol. It fulfils three main functions: governance of the protocol, remuneration of liquidity providers and support for staking activity. Total supply is capped at 555 million units. In June 2025, 288 million tokens were in circulation, i.e. just over half the supply.

A distribution structured around uses

The initial distribution of the token has been designed to align the interests of the various players in the ecosystem. 34% of the offering (RAY 188.7 million) was allocated to the mined liquidity reserve, 30% (166.5 million) to strategic partnerships and ecosystem development, 20% (111 million) to the founding team, 8% (44.4 million) to initial liquidity, 6% (33.3 million) to the community and initial investors, and 2% (11.1 million) to project advisors.

The allocations reserved for the team and early investors were subject to an initial 12-month lock-in, followed by a progressive daily release over a 24-month period. This vesting schedule ended in February 2024. All the tokens concerned have been unlocked, but the supply actually in circulation remains lower than the theoretical supply, suggesting that part of the allocations dedicated to partnerships and the ecosystem has been put in reserve. This reserve gives the DAO room to manoeuvre for future initiatives.

A buyback programme to support the protocol's evolution

Raydium is also replenishing its cash position by buying back tokens on the secondary market. Funded by 12% of the transaction fees paid by order takers, this mechanism enables RAYs to be accumulated in an address controlled by the DAO. These tokens can be burned, redistributed or used to support new initiatives such as Raydium Perps.

Since the launch of the protocol, around $186 million has been raised for these redemptions. In the first half of 2025, nearly 15 million RAYs were bought back for a total of $76 million, including $54 million concentrated in January alone. This period saw DEX generate $430 million in swap fees for a cumulative volume of $124 billion.

Redeemed tokens are not automatically destroyed. The DAO retains flexibility over their use, enabling it to adapt its strategy according to the priorities of the moment: support for liquidity, development of new products, or incentives for participation. This mechanism strengthens the token's role in governance while introducing a dynamic of buying pressure into the protocol's economic structure.

Token usefulness and value creation mechanisms

A multifunctional token anchored in protocol usage

The $RAY token fulfils several functions within the Raydium ecosystem. Firstly, it allows holders to stake it to receive 0.03% of the fees generated by the protocol, ensuring a passive return directly linked to trading activity. It also serves as a governance token: via the Realms platform, users can vote on key decisions, such as adding pools, modifying fee parameters or validating new partnerships. This governance model is still evolving.

The token is also used in farming activities. Liquidity providers can deposit their LP tokens into farms and earn rewards, with additional return multipliers for users who stak RAY. Since June 2025, Raydium has run a weekly RAY 50,000 incentive scheme, designed to boost engagement on the platform. This includes prize draws for traders, bonuses for projects launched via LaunchLab, and bonuses for liquidity providers in Fusion Pools.

These uses structure demand for the token, indexing it directly to use of the protocol.

A buyback strategy at the heart of the business model

$RAY's main valuation mechanism is based on a regular buyback programme financed by a fraction of the revenue generated from trading fees. This link between the protocol's economic performance and buying pressure on the token helps to stabilise its valuation, particularly during periods of high activity.

Aside from staking, there is no mechanism for redistributing income to holders. The token's appreciation therefore depends largely on the continuity and scale of these redemptions. This choice reflects a desire to strengthen the protocol's cash position while creating a gradual scarcity effect.

A liquid asset on secondary markets

In June 2025, the RAY token was trading at around $2.16, for a market capitalisation of around $626 million, out of a total of 288.6 million tokens in circulation. It has a fully diluted value (FDV) of $1.2 billion. The token is listed on several major exchange platforms, including Binance, as well as on several DEXs. Daily trading volume is estimated at $33 million, with active pairs such as RAY/USDC. This sustained liquidity testifies to stable adoption within the ecosystem.

