Raydium Review: The Best Liquidity And Spot Trading Features For Solana Ecosystem

With Solana’s recent surge to become one of the top seven cryptocurrencies by market size, greater emphasis has been placed on decentralized exchanges and apps built on the scalable blockchain.

At the time of writing, the Solana ecosystem included 350 projects. Raydium is one of the most prominent of these sites. Therefore, let’s get started with our Raydium Review to see whether it’s the correct platform for you.

Overview

Raydium is an automated market maker (AMM) on the Solana blockchain that uses the central order book and depth of Serum, a prominent Solana-based decentralized exchange. It is a critical component of the Solana ecosystem that leverages liquidity pools to enable ultra-fast token swaps and transactions.

It was established on February 21, 2021, by three inventive creators – AlphaRay, XRay, and GammaRay – with a maximum supply of 555 million coins.

Raydium differs from other AMMs in that it seeks the best potential rates for token swaps by routing orders via either a liquidity provider or the Main order book. It also has a good user interface and user experience.

Raydium, like other decentralized exchanges, uses a liquidity pool method to allow users to shift assets. Raydium, on the other hand, does this by using the Serum DEX developed on Solana. Users may obtain access to an ecosystem-wide central limit-order book system via the Serum DEX interface, which offers unrivaled liquidity in comparison to other platforms.

Raydium also has its own token, ‘RAY,’ which gives holders access to the platform’s native launch pad, ‘AcceleRaytor,’ as well as a percentage of protocol revenues. RAY is planned to function as a governance token in the future, offering holders prospective governance privileges. According to DeFi Llama, ‘Raydium’ is presently ranked fourth in total TVL inside the Solana ecosystem, having over $317 million in assets on its platform.

Raydium was established in the summer of 2020 by the pseudonymous developer AlphaRay and their crew. DeFi was just getting started at the time, and AlphaRay, a seasoned trader frustrated by Ethereum’s high gas prices, was seeking a solution. So he contacted the FTX team and shared his concept with them. In turn, FTX introduced AlphaRay to two projects with which they had previously been engaged and worked: the Solana blockchain and the Serum protocol.

AlphaRay and other team members saw the promise of Serum DEX and started work on Raydium, which premiered in February 2021. Raydium’s staff has over two decades of expertise in cryptocurrency and conventional markets market making, arbitrage, and high-frequency trading.

Raydium’s entire strategy, operations, product direction, and commercial growth are overseen by AlphaRay. He formerly worked in commodities algorithmic trading before transitioning to bitcoin market creation and liquidity providing in 2017.

GammaRay and XRay are two more famous team members. GammaRay is the director of marketing and communications. He oversees product development and strategy. Before to joining Raydium, his crypto expertise was in marketing and technical analysis.

XRay is the Head of Technology and the Development team’s leader. He has almost eight years of expertise in crypto and traditional market trading, as well as system design. X also designed Raydium’s infrastructure and technologies.

Trading features

Trading or Swapping

Raydium provides its consumers with two exchange options. This is either through their “Trade” option or simply “Swap.”

“Trade” allows users to swap their tokens using an interface similar to that of a centralized exchange. Users may make Limit orders and explore numerous markets to trade with, thanks to its interaction with Serum.

“Swap” is a simple method for switching between any SPL token. The system will evaluate whether swapping inside a liquidity pool or via the main order book will provide the best pricing to its customers using Raydium’s Best Price Swaps.

Since the liquidity comes from both its own liquidity pools and the Serum order book, there is greater liquidity and less slippage for its consumers.

Raydium’s trading experience is comparable to that of Ethereum DEXs, but with two important differences: unprecedented liquidity and the option to put limit orders on specific coins. Raydium’s interface with Serum DEX enables both of these functionalities.

If you’ve never heard of Serum, it’s a decentralized exchange protocol layer that enables developers to construct their own DEXs on top of it. This enables Serum-powered exchanges to access and share liquidity through its on-chain central limit order book technology.

Limit Order Book

Raydium’s Limit Order Book interface gives customers an experience comparable to centralized exchanges, where they can see the price chart of the targeted token pair as well as the top buy or sell bids put by exchange users.

It lets users place limit orders on certain tokens available via its trading interface. Users may use limit orders to define the price at which they want their transaction to execute. In comparison to most other DeFi exchanges, this enables consumers to have a very stress-free trading experience.

Presently, Raydium’s user interface actively supports over 260 market pairings. Users may, however, access and add any new market pair that is not displayed on the UI as long as it already has a market on Serum.

Users must build a new market on the interface by clicking the ‘+’ sign above the trading chart and entering the market id of the desired pair to add an existing market pair on Serum to Raydium. But, be cautious; some custom market pairings may be obsolete; do not trade on them.

Providing Liquidity

If you wish to receive rewards from your Solana tokens, you may offer liquidity to a pool. Raydium’s liquidity pools enable anybody to supply liquidity by contributing assets to the pool and collecting transaction fees on swaps inside the pool.

