Raydium Report by Jesse

With less retail movement this week many Bitcoin firms are continuing to double down on the growing network activity of this asset. Finally seeing some green as Bitcoin HODLs at $40,000 USD the gains are starting to return with Amp pushing above 100% in weekly gains. Following behind is Quant and Chiliz acquiring 40% weekly return for its holders. The most interesting of which is Bitcoins position as the 4th highest gainer this week with 20%. While some of the SOL madness has calmed down, this week we’ll be looking into its first AMM called Raydium.

Introduction

Raydium is an automated market maker built on the Solana blockchain which leverages the central order book of the Serum DEX to enable lightning-fast trades, shared liquidity, and new features for earning yield. Raydium offers DeFi and AMM projects a clear path for bridging platforms and liquidity with the increased evolving capabilities of Solana and Serum. Current AMM DEXs and DeFi protocols are only able to access liquidity within their own pools and have no access to a central order book. Additionally, with the majority of platforms running on Ethereum, transactions are slow and gas fees are high. Raydium leverages the efficiency of the Solana blockchain to achieve transactions significantly faster than Ethereum at a fraction of the cost. Raydium offers an avenue for evolution, where projects and individuals can swiftly enter the Solana and Serum universe to leverage its distinct advantages in speed and efficiency. As Raydium progresses as a foundation for liquidity on Serum, it aims to partner with other DeFi and AMM communities to provide support and build out their products on Solana. Leading to both extra liquidity and faster, more efficient DeFi protocols for everyone.

Being part of the Solana ecosystem in the same way Uniswap is part of the Ethereum ecosystem. Users will need to create and fund a SOL wallet to navigate the Raydium Platform. Through their integration with Solana Raydium is able to offer a powerful trading experience like that of a centralized exchange thanks to Serum. If you’ve ever been annoyed by the total absence of an order book, charting, or reliable limit orders on other DEXs, Raydium is looking to fix that. On Raydium any SPL token can be quickly exchanged for another with RaydiumSwap. But, swaps are not allowed in any way when the price impact is above 15%. Liquidity comes both from its own liquidity pools, as well as from the wider Serum order book shared by all Serum users. This should translate to more liquidity and less slippage for Raydium traders but this early in their lifecycle it’s proving to be easier said than done. Raydium offers Yield farming options that currently enable farming for USDT, USDC, SRM, SOL, and ETH at significantly higher APR than other platforms. As new upgrades are made to Raydium these farms will be upgraded with previous yield offerings being retired to Legacy status. Raydium adds to the standard farming by offering a double reward system called Fusion Pools. These types of dual yielding pools offer new opportunities for users who can manage the increased risk of market volatility and impermanent loss.

Staking rewards are offered on Raydium for its native tokens, like most AMM protocols. Currently on offer is up to 32% APR for staking your tokens directly on the platform. For new projects looking to raise funds through offerings on the platform. Raydium has created the AcceleRaytor to facilitate these operations. With different IDOs come different rules for each offer. Some offerings will allow users to take part without any staking requirements. While most others need some level of staked Raydium (20-500) to participate in new offerings. Maximum token allocations for new projects launching on Raydium are intentionally low during these offerings. Whether this is to create a scarce asset or not is hard to tell. But, a noticeable metric from the previous offerings with Media Network and Mercurial by their price charts. Have an uncanny correlation with every pump and dump token to date. While I have no way of acquiring the specific allocations made to Raydium for listing of these projects on its platform. All AcceleRaytor, and existing projects interested in launching an LP or Fusion pool on Raydium do so in a very non-decentralized manner.

The Token

The native token for Raydium is RAY. The RAY token is used in all aspects of the protocol’s fee structure and pool requirements. With a maximum Supply of 555 Million RAY tokens, the project has allocated 34% for Mining Reserves, 30% Partnerships and Ecosystem, 20% for the Team, 8% Liquidity, 6% Seed Funding, and 2% for Advisors. Allocating 2 ½ times the amount to themselves than the Liquidity provided to the platform seems extremely counterproductive, almost by design. With no real public offering the only available tokens and being dropped via the previously mentioned Airdrop in this month’s section. Seed participants carry a 1-year vesting schedule with the Team and Advisors having a 1-3 year schedule. Mining Reserve emissions will last for approximately 36 months, with halvenings occurring every six months and a reasonable 0.03% of all trading fees awarded to RAY stakers.