A business model centred on transaction fees

Raydium generates the bulk of its revenues through fees charged on each token swap carried out on its DEX. The protocol applies a fixed commission of 0.25% per transaction, of which 0.22% is redistributed to liquidity providers and 0.03% is allocated to RAY holders via the staking mechanism. This sharing is intended to enhance the attractiveness of the protocol for LPs and encourage activity on the platform, in a competitive environment marked by constant pressure on fees.

In addition to this main source are revenues generated by LaunchLab, launched in April 2025. This platform allows projects to launch their token at no upfront cost, with immediate migration of liquidity to Raydium's pools. The protocol charges launch fees and post-migration commissions, part of which can be paid back to project creators or partners. The case of Letsbonk.fun illustrates how this works: this memecoins launchpad redistributes part of the revenue to the community of validators and uses part of the funds to support the $BONK token.

These two monetisation channels enable Raydium to occupy a significant position on the Solana market. In January 2025, the protocol concentrated 47.1% of DEX volumes on the network, representing more than $124 billion exchanged over the month, according to Messari. Over certain periods, this market share placed it ahead of Uniswap in terms of cumulative volumes.

However, this dynamic masks a dependence on sometimes unstable flows. In January 2025, memecoins accounted for 65% of volumes traded on Raydium. This structure exposes the protocol to high volatility. In February, a drop in overall activity on Solana led to a 66% decline in trading volumes, directly affecting the protocol's revenues, according to DeFiLlama data.

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Treasury and financial health

Raydium's treasury is mainly based on its native token, the $RAY, supplemented by liquid assets such as the USDC. An automatic mechanism allocates 12% of trading fees to the purchase of $RAY, gradually strengthening the protocol's reserves.

According to the latest available data, the governance treasury stands at around $134.2 million, including nearly 55 million $RAY tokens. This reserve is fed by two channels: redemptions from transaction fees (12%) and direct payments from certain pools, in particular those with concentrated liquidity (4% of fees).

To date, the main use of this treasury remains the redemption of tokens. In January 2025, for example, Raydium raised $54 million to buy back around 8.8 million $RAY. This mechanism fuels a policy of reducing the supply in circulation while supporting the token price.

Fundamentally, the protocol's valuation can be analysed via a P/B (Price to Book) ratio, comparing the market capitalisation ($705 million) with the value of net assets ($134.2 million). The ratio comes out at 5.26, signalling a market confident in the protocol's prospects, despite its still partial monetisation.

Raydium generated $481 million in annualised expenses, for $149 million in net revenues, according to DeFiLlama estimates. Relative to its valuation, this gives a P/E (Price to Earnings) ratio of 4.73. A level that reflects a model that is already profitable, but whose sustainability will depend on the ability to maintain - or even increase - these revenues.

In the first quarter of 2025, DAO pursued this strategy by buying back 15.4 million $RAY, or 2.8% of the maximum offer, for a total of $76.2 million. This approach gives Raydium the flexibility to adjust its priorities in line with market conditions.

Partnerships

Raydium has structured its build-up in Solana through a series of strategic partnerships. The collaboration with Bonfida, OpenBook and Jupiter has facilitated the transition following the closure of Serum in 2022, while strengthening market depth and price competitiveness on the DEX. These integrations have helped to optimise the trading experience, consolidating volumes via shared liquidity flows. Its AcceleRaytor launchpad has also enabled the emergence of projects such as WEN and BONK, which have mobilised a large user base.

In January 2025, Raydium launched Raydium Perps, a platform dedicated to perpetual contracts, in partnership with Orderly Network. The offering features gas-free trading with up to 50x leverage on more than 110 pairs. The launch is part of a strategy to diversify into higher value-added products for experienced users.

Raydium is also looking to make it easier for users unfamiliar with crypto to enter the Solana ecosystem. In July 2024, the protocol partnered with MoonPay to enable the direct purchase of Solana tokens with fiat currencies. This service is now available in more than 160 countries, for a potential audience of 20 million users.

This drive for accessibility continued in February 2025 with the integration of Zypto App, a mobile application that simplifies access to trading on Raydium. The interface is aimed at a wider audience, also targeting novice users.

