Crypto Gems Series Part 4: Raydium

As the crypto market grows, perhaps the most exciting aspect of it is DeFi and particularly, DEXes. In that context, Raydium is certainly a crypto gem worthy of our attention. An automated market maker (AMM) developed on the Solana blockchain, Raydium executes trades using the Serum decentralized exchange’s (DEX) central order book. Raydium’s swap function enables users to exchange tokens via Serum, and its user interface also supports other trading features such as limit orders. In this post, we discuss everything about Raydium from how it started to how it is doing in the crypto market!

Raydium Background: The Team and Advisors

The team behind Raydium boasts of over two decades of working in arenas like in market making and high-frequency trading in both crypto world and conventional markets. The creation of  Raydium started in the summer of 2020 by the team. The team includes: 

• AlphaRay

AlphaRay is in charge of Raydium’s complete strategies and business growth. AlphaRay saw a market demand for an order book AMM to aggregate liquidity after jumping into DeFi in the summer of 2020, and with the launch of Serum, assembled a team of successful trading developers to begin creating Raydium to meet the market demand.

• XRay

Raydium’s chief technology head is XRay. Raydium’s required frameworks and infrastructure are designed by X.

• GammaRay

GammaRay is in charge of marketing and communications, as well as strategy and product development of Raydium.

• StingRay

StingRay works as a senior developer and supervised the development of Raydium’s on-chain order book AMM.

• RayZor

RayZor is in charge of keeping all the Raydium’s capital protected.

Technology Architecture

Due to Ethereum’s notoriously sluggish transaction pace and high gas prices, it’s quite challenging to incorporate efficient trading applications. Users would find it challenging to profit from any of the platforms as a result of this. Raydium enters the picture at this point. Raydium differs from other AMM platforms in many ways. A central limit order book can benefit from on-chain liquidity provided by the platform. 

Developed on the Solana blockchain, the platform can tap into the Serum DEX’s central order book, allowing for lightning-fast trades, mutual liquidity, and a variety of yield-generating functionality. Despite the fact that Raydium is based on Solana, the platform will be Ethereum compatible. 

The platform can currently handle 65,000 transactions per second with block times of 400 milliseconds. The protocol was created to measure hardware and bandwidth upgrades in combination. Raydium also employs the K = Y*X constant equation. This equation has unique characteristics that make it stateless for any kind of two tokens, enabling users to trade with infinite liquidity. Raydium can use this equation to price orders on the order book using the Fibonacci series, resulting in up to 20 orders at different prices with spreads that are as low as 20bps.

This is a better way to fit all of the exchange instructions into a single Solana transaction. Furthermore, Raydium anticipates that other liquidity-providing models will be used in the future, getting the benefit of oracles and increased liquidity consumption.

Features of Raydium are mentioned below –

• Swap Feature – Raydium’s swap feature enables two tokens to be easily exchanged via Serum, and the DEX UI also supports more sophisticated trading features including limit orders. Users would have a more enhanced trading experience as a result of these changes. 
• RAY – You can receive RAY tokens in a variety of ways on the website. So cultivating liquidity pools and staking will be two of the ways to receive RAY tokens! In fact, several other features for users to gain RAY would be soon put on Raydium!
• Powering Project – Raydium can help you start your project on the Serum DEX or build out and supercharge features of your platform on Solana, and would be interested to talk about collaboration!

Benefits of using Raydium are:

• Quick and less expensive – The network is capable of achieving transactions quicker than Ethereum and with gas charges which are a fraction of the price by using the Solana blockchain.
• Ecosystem-Wide Liquidity – Raydium can add on-chain liquidity to the Serum DEX’s central limit order book. As a result, Raydium will give the entire Serum ecosystem exposure to the order flow and liquidity!
• Interfaces for Trading– Traders who would like to display TradingView charts, place limit orders, and have more authority on their trading can use the trading interface.

 Competitor Analysis

Raydium has many competitors in the market such as UniSwap, PancakeSwap, Pangolin.

Token Economics

The RAY token is considered as Raydium’s default token. There are only 555 million RAY tokens available. The emissions would last approximately 36 months, which gets halved every six months. The following is the complete distribution:

• Mining Reserve is distributed with 34% RAY
• Partnership & Ecosystem is distributed with 30% RAY
• Team (1-3 Year Lockup) is distributed with 20% RAY
• Liquidity for AMM at Launch is distributed with 8% RAY
• Community Pool (1 Year Lockup) is distributed with 6% RAY
• Advisors (1-3 Year Lockup) is distributed with 2% RAY

A transaction fee of 0.25 percent will be charged if you make a trade or execute a swap on Raydium. The remaining 0.22 percent goes back into the liquidity pool as an incentive for liquidity providers. The remaining 0.03 percent will then be sent to the staking pool as a reward for users who stake RAY tokens.  (Source: Raydium Gitbook)

On major cryptocurrency exchanges, as of mid-May 2021, one Raydium (RAY) is worth approximately $14.73 or 0.00025106 BTC. In US dollars, the total amount (or market capitalization) of all available Raydium is $612.77 million. You can exchange RAY tokens on platforms such as Bonfida, FTX, Gate.io etc. 

Fundraising History

Just a year old in the crypto sphere, Raydium has raised an undisclosed amount from Petrock  Capital on a minority stake. Raydium itself has been active in the investing arena, having invested in Solana position tracking tool StepFinance.

Raydium has also introduced Fusion Pools, that provide dual-yield incentives for both liquidity suppliers and stakers, and its position as a bridge for ventures looking to extend to Solana and Serum is assured.

Milestone and Future Roadmap 

Raydium recently hit a milestone of $1 Billion  on TVL. Its future roadmap is fairly exciting, covering the following: 

• Q1 2021 will involve developing liquidity pools and cross chain swap, launching mainnet, platform, official website
• Q2 2021 will involve researching more on market making strategies and features in collaboration with different protocols
• Q3 2021 will involve ideation of governance models along with partners.

Price Performance History

(Source – coincodex)

In early April, RAY was priced at around $11. As of mid-may it is trading in the $14 range, with a 24-hour trading volume of $36 million throughout six exchanges. Raydium’s peak price was attained at $16.19 on May 3, 2021. It has a cumulative supply of 555.00 million RAY and a circulating supply of 41.64 million RAY. (Source – coincodex)

Conclusion

Since the cryptocurrency market is highly unpredictable and difficult to forecast over time, researching the fundamentals and development of Raydium is critical before deciding to invest some amount of money for the long term with the intention of keeping for months or years.