Liquidity exhaustion, how many people will participate in this civil war?

Written by: TechFlow

“What did CZ tweet today?”

If you are asking this question, then it is clear that the recent BSC is one of the few hotspots on-chain.

As CZ and the top influencer become increasingly active on Twitter, the strategies of attracting attention and creating memes are gradually surfacing; at the same time, leveraging the powerful secondary traffic capabilities of the Binance APP to directly integrate Binance Alpha into the app has also brought more heat to meme trading.

In a generally poor market, BSC has a flavor of latecomer advantage, and what it is seizing is clearly the on-chain heat that previously belonged to Solana.

Traffic and transaction fee income are the anxieties and desires of every chain.

Under business anxiety, there is bound to be competition between different chains, but in fact, different protocols on the same chain are also competing.

For example, Pump.fun and Raydium each launched a “copy” of the other.

Pump.fun does AMM

More than 20 days ago, Pump.fun started doing the work of Raydium, launching a self-built AMM pool, attempting to siphon off the liquidity income that originally belonged to Raydium.

(See “Did Pump.fun create its own AMM pool? The intention to seize Raydium's profits is evident”)

Since users' trades are first matched on Pump.fun's internal market, relying on the platform's liquidity to complete transactions; when the internal market is full, trades will be routed to the external market, which actually relies on Raydium's liquidity pool.

In this model, Pump.fun has always been a “traffic provider” for Raydium, but is also constrained by Raydium's rules. Whenever trades flow to the external market, Pump.fun has to pay a portion of the transaction fees, and this portion of profit ultimately flows to Raydium's liquidity providers (LPs), with each transaction on Raydium currently incurring a 0.25% fee.

The motivation behind this is quite simple: to put it bluntly, Pump.fun, as a traffic entry point, has not fully capitalized on the benefits brought by the traffic.

We mentioned at the time that in a poor overall environment, it is not just the retail investors engaging in PVP; the projects are also engaged in fierce competition against each other.

Raydium does Launchpad

And just today, Raydium's counterattack strategy has also surfaced.

According to Blockworks reports, Raydium is launching a token launchpad called LaunchLab, which is a direct fork of Pump.fun.

Although Raydium's official Twitter did not directly mention this new change, where there is smoke, there is fire; this seems to indicate that the previously ceremonial cooperation and tacit understanding between Raydium and Pump.fun is gradually being broken.

As an observer, the feeling is very clear --- since you have taken my work, I can take yours too.

Raydium's motivation is also very simple; as a backend for liquidity pools, why not take a step further to capture the front-end entry traffic?

But the premise of seizing work is to have strength.

For token launchpads like Pump.fun, replicating a similar product is relatively simple; the strength may not come from technology, but from capital.

Further reports indicate that Raydium's balance sheet still has about $168 million, which provides the greatest confidence for imitating Pump.fun, namely investing people and money.

And comments from an anonymous core contributor of Raydium interviewed by Blockworks indirectly confirm this:

“The protocol started developing LaunchLab months ago but shelved the project because it 'didn't want the team to feel that Raydium was directly competing with them.' After the AMM plans of Pump.fun emerged, this so-called generosity seems to have exhausted.”

In other words, while Pump.fun was doing AMM, Raydium was already thinking about doing a Launchpad.

This feels more like a coincidental competition and a conscious action to advance the business further.

Project parties are clearly more aware than retail investors that trading is the soul of the crypto business, and focusing on various aspects of trading makes it easier to reap the benefits.

Of course, the best scenario is to have the ability to capture the entire process, from entry to backend.

Civil War Moat

The AMM pool is essentially an open-source design, and creating a meme coin launchpad is not difficult; since both sides have no development barriers in products, Pump.fun and Raydium can do their respective businesses;

The only question is, where are the moats on both sides, and what will lead to victory?

Pump.fun's moat clearly lies in the traffic advantage brought by user habits. As a meme coin launch platform, Pump.fun has firmly captured a portion of users' attention through its unique community culture and user stickiness.

Once this user habit is formed, it is difficult to easily transfer to other platforms. More importantly, Pump.fun's user ecosystem inherently possesses traffic entry attributes, providing it with sustained growth momentum.

On the other hand, Raydium's moat is built on the essential trading demand of its liquidity pool. As one of the most important DeFi infrastructures on Solana, Raydium's ecological control comes not only from its deep liquidity pool but also from its position in the trading network across the entire Solana chain.

In other words, Raydium's advantage is not just technical but also stems from the entire ecosystem's dependency on it.

However, the strength of a moat is not just a static existence.

In the current environment, both Pump.fun and Raydium's moats face different challenges:

Whether Pump.fun's traffic can continue to grow depends on its ability to continuously launch new features and gameplay that attract users. Meanwhile, Raydium needs to maintain its lead in liquidity competition and further consolidate its ecological position through capital and technological investment.

Liquidity exhaustion, how many people will participate in this civil war?

As the two major protocols are busy competing with each other, a bigger question arises:

How many users will actually participate in this civil war? Is there really enough market space and user base to support it?

From the current market environment, the entire crypto industry is in a downturn, with liquidity and user activity significantly lower than before. Against this backdrop, whether it is Pump.fun or Raydium, what they are actually competing for is a shrinking pie.

Without new liquidity injection or more “retail investors” entering the market, this competition is actually of little significance.

Whether it is BSC, Solana, or other public chains, competition between chains and within chains is intensifying. Behind this competition reflects the entire industry's thirst for traffic and transaction fee income. However, if the overall environment of the crypto industry does not improve, this competition may ultimately be fleeting.

For the entire industry, the real breakthrough lies not in civil wars or inter-chain wars, but in how to enhance the overall attractiveness of the industry. Whether through innovative product forms, lowering user thresholds, or through broader education and promotion, attracting new liquidity is the key to solving the problem.

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