Raydium Protocol
First Constant Function AMM built on Solana
Raydium is the first decentralized exchange on the Solana blockchain that uses the Automated Market maker (AMM) model. Not just that, it also leverages on the serum network which uses the order book model. Serum and Raydium work hand in hand on the Solana Blockchain to maintain faster transactions speed with low cost. Raydium provides wide liquidity for projects and users.
HOW DOES RAYDIUM WORK?
It partners with Solana and Serum.Raydium’s liquidity pools can feed Serum’s order book, and vice versa (i.e., Serum users can access Raydium liquidity pools). Raydium uses its liquidity pools to strategically place its orders in Serum’s backlog. The objective is to establish a reliable order match and a fair price for the asset traded.
It's the first AMM built on Solana blockchain. The major advantage of this protocol to users is its speed and interoperability.
Two major properties of Raydium are:-
You can access Serum's orderbook in raydium
Its algorithm is based on a constant function, CFAMM (constant function automated market maker).
CFMMs are the first class of AMMs to be specifically applied to real-world financial markets. They were designed by the crypto community to construct decentralized exchanges and are based on a function that establishes a pre-defined set of prices based on the available quantities of two or more assets.
Raydium’s AMM model uses the constant function K = Y * X.
X and Y represent the number of tokens in mining and liquidity reserve tokens, and K is the constant product.
WHAT IS RAY?
RAY is the native utility token of the Raydium ecosystem. It was launched in February 21, 2021, with initial supply capped at 555 million tokens. The development team was allocated 20% of the total supply, locked for up to three years so developers cannot sell them. One-third of the supply of RAY tokens (188 million) can be mined. Block rewards are projected to be halved every six months. At the same time, 0.03% of the transaction fees made on the platform will be sent as a reward to stakers.
Maximum quantity in circulation: 555,000,000 RAY
Liquidity Mining Reserve: 34%
Partnerships & Ecosystem: 30%
Development Team: 20% (locked between 1 and 3 years)
Liquidity: 8%
Community: 6% (locked for 1 year)
Advisors: 2% (locked between 1 and 3 years)