Raydium Explained: How Fast, Low-Cost Trading Works on Solana

What is Raydium (RAY)?

Raydium (RAY) is a major player in the decentralized finance (DeFi) space, functioning as an Automated Market Maker (AMM) and liquidity provider on the Solana network. It provides services to the Serum decentralized exchange (DEX). Launched in February 2021, Raydium has established itself as a cornerstone of the Solana ecosystem, standing out for its fast, low-cost token swaps, ability to provide liquidity, yield farming opportunities, and as a launchpad for new projects.

Key Features and Functionality

• Efficient Token Swaps: Users can swap between various tokens within the Solana ecosystem quickly and cheaply. Its integration with Serum helps find the most optimal trading routes.
• Liquidity Provision and Pools: Users can become liquidity providers (LPs) by depositing pairs of tokens into liquidity pools. In return, they receive a 0.22% share (Out of the total 0.25% swap fee) distributed to LPs, as well as incentives in the form of RAY tokens.
• Yield Farming: LPs can stake their LP tokens to earn RAY rewards as an additional incentive for providing liquidity. Furthermore, "Fusion Pools" allow staking to earn tokens from partner projects.
• Staking: Holders can stake their RAY tokens directly to earn a share of the protocol fees (0.03% of swap fees) and potentially participate in future governance.
• AcceleRaytor: This serves as a launchpad for new projects on Solana. Staking RAY tokens gives users access to Initial DEX Offerings (IDOs), providing early-stage investment opportunities.

Liquidity Pools (LP)

Raydium's Liquidity Pools (LPs) are notable for their use of automated market makers (AMMs), a popular feature for liquidity pools. Because Raydium operates with an AMM, users buy and sell assets against a pool of assets supplied by liquidity providers.

While a previously popular AMM platform was Uniswap on the Ethereum network, Raydium operates on the Solana network to address issues such as high gas fees, slow transaction times, the lack of limit orders, and the lack of overlapping liquidity found on Ethereum-based platforms. In addition to its core exchange offerings, Raydium also features "dual reward farming," which allows liquidity providers to earn additional yield from their LP tokens.

What is the RAY Token?

RAY is the native utility and governance token of the Raydium protocol. Its main functions are as follows:

• Trading and Fee Payments: The RAY token is used to pay for transaction fees for trades on the platform.
• Staking and Liquidity Provision: The RAY token is used for staking, which incentivizes users to provide liquidity to the platform. Stakers receive a portion of the transaction fees as a reward.
• Liquidity Mining Incentives: RAY is distributed as rewards for providing liquidity and participating in the ecosystem.
• Governance: RAY holders can participate in important protocol decisions, shaping its future development.
• AcceleRaytor and IDO Participation: The RAY token is used to participate in AcceleRaytor launches, allowing users to invest in new projects and receive tokens.
• Market Making Fee Capture: The RAY token is used to capture fees from market-making activities, providing an additional revenue stream for users.

RAY Token Distribution

Raydium has a maximum supply of 555 million RAY. The distribution is designed to support the long-term growth and decentralization of the protocol as follows:

• Mining Reserve: 34% (188.7 million RAY) allocated for liquidity mining incentives over several years.
• Partnerships and Ecosystem: 30% (166.5 million RAY) to foster partnerships and expand the ecosystem.
• Team: 20% (111 million RAY) subject to a vesting schedule, with an initial 12-month lock-up followed by a 24-month unlock period, which was reported to be complete by February 2024.
• Liquidity: 8% (44.4 million RAY) for initial and ongoing liquidity needs.
• Community and Growth: 6% (33.3 million RAY) also subject to vesting.
• Advisors: 2% (11.1 million RAY).

Interesting Information Regarding RAY Price

According to data from the CoinMarketCap website on 4 June 2025, the RAY token has a market cap of $695,690,389.42, or approximately 22,702,559,874.84 [Thai Baht].

At the time of writing this article, the RAY token is trading at a price of approximately $2.41, or about 78.64 Thai Baht. RAY reached its all-time high price of $16.93, or about 553.98 Thai Baht, on 13 September 2021.

Reference

• Raydium Document