On May 18, Raydium, the leading decentralized exchange in the Solana ecosystem, officially completed a major upgrade to its Concentrated Liquidity Market Maker (CLMM) protocol. This upgrade introduces three core features: in-pool limit orders, dynamic fees, and optional one-sided fee collection. These enhancements mark a new phase for Raydium in optimizing capital efficiency and expanding trading tools. As the Solana DEX ecosystem continues to diversify rapidly, can this upgrade help Raydium rebuild its competitive moat?
Key Functional Changes in the CLMM Upgrade
Raydium’s latest CLMM upgrade centers on three optional "add-on" features. First, in-pool limit orders. Liquidity providers and traders can now set limit orders directly within the concentrated liquidity pool, eliminating the need for external order book systems. Second, dynamic fee mechanism. Fee rates automatically adjust based on market volatility, optimizing liquidity provider returns across different market conditions. Third, one-sided fee collection. Liquidity providers can choose to collect fees from only one side of a trade, which is especially valuable in markets with strong directional price expectations. All three features are backward compatible, with strict limits on protocol-level interruptions, resulting in virtually seamless user experience.
Optimizing Trading Experience and Capital Efficiency After the Upgrade
The introduction of limit orders fundamentally changes the logic of DEX trading. Previously, users could only execute trades at the current market price within AMMs. Now, they can place orders at specific price points and wait for execution. This is a significant upgrade for traders who require precise strategy execution. The dynamic fee mechanism improves the incentive structure for liquidity provision—fees rise during periods of high volatility, offering greater compensation to LPs; fees fall during low volatility, reducing trading costs. One-sided fee collection gives professional market makers more refined risk management tools. Together, these features are expected to systematically enhance Raydium’s capital efficiency and execution quality.
Market Data: Raydium’s Current Challenges
However, the upgrade comes at a critical moment when Raydium’s market share is under pressure. As of mid-May 2026, Solana DEX traffic is highly concentrated among a few protocols. Over the past seven days, Meteora led with $84.7 billion in trading volume, accounting for 64.9% of the market. PumpSwap followed with $37.9 billion and 29.0%. Raydium’s trading volume was $1.61 billion, only 1.2% of the total. Orca’s volume surpassed Raydium’s, but its trader count was only one-fifth that of Raydium. Meteora’s average trade size reached $884, while Raydium’s was just $117—a 7.5x gap. These figures indicate that Raydium’s primary traffic comes from numerous small trades, not large institutional orders.
Potential Impact of New Features on Traffic and Revenue
Raydium’s CLMM upgrade affects protocol revenue through two main channels. On the trading volume side, limit orders and dynamic fees are likely to attract more professional traders, especially those sensitive to execution quality and costs, such as high-frequency traders. On the fee rate side, the dynamic fee mechanism can automatically increase rates during periods of volatility, boosting overall protocol income. Each Raydium transaction includes a swap fee, with the standard AMM pool rate at 0.25%. Most of this is distributed to liquidity providers, with a portion allocated to RAY token buybacks. If both trading volume and fee rates rise post-upgrade, Raydium’s buyback scale will also expand. It’s important to note, however, that this upgrade does not involve changes to the tokenomics or introduce new emissions, so improvements to protocol fundamentals are expected to be gradual and cumulative, rather than driven by a single event.
Raydium’s Structural Position in Solana DEX Competition
To understand the significance of Raydium’s upgrade, it’s essential to grasp its structural role within the Solana DEX ecosystem. Since early 2026, the Solana DEX landscape has undergone accelerated fragmentation. Active AMMs and passive AMMs have diverged onto fundamentally different paths. Active AMMs now account for over 50% of all Solana spot trading volume, almost entirely concentrated in deep, oracle-driven pairs, where execution quality is the key competitive factor. HumidiFi currently controls about 65% of active AMM volume, followed by Tessera (around 18%) and GoonFi (about 7%).
Passive AMMs—represented by Raydium, Orca, and Meteora’s classic pools—still provide primary day-one liquidity for new tokens and long-tail assets, but their share of high-liquidity traffic has dropped sharply. Notably, new-generation passive AMMs like PumpSwap, Futarchy AMM, and Jupiter DTF pools no longer create pools for SOL–USDC or SOL–USDT, recognizing that they cannot compete with traditional market makers on price, latency, or reliability for short-tail assets.
Raydium’s structural challenge is clear: it does not belong to the active AMM camp, making it difficult to gain an edge in high-frequency execution markets. At the same time, it faces pressure in the new generation of issuance-driven passive AMM competition—vertical integration between PumpSwap and Pump.fun, and the collaborative ecosystem of Meteora and Jupiter DTF, form more complete issuance→liquidity→trading loops. Raydium’s LaunchLab issuance platform is live, but it remains in catch-up mode compared to these integrated models.
Order Flow Capture: The Key Variable for DEX Survival
In the Solana DEX ecosystem, "who controls order flow" has become a more critical competitive factor than "who built the best AMM." Active AMMs have almost no native frontend traffic—over 95% of HumidiFi’s volume comes via aggregators like Jupiter, and their competitiveness depends entirely on providing the tightest, fastest, and most reliable execution. Passive AMMs have lost their edge in short-tail asset execution battles. The most sustainable passive AMM model in 2026 is vertical integration centered on issuance platforms, with AMMs serving as the monetization layer for issued tokens.
Raydium’s CLMM upgrade is, in part, a response to this trend. Limit orders and dynamic fees strengthen execution competitiveness, while one-