You’ll need an equal share of two SLP tokens to provide liquidity to a pool. You can utilize Raydium’s swap/trade option if you don’t already have them. When you contribute to a pool, you will earn Liquidity Provider (LP) tokens, which effectively represent your pool share. Using these LP tokens, the user may retrieve their tokens at any moment.

Farming

If you offer liquidity to a pool, you may earn not just trading fees but also extra prizes via Farms. You may stake your liquidity provider (LP) tokens with Raydium Farms to receive rewards in multiple cryptocurrencies.

At the time of writing, you may earn 28% APY on your LP token deposits. But keep in mind that as more individuals deposit money into the liquidity pool, you will get less of the harvest since your portion of the entire pool will be diluted.

There is considerable risk associated with Impermanent Loss while supplying liquidity. This is the primary distinction between storing tokens in an AMM and storing them in a wallet. Depending on how people trade, you may wind up with more than one token after boosting liquidity.

If one of these tokens is much less valuable, you may wind up worse off than if you merely held or staked the tokens you’ve contributed to a pool.

Staking

Raydium allows for single asset staking of their RAY token. With rates presently at 10% APY, this is a simple way to make extra income. Users just deposit their RAY tokens to get additional RAY prizes. Since the tokens are not locked, the staked Money may be withdrawn at any moment.

AcceleRaytor

Raydium’s native launchpad, AcceleRaytor, assists projects in raising financing and driving early liquidity in a decentralized way. Raydium’s efforts to lead and foster growth in the Solana ecosystem are part of this. In most cases, this is accomplished by conducting an initial token offering on the Raydium platform. Before placing tokens on the Raydium launchpad, the Raydium team curates and analyzes projects to discover whether they are a suitable match for the platform’s mission.

Pros and Cons

Pros

• Fast transactions and low fees
• Scalability
• Intuitive trading platform
• Access to Serum DEX order book

Cons

• Integration with only one Serum
• The team behind it hasn’t been fully identified yet

Raydium token

Upon debut, RAY has a maximum supply of 555 million tokens. Mining Reserve (34%) and the Ecosystem and Partnership fund (30%) account for more than 60% of the token supply. These tokens will be used to grow the ecosystem and reward early RAY community members.

The team has a 20% token supply allocation with a three-year vesting time. The remaining tokens are divided between AMM liquidity at launch (8%), the community pool (6%), and advisors (2%). The vesting time for the community pool and advisor tokens is one year and three years, respectively.

Fees

While executing a swap in its liquidity pools, Raydium charges a 0.25% fee for both maker and taker orders. This 0.25% fee is divided and allocated as follows:

• 22% (88% of the fee) is redeposited into the liquidity pool as compensation for liquidity providers.
• 03% (12% of the fee) is used to purchase RAY and distribute it to the staking pool as RAY staker rewards.

The transaction fee for orders completed via the Serum DEX is paid to Serum and is determined by the quantity of SRM tokens staked. Serum costs an average of 0.22%, which lowers with the quantity of SRM carried.

Users must be aware of network costs in addition to the fees levied by Raydium for the usage of its platform. Transactions in Solana often cost between 0.0001 and 0.001 SOL.

Security

DEX servers are often distributed throughout the world. This differs from centralized exchanges, which often have more concentrated servers. This dispersion of servers reduces the likelihood of server outage and makes DEXs essentially impervious to assaults. This is because removing one of the servers has little to no effect on the whole network. Nevertheless, if you manage to get access to a server at a centralized exchange, you may do even greater damage.

Moreover, when you trade on a DEX, the exchange never touches your assets. As a result, even if a hacker is able to hack the exchange (despite the foregoing), the hacker cannot access your assets. When you trade on a centralized exchange, you often keep assets at that exchange. Unless you withdraw them to your own wallet. As a result, a centralized exchange may be hacked, and your cash kept at such an exchange can be stolen. This is not the case with decentralized exchanges such as Raydium.

Raydium was first audited by Kudelski Security in 2021 and has since undergone various revisions. As a result, although a comprehensive re-audit is presently happening, the team has gotten considerable feedback from Neodyme team members through a bug bounty arrangement.

The programs AcceleRaytor, DropZone, and stable-curve AMM have not yet been audited. Nevertheless, an extra complete audit of all renovations and more recent initiatives is scheduled for the second quarter of 2022.

Moreover, Raydium’s AMM employs the constant function pricing curve k=x*y to compute price based on the token ratio in a liquidity pool. This implies that Raydium does not now depend on an external Oracle for price feeds, removing the potential of Oracle manipulation in flash-loan assaults. Similarly, Solana’s low latency and fast throughput limit the danger of transactions becoming front-runners.

Conclusion

Raydium is without a question one of the best DeFi ventures to start on Solana, delivering customers with amazing liquidity. Their launchpad is also a formidable force, having launched several high-quality goods in the Solana ecosystem.

Raydium is a fantastic pick if this is your first time exploring DeFi on Solana. Its user interface is similar to that of other Ethereum DEXs, but it also shows customers Solana’s promise of low-latency trading and on-chain order books.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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