The Founders

The core team is and will remain anonymous and unvetted throughout the entirety of Raydium. With no information about seed participants, funding raised or the core team’s involvement with Raydium. But, a few doors were unceremoniously left ajar and I was able to get “some” information on a few contributors to the project as well as the Core Team’s questionable reallocation of early funding to privately invest in other projects. While the team wants to remain anonymous they don’t realize that by providing private funding to DeFi project Step.Finance in April opens them up to all types of moral deliberation. While their platform has not gained hardly any liquidity, the Team seems to already be moving their attention into other projects instead of focusing on their own.

While I was told by moderators of the project that the public repository had been moved from open to close-source. There are many details that don’t add up, like a visible update less than seven hours from my review. With not much else to show for, the team simply utilized how easy it is to work on Solana by using a Javascript bundler yarn.build to create the current platform with little effort on their part. A handful of independent developers like T-Rekt, Hsuan Lee, illyism, Scott, Edsolater, Rudy, and TimonPeng have provided single-line updates to the codebase but nothing much has been added by any one individual. Leaving some parts open and some closed only adds to assumptions about the Core Team’s true intentions.

Market Impacts

The RAY token was released to market only by Private investors and the Raydium Team allocations. Using new users to offload their share of tokens, it’s been a low liquidity closed loop between Serum and Raydium for the most part. This only just recently changed with RAY being added to FTX, Gate.io, and bkex that has now created over 50% of all Daily RAY Volume. While I don’t have a baseline for token appreciation, RAY released to the market on February 20th at $7 and gained a small bump to $12 before falling below $6 in its first week. With price appreciation since then always being met with a sell-off right around the monthly distributions of tokens to the team and investors. But, its last run from $7 to $15 in May has been sold off down to $4 in the last month. As it stands around 10% of the total supply is currently circulating with questionable fertile enough grounds in Solana to even need an AMM at this point.

In the Raydium community, many individuals don’t understand what Raydium even is. While defending some of the points made in this article with baseless hearsay, they’ve shown clearly that their understanding of Solana, in general, is lacking. While moderators remained respectful in giving me the run around with my questions. The community immediately lashed out for even inquiring about the team, codebase, and overall lack of transparency. Telling me this is already an extremely fragile ecosystem. The project has also grossly inflated its social status with 70k Twitter followers, and 16k Telegram members.

Concerns

With Raydium there are few concerns I “don’t” have with the project. From the unnecessary anonymity of the developers to the non-existent codebase and complete lack of transparency by the team for their large share of the tokens, and much more. Raydium checks half the red flags researchers like me look for in a project. Very, very scammy vibe going on not only with Raydium, but it’s launched IDO’s as well. Thankfully I’m not the only one who has noticed these inconsistencies with the project. Raydium falls flat to gain any network effects or community members outside of its onslaught of bots, which has undoubtedly caused their Medium account to get shut down. Being that Medium has a no-tolerance policy for this it’s possible but unlikely that the team will be able to recover their account if, in fact, they did manipulate their community growth. Happening with a handful of projects in the past, this is the only reason I’ve ever seen a Medium account suspended in this manner. Not that they had much content, to even begin with.

It’s worth drawing attention to how little liquidity there actually is on the platform. With everything outside of stablecoins not tradeable due to how thin the books are, this goes for Serum in the same light as both platforms combined are barely managing $30 Million in Daily Volume. While Solana itself has grown 5x in the same timeframe this growth has not transferred to Raydium in any way. Leaving a very clear sign that much of the Solana hype is still speculation, instead of operational ecosystem growth.

Conclusion

I’m going to be direct with all of you because there’s no need to beat around the bush taking up more of your time with this project. If you value your time and money, I would stay far away from Raydium. Outside of receiving free tokens during the Community Airdrop and possibly yield-farming stablecoins. But, If you’re all about that speculation then by all means spin that short-term gains wheel friend. Otherwise, Raydium has all the fresh ingredients for a recipe in getting Rekt.

Until next time, remember that the only guarantee is BTC. So keep stacking that Satoshi.

-Jesse Koz

Follow Jesse on Twitter

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