Raydium is the most popular AMM (automated market maker) built on Solana.
I consider it the PancakeSwap or Uniswap of Solana, but it’s arguably even better than the two of them combined.
In this post, I will be sharing with you everything you need to know about Raydium, the RAY token, and why I think this is a potentially good project to invest in now.
What is Raydium?
Raydium is an automated market maker (AMM) built on the Solana blockchain that offers yield farming, staking, token swap and trading, among other features.
The AMM leverages the central order book of the Serum decentralized exchange (DEX) and the speed of Solana to provide deep liquidity, frictionless yield farming and lightspeed token swaps.
Radium stands tall above competitors on other chains because:
- It’s faster and cheaper to do yield farming, token swaps and trading on Raydium than on any existing AMM or DEX on BSC and Ethereum, thanks to the efficient Solana blockchain. Solana fees are over 1,000x cheaper than BSC and speed is over 2,000x faster than Ethereum.
- Raydium gives traders the best available price by leveraging both its internal pools and the central order book of Serum. The AMM first determines whether it can give the best price by swapping through the pool or by filling the order on the Serum order book. Thus providing users with better rates than other AMMs can.
- In addition to its token swap functionality as an AMM, Raydium also provides a DEX trading interface for traders who wants to set their own limit orders, view TradingView charts, and have more control over their trades.
Features of Raydium
Raydium is the perfect place for your yield farming and decentralized token swap on Solana, but it does much more than that.
Below are some of the features and things you can currently do on Raydium.
- Trading
- Token Swap
- Liquidity mining
- Farming
- Staking
- Launchpad (AcceleRaytor)
1. Trading
Raydium taps into the Serum DEX central order book to provide a decentralized trading experience where users can place limit orders.
Usually, AMMs like Uniswap and PancakeSwap only offers instant token swap and whatever current market rate.
To be able to set your own sell or buy rates you will need to use third-party applications such as Unitrade and Unilayer.
But Raydium spares you all that third-party risk by providing you with a simple trading interface.
You can set your own buy and sell rates (limit orders), view and analysis professional TradingView charts directly from the Raydium trading interface.
How to trade on Raydium
First, click here to launch the Raydium DEX or from the home page click on “LAUNCH APP” and then click Trading to open the DEX page.
From the top left-hand side of the page, you can select your trading pair (SOL/USDT for example).
Then on the right-hand side, you can set your buy or sell rates and amount accordingly.
Once you’re done setting your price and entering the amount of the coin or token you want to trade, just click LIMIT BUY “CoinName” or LIMIT ELL “CoinName” and wait until your order is matched and filled.
No more waiting around by your laptop all day to catch your target price anymore. Just set your order and wait for the market to fill it.
Trading fees on Raydium DEX is the same as for Swaps, which is 0.25% of your trade amount.
2. Token Swap
You can instantly swap any token to another with Raydium swap.
When you swap, you’re instantly buying or selling the token at the current market rate.
How to swap on Raydium
First, click here to open the Raydium token swap page.
Select the token you wish to sell and the amount. Then select the token you wish to swap it to.
You will see how much of the other token you will get for the amount of your token you wish to sell.
In the above screenshot, I want to swap TULIP for USDC.
Once done, and you’re satisfied with what you will get after the swap, click the Swap button. That’s all!
In about a second or less, your token swap transaction will be executed and confirmed accordingly.
The network fees are so cheap you wouldn’t even notice them.
It’s like 1000X lower than whatever you pay on BSC which is one of the many things that makes Solana interesting and dangerous to its competitors.
3. Liquidity Mining
Just like every other AMM protocol, you can supply liquidity to any pool and earn a share of all trading fees collected from that pool.
Every token swap is charged a 0.25% swap fee which is distributed among all liquidity providers in proportion to their share of the pool.
If you own 10% of the TVL (total value locked) in a pool, you will get 10% of all fees it generates.
4. Yield Farming
You can farm RAY —Raydium’s native token— by depositing your LP (liquidity provider) tokens in any of the supported Raydium farms.
The RAY you earn from these farms is in addition to the trading fees you earn from the liquidity pools.
Thus you’re earning double rewards with the same capital on the same platform.
Raydium farms are liquidity pools that allow liquidity providers to use their LP tokens to generate RAY.
As of today (June 2, 2021), there are only 5 Raydium farms as shown in the above screenshot.
So if you want to farm RAY, you will have to provide liquidity into any of the supported pools and deposit your LP token in the appropriate farm.
5. Staking
You can earn even more RAY with your RAY tokens by staking it for a nice APR.
The APR fluctuates with the amount of liquidity (number of RAY staked) in the staking pool.
The bigger the number of RAY being staked, the lower the APR and vice versa.
This is a nice tokenomics feature that should constantly reduce the amount of RAY in circulation. Which should theoretically support the upward price movement of the token.
6. Launchpad (AcceleRaytor)
Initial DEX offerings (IDOs) are the new ICO and every centralized exchange and AMM seem to be running one these days.
“AcceleRaytor is an initiative by Raydium to spearhead the growth of the Solana Ecosystem. It serves as a launchpad for the latest projects to raise capital and drive initial liquidity in a decentralized and interoperable manner while enabling both project and Raydium communities to participate in carefully curated and vetted token offerings”.
To be able to participate in the AcceleRaytor programme, one must stake a minimum of 50 RAY.
However, this requirement is not permanent or universal as each AcceleRaytor project may have its own unique requirements.
Thus the minimum amount of RAY you need to stake may be more than the current 50 in future IDOs.
Once you have the minimum amount of RAY required to participate in an IDO, you can then allocate an amount in USDC that you wish to use in purchasing the new token.