Finally, in March 2025, Raydium consolidated its foothold in Solana's DeFi by partnering with Pumpkin.fun. This partnership enables CLMM liquidity to be integrated into the platform and offers fee sharing and reward mechanisms for stakers, reinforcing the complementary nature of the two protocols.

Competition

Raydium remains a major DeFi player on Solana, but its relative weight has eroded in the face of the emergence of new platforms. In June 2025, the protocol accounted for an average of 11.7% of DEX volumes on the network, far behind Pump.fun, which now dominates with a 72.8% market share. This refocusing is due to the rise of its integrated DEX, PumpSwap, combined with a successful launchpad.

Until March 2025, Raydium benefited indirectly from Pump.fun's business. Tokens created on this launchpad were automatically migrated to its AMM pools, accounting for up to 41% of its swap fee revenue in February. This flow was interrupted with the launch of PumpSwap on 20 March, which natively integrates a DEX and offers favourable terms to token creators: free migration, redistribution of 50% of fees, and a unified interface.

This strategy quickly bore fruit. By May, PumpSwap had climbed to a 21% market share of Solana's DEX volumes in one week, peaking at $80 million in daily volume. Faced with this direct competition, Raydium must now rethink its positioning to remain competitive in a rapidly evolving market.

Protocol structural limitations and vulnerabilities

Raydium retains a key position in the Solana ecosystem, but a number of vulnerabilities could affect its medium-term trajectory. While the competitive pressure exerted by Pump.fun is now well identified, other technical, structural and economic limitations weigh on the stability of the protocol.

Raydium relies on OpenBook's on-chain order book infrastructure, which gives it advantages in terms of market depth, but also exposes the protocol to liquidity risks. In periods of high volatility or when certain market makers withdraw, execution quality can deteriorate, with a direct impact on the user experience.

This is compounded by the protocol's sensitivity to the performance of the Solana network. Despite the arrival of the Firedancer validator on the mainnet in April 2025, which has improved confirmation times and reduced congestion, the network remains prone to one-off outages that can affect DEX operations.

Raydium is also exposed to the volatile dynamics of memecoins, which has been one of the main drivers of the protocol's growth. This dependence proved risky in February 2025, when the LIBRA affair led to a 51.7% drop in memecoin volumes on Solana, from $206 billion to $99.5 billion. A shock of this magnitude mechanically affects DEX's revenues.

Finally, the regulatory environment is changing rapidly. The investigations opened by the SEC into certain players in the Solana ecosystem in 2025 have rekindled uncertainties around DEX compliance. Increased pressure on the legal framework could slow institutional partnerships and introduce greater volatility in revenue streams.

On the technical front, Raydium has strengthened its security since the December 2022 hack, notably by migrating to OpenBook and securing its accesses with hardware wallets. Nevertheless, its dependence on Solana's infrastructure remains a major constraint. In the event of a network outage, the entire protocol would come to a halt.

The Big Whale's opinion

Raydium continues to occupy an important place in Solana's DeFi ecosystem. Its hybrid structure, history of rapid adaptation and targeted initiatives such as LaunchLab and token buyouts demonstrate a desire to consolidate its position. The protocol has demonstrated a degree of resilience in the face of changes in the environment.

But this solidity conceals structural fragilities. Raydium remains heavily dependent on OpenBook, the evolution of the Solana network and the popularity cycles of memecoins, all external factors that are partly beyond its control. In a market where competition is intensifying, the protocol's responses - incentives, farming, buyback mechanisms - are not enough to stem the loss of market share.

The technical infrastructure remains robust and the community active. However, to get back on an upward trajectory, Raydium will have to move beyond a defensive rationale and redefine a clearer course. This will require a strategic refocusing, greater diversification of its growth drivers, and an ability to stand out beyond cycles.

The foundation is in place. The challenge now is to turn this foundation into a driver for recovery.

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