Raydium Protocol: An On-Chain Orderbook Powered by Serum and Solana

Raydium Protocol has been making significant volume and seeing major growth and acceptance for nearly a month since its launch on Solana. Through its utilization of on-chain liquidity, Raydium provides seamless swaps.

By
Ifeanyi Egede
on
April 17, 2021
Category:
Project Insight


What is Raydium?

Raydium is a decentralized exchange (Dex) that leverages automated market maker (AMM) technology. As a liquidity provider on top of the Serum Dex, Raydium has the first-mover advantage and will play a key role in introducing new and established protocols into the ecosystem. Raydium and the RAY token will become a base for facilitating further development with collaborators, networks, and the community as a whole. The protocol aims to act as a bridge for projects looking to extend to Solana and Serum.

Raydium, unlike every other AMM, offers on-chain liquidity to a central limit order book, giving Raydium LPs access to all of Serum's order flow and liquidity. Raydium's long-term goal is to gain and retain leadership among AMMs and liquidity providers on Serum while also leveraging Solana's power to accelerate the evolution of decentralized finance (DeFi).

Raydium Features

Raydium has several defining features that make up the basis of the protocol: 

Order Books - The available bid and offer prices between market participants will be shown in order books. As a result, market participants would express their desire to exchange any number of tokens at any cost. Raydium will carry order books back to AMMs. 

Market Making - Perhaps the project’s speciality, Raydium can take all of the tokens in its liquidity pool and use them to position orders on the order book based on a constant product invariant. 

Coin Swaps - Coin swaps allow users who don't need the order book to swap their tokens for a low gas fee and a low trading fee.

Farming - Liquidity providers can earn additional incentives for their contributions by farming on Raydium. RAY tokens are used to incentivize the key pools.

Dual Reward Farming: Raydium's team will be able to manage which pools earn farming rewards. Additional reward tokens may be added by projects who want to reward users for providing liquidity.


Raydium Tokenomics

Raydium has a hard cap of 555 million Ray and currently only 27 million (~5%) are in circulation. This notes that a large portion of the supply remains unminted. The Mining Reserve will follow an emission schedule and be exhausted after 36 months. These block rewards will be halved every 6th months to sustain liquidity incentives and reward early adopters. On top of liquidity incentives and trading fees, RAY stakers can also receive 0.03% of trading fees in the RAY staking pool.


Other Relevant Features

Trade and Swap - The swap feature in Raydium will allow two tokens to be quickly exchanged via Serum. Simultaneously, DEX UI will enable more advanced trading features such as limit orders. Users will benefit from a better overall trading experience as a result of this.

Jumpstarting Projects - Raydium allows users to implement projects on the Serum DEX and enhance their platform on Solana.

Earn RAY - Users can receive RAY tokens in a variety of ways on the website. Farming liquidity pools and staking are the two methods used to receive these tokens. Currently, users can earn RAY through providing liquidity to following pairs:

RAY-USDT, RAY-USDC, RAY-SRM, RAY-SOL, RAY- ETH, FIDA-RAY, OXY-RAY, MAPS-RAY, KIN-RAY, COPE-USDC

Raydium also has plans for future usage of the mining reserve and ecosystem fund still in the works.

 

RoadMap / Team

The Raydium team still has a lot of plans in store for the AMM. In particular, they are focusing on how to leverage external oracles in order to streamline transactions. Here is a short roadmap detailing their achievements so far and where they plan on taking the protocol:

Completed

Q4 2020

·         Ideation and project scope

·         Development of the protocol and iteration on testnet

Q1 2021

·         Development of liquidity pools and staking completed

·         Mainnet launched

Projected

Q1 2021

·         Website and platform launch

·         Development of cross-chain swap

Q2 2021

·         Research on additional market making models and features in partnership with other protocols

Q3 2021

·         Leverage of external oracles for improved market making

·         Governance model ideation in collaboration with partners

 

Conclusion

Raydium has a lot of advantages that make it a superior protocol to those currently available. The network can achieve TPS numbers much higher than Ethereum and with gas fees that are a fraction of the cost. Its leveraging of the Solana blockchain allows for these reduced gas fees, as well as granting it a larger TPS rate. Traders who want to display TradingView charts, place limit orders, and have more control over their trading can benefit from the easy-to-grasp trading interface.

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Ifeanyi Egede

Ifeanyi Egede is an experienced and versatile crypto writer and researcher on fintech, the blockchain and emerging technologies. He has several published works online and in the print media. He loves reading, research, traveling, meeting people and football. When he is not writing, he spends time with his lovely wife and kids.