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Tokenomics

AMM (Automated Market Maker)

A decentralized exchange mechanism that prices assets algorithmically based on the ratio of reserves in a liquidity pool rather than an order book. PumpSwap, Raydium, Meteora, and Orca are the primary Solana memecoin AMMs.

See also
Tokenomics Liquidity Pool (LP) A smart-contract-held reserve of two assets that enables AMM trading. Pool depth determines price impact: shallow pools move more per trade than deep ones. The liquidity-to-MC ratio below roughly 5% is structurally thin — large sells move price dramatically and the depth visible on the chart may not be available at execution. → Tools Slippage The maximum percentage deviation between the expected and actual execution price. Too tight causes failed transactions; too loose invites price extraction. Sell slippage matters more than buy slippage — a failed sell during a dump is catastrophic, while a missed entry is merely annoying. → Tools PumpSwap Pump.fun's in-house AMM launched March 2025. Replaced Raydium as the destination for bonding-curve graduations. LP tokens are burned automatically on migration, closing the hard rug vector. Post-migration price action is determined by existing holders selling, not by LP structure. →
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