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While the DeFi market is growing at a rapid pace, it’s still considered to be in its infancy, with developers in the space finding themselves face-to-face with several challenges. First, DeFi transactions tend to be slow and expensive: for example, Ethereum’s blockchain is saturated, and depositing ETH within a liquidity pool will set you back over $100. Second, liquidity pools are fragmented between different protocols which compete with one other. And finally, without an order book, the trading experience is limited: not only are you unable to place limit orders, but you’re also obliged to provide liquidity on either side of an exchange pair. Rising to the occasion is Raydium, which provides excellent solutions to combat these limitations.
Raydium is a decentralized AMM (automated market maker) on the Solana blockchain. It draws directly from the order book of Serum, Solana’s largest DEX (decentralized exchange), to run its swap system.
The main advantages of an AMM built on Solana are speed and affordability. In addition, Raydium interacts directly with the Solana ecosystem and with Serum for greater liquidity.
The enthusiasm around DeFi is an indication of the growing interest in DEXs operating the AMM model. DEXs such as Maker, Compound, Uniswap, Aave, and SushiSwap are attracting an increasing number of investors. Despite having only been launched in February 2021, Raydium has gained significant popularity — and for good reason.