Each qualified participant in the AccelRaytor program will be allocated a share of the new token based on their contribution or other criteria that Raydium and the project team proposes.
Depending on the number of participants, you may or may not get to buy the new token at all or you will get only a fraction of the amount you allocated for it.
All past IDOs have been oversubscribed, which lead to participants getting far less allocation than they wanted.
If you got some of the new tokens, you will be able to claim your allocation and any remaining unused funds at the end of the programme.
The Raydium (RAY) Token
RAY is the native token of the Raydium protocol and it’s available on both Ethereum and Solana blockchains.
Raydium RAY tokenomics
The token has a maximum supply of 555,000,000 (five hundred and fifty-five million).
This makes it a little more appealing to me compared to the billions or infinity supply of its biggest competitors (UNI and CAKE).
And given a similar userbase, TVL, effective token burn program, and other tokenomics, the price of RAY should enjoy a more sustainable upside.
RAY token allocation
The token was allocated as follows:
- 34% of the supply was allocated to mining reserve to reward RAY stakers.
- 30% was allocated for partnership and ecosystem developments,
- the team has 20% with up to 3 years lockup period.
- 8% goes to provide liquidity for the trading of RAY.
- 6% was allocated for community sale and seed funding with a 1-year lockup period.
- 2% was allocated to the project advisors with up to 3 years of lockup
Raydium RAY use cases
The major use case for RAY right now is to stake it to earn rewards and be eligible to participate in IDOs.
Another proposed but not yet active use case is as a governance token.
According to a Raydium admin’s response on Telegram…
Raydium is likely to also include a limited governance model allowing for stakers of RAY to participate and vote on community proposals and amendments.
Furthermore, staking RAY also helps you earn additional multipliers on yield. Meaning that when you stake RAY, you earn more than the normal yield on Raydium farms.
Raydium (RAY) price prediction 2021 – 2022
RAY has the potential to achieve the same price levels as UNI and CAKE —both of which have achieved an ATH (all-time high) price of $44 during the last bull run.
Why I’m I comparing RAY with these two?
Because they do exactly the same thing and each of the 3 are the most prominent AMM on their respective chains. So, they have everything in common.
On that note I expect RAY to be worth about $25 to $40 per token by the end of its first year in existence —February ending 2022.
Neither UNI nor CAKE took that long to reach similar prices but I expect the Solana ecosystem will develop slower than BSC and I’m trying to be conservative.
Raydium (RAY) price prediction 2022 – 2024
By the end of the first quarter (Q1) of 2024, I expect all or nearly all of the maximum of RAY to be in circulation.
Similarly, by the same time, the market cap of RAY should be in the range of $10 to $15 billion.
Solana is over 1000x cheaper and faster than Ethereum and BSC combined without any trade-off between decentralization, security, speed, and transaction.
More so, Solana competes favourably with layer two (l2) solutions like Polygon in terms of everything without sacrificing composability or interoperability.
In these regards, I am confident that Solana and ultimately Raydium (RAY) will attract the userbase and volume it needs to have a marketcap of over $10 to $15 billion by 2024.
Should this happen, RAY would be worth between $18 to $27 apiece.
All these are by organic growth, and we both know that the crypto market is not based on organic growth alone.
Speculative activities and global market conditions could push the price beyond or below the projected rates.
The risks of investing in Raydium (RAY)
There’s risk in everything, even more in crypto and worst in DeFi protocols with anonymous and unaudited protocols
The following are some of the risks you will be taking if you decide to invest in Raydium (RAY).
1. Anonymous team
The Raydium team (like most DeFi projects teams on every chain) is anonymous.
If anything should go wrong the people behind it could simply disappear into thin air and you would never be able to recover your money from them.
2. Closed source code
The Raydium protocol codes are not publicly available to be scrutinized for potential errors.
This means that you or anybody else cannot look into the codes to see if there are any malicious lines that could make the protocol susceptible to exploits, hacks, or exit scam.
According to the team, they’re keeping it this way, to prevent other developers from stealing their work and creating their own AMM with no effort.
However, according to the team, as the Solana ecosystem develops and the Raydium protocol advances more of the code will be published and released to the public over time.
3. Unaudited code
The Raydium protocol code has not been audited (yet).
We understand that being audited doesn’t “guarantee” anything.
However, it does show that the team takes transparency very seriously and it can assure the users that some basic checks have been conducted on the code to mitigate obvious bugs.
A closed source, unaudited code only adds to the risk, even though the reasons may be justified.
The good news is, the team has reassured users that an audit is on its to-do list, and will be conducted as soon as possible.
4. Smart contract risk
Every protocol or piece of software can still be hacked or exploited by more superior developers whether it is open source and audited or not.
A vigilant hacker could spot a bug in the code before the developers do and exploit it to “steal” funds deposited in the protocol.
This is a normal risk with everything software that you as a user should be aware of.
And that’s why you should never put all your money on a single project or platform.
Conclusion
I’m optimistic that Raydium has all it takes to become the Uniswap or PancakeSwap of the Solana blockchain.
The project is backed by a committed, innovative and competent team that works closely with the Solana foundation.
More so, the Solana ecosystem is developing really fast and Raydium has the first-mover advantage being the first AMM on Solana.
Yes, in crypto, first-mover advantage means a lot especially when the team is equally good and the project has a functional product.
However, as stated the project is still in its infancy and poses greater risks than its more established.
The success of the project will depend mostly on the quality of the team and the state of the global cryptocurrency market in the months and years ahead.
What do you think about Raydium and where do you see RAY in the next one to 5 years? Share with us in the comments section below.