Raydium AMM Built On Solana Crypto Beginner’s Guide 2022 | Governance, Staking and RAY Tokenomics Explained

7 min read

It has only taken a short time for DeFi to grow from a single word into a whole ecosystem that has changed how we interact with money. However, the high transaction fees and slow block times of the Ethereum Blockchain make it unsuitable for its intended purpose.

Although DeFi has the potential to transform the traditional financial system, it is greatly constrained by outdated blockchains.

The entire crypto ecosystem needs a protocol that is flexible, scalable, and easily adaptable. Radium was developed to meet these needs.

Raydium is a decentralized exchange powered by Solana and Serum that allows for fast, cheap, and secure transactions. It is an automated market maker that introduces the concept of accessing the liquidity on Serum Decentralized exchange along with its liquidity pools.

Does that seem like a lot to take in?

Don’t worry. It’s a pretty new concept. It will all make sense to you after reading this article.

So, without any further ado, let’s jump in to see what it is and how it works?

What is Raydium?

Raydium is an Automated Market Maker built on top of the Solana Blockchain, and acts as an integral part of carrying out fast transactions on the Solana Blockchain. 

Besides the liquidity that it has in its Swap pools, Raydium has access to Serum’s order book, a feature that makes it unique among the Automated Market Makers.

Its main objective is to attract large numbers of DeFi enthusiasts to the Solana Blockchain by using its distinctive features and capabilities. Raydium offers its users a variety of products that make their crypto journey easier and more fun.

Let’s examine these products. What are they and how do they work?

What are the Raydium Products?

Before you get started on Raydium, have an SPL wallet ready to store your funds on the Solana Blockchain. You can either use Sollet or Bonfida wallet to interact with the features on Raydium.

If you don’t know how to install and use Sollet wallet, please refer to the FAQ section at the end of this article.

Trade and Swap

Raydium makes trading easy by providing its users the flexibility to access Serum’s central limit order book. Raydium Trading exchange works like any other Central Exchange and has the feature of limit orders that is difficult to implement on Ethereum based DEXs because of its slow block time and high gas fees.

Raydium provides its users with a robust trading experience on the Solana Blockchain through its integration with Serum and ensures necessary liquidity and minimum slippage during a trade.

Radium’s Swap feature allows you to easily swap your SPL token from one to another with almost no transaction fee and time.

You can easily use Raydium’s Swap function like any other Swap feature in the existing DeFi protocols, but just faster and cheaper.

To use the Swap function on raydium.io, follow the steps as guided below:

  1. Click on the “Swap” button at the top of the website.
  2. Connect your SPL (Solana Program Library) wallet by clicking on the “Connect Wallet” at the top right of the page.
  3. From the drop-down list, select the token you want to Swap in the first column and choose the one you wish to receive in the second column.
  4. Enter the number of tokens that you wish to exchange in the first column.
  5. In column 2, it will automatically show you the estimated amount of tokens that you receive.
  6. Finally, click Swap to exchange.
  7. Click “Approve” in your wallet to confirm the transaction.
  8. Soon after the completion of the transaction, you can view your tokens in your SPL wallet. Make sure to add the token to view it in the wallet.

Liquidity

Anyone who has the SPL wallet can provide liquidity to Radiyum’s liquidity pool. You can view the complete list of pools by navigating the “Pools” tab on the website.

Follow the below steps to provide liquidity on raydium.io

  1. Go to the pools section and scroll down to select your preferred pool pair to provide liquidity.
  2. Click on it, and it will redirect you to the “Liquidity tab” of the website.
  3. Enter the number of assets to provide liquidity. Make sure to enter them in the ratio of 1:1.
  4. Click to “Add Liquidity”
  5. Confirm both of the transactions in your wallet to provide liquidity.
  6. Once done, you can view the received LP tokens in your wallet that you get as a proportion to provide liquidity to the pool.
  7. You can withdraw your assets at any time by clicking on the “Remove Liquidity” button against your preferred pool pair.

Farms

Raydium farms function similarly to that of any other farm in the De-Fi space. Users can earn Ray tokens as farming rewards to provide liquidity to the pools. It is a process to generate more crypto from your existing crypto securely and efficiently. Users can stake the LP tokens they receive after providing liquidity to the pool and can earn Ray.

Follow the steps below to generate Ray as farming rewards:

  1. Go to https://raydium.io/farms/
  2. Select your preferred farming pool to generate Ray token.
  3. Click to Add liquidity on the left-hand side under pool pair name.
  4. Follow the steps described above to add liquidity and receive LP tokens.
  5. Once you receive LP tokens, you can stake them in the farming pool to earn Ray.
  6. To Stake LP tokens, click Stake under the pool you wish to farm.
  7. Enter the number of tokens you would like to stake or hit MAX to stake all LP tokens.
  8. Click Confirm.
  9. Approve the transactions in your SPL wallet to successfully stake the tokens.
  10. Your asset will grow based on the mentioned APR against it, and you will also receive Ray tokens as farming rewards.

Staking

Users can earn additional Ray by staking their already made Ray in the Ray vault.

  1. To stake Ray, go to the “Staking tab” at the Raydium website.
  2. Enter the amount of Ray you want to stake and click “stake,” followed by confirming the transaction in the SPL wallet.
  3. Once staked, your Ray token will grow based on the mentioned APR against the Ray vault.
  4. You can harvest your Ray rewards by clicking on the harvest button under the Ray vault, but only when it reaches a specific value.
  5. You can also come out of all this with one click. Simply click “unstake” to receive your Ray tokens back.

AcceleRaytor

AcceleRaytor is designed to accelerate the growth of the Solana ecosystem. This feature of Raydium is made to help new projects entering the space by providing them the initial liquidity and helping them raise capital all through Raydium and Serum on Solana Blockchain.

It consists of pools where a user can supply funds to an allocation of project tokens. Each pool consists of a specific set of requirements to fulfill and a time limit to obey.

Now, let’s move on to see “How to participate in AcceleRator?

  1. Switch to the AcceleRator tab on raydium.io
  2. There you will see a list of available pools and their status.
  3. You can click on the pool to know the additional details and requirements of it.
  4. If you satisfy the requirements and want to contribute to the pool, enter the amount you wish to supply and click “Join Pool.”
  5. Once joined, you cannot take a step back until after the pool closes and at the time specified.
  6. To receive your tokens or funds in your wallet, come back to the pool at a specified claim time and click claim to receive your amount.

Migrate

This feature is designed to smoothen the upgrading process. Raydium users can easily migrate from an old to a new version through this feature and avail exciting new features and benefits of the platform.

WSDT Migration: This tool helps you move your funds from the RAY-WUSDT pool to the RAY-USDT pool with almost no effort and fees. You can easily unstake your funds and move them into the newly created RAY-USDT pool with just a few clicks using this tool.

DEX2 to DEX3 Migration: Serum is upgrading to DEX3 from DEX2. Thus, to keep the features up and running, Raydium has elevated itself to adjust to Serum’s new version. This means that Raydium has created new pools on DEX3 and needs to migrate liquidity from DEX2 pools to DEX3 pools.

This can be done quickly by using the DEX2 to DEX3 migration tool on the Raydium platform.

First, you have to unstake LP tokens and remove liquidity using the migration tool, and then you can manually stake your LP tokens in the newly created pools on DEX3 in the same way as we did before.

RAY Coin Tokenomics

Ray is the native token of the Raydium protocol. It can be earned as rewards by participating in Raydium farms and staking Ray tokens to earn more Ray in the Staking section of the Raydium website.

Allocation of Ray token:

Ray token total supply: 555,000,000

FAQs

How to install and set up sollet.io wallet?

  1. Go to https://www.sollet.io/
  2. Write down the 24 words secret seed phrase and keep it in a safe place.
  3. Check the box and click Continue.
  4. The app will ask you to enter the seed phrase that you have just saved.
  5. Proceed by entering the seed phrase and click Continue.
  6. Create a strong password for your wallet.
  7. Your sollet.io wallet has been successfully created.
  8. You can now use it to move your funds across various Dapps on the Solana Blockchain.
  9. You can easily add new tokens by clicking on the “Add” icon on the right-hand side of the app.
  10. You can also manually enter token details to add them to your wallet by going to the Manual input section.
  11. For more details on Sollet.io, please refer to this tutorial.

What is an order book?

An order book is simply a list of buying and selling orders for a particular asset. It showcases the interests of buyers and sellers in a specific cryptocurrency.

What is a liquidity pool?

A liquidity pool is a pile of funds locked into a smart contract. Anyone can provide liquidity to these pools to earn rewards based on the proportion of their share to the total liquidity.

A market can be created by adding an equal value of two tokens in a pool. Once the pool is created, users can trade against it.

Unlike an order book, trade against a liquidity pool doesn’t require the presence of a seller while carrying out a transaction. It will automatically execute the trade once predetermined conditions are met.

What is the difference between a centralized and a decentralized exchange?

Decentralized exchanges offer more security than centralized exchanges as it gives its customers complete control over their assets. While in a centralized exchange, most of the control of your account remains in the hand of a centralized party.

What is Solana Blockchain?

Solana is a unique high-speed single-layer blockchain focused on delivering cheap executions, scalability in protocols, and decentralization.

SOL is the native token of the Solana ecosystem. It can support 65k transactions per second. Solana is designed to eliminate the challenge of scalability with existing blockchains. 

Is Raydium Worth Your Investment in 2022?

Raydium acts as a bridge for the new projects entering the Solana Ecosystem. It is the first-ever protocol designed to drive the initial liquidity and raise capital for any new project that enters the Solana Space.

It also helps projects to grow through its robust features that enable faster transactions and significantly lower fees.

If you wish to launch your project on the Serum DEX then Raydium is the must-go platform that will provide an easy entry into the Solana Space.

Originally published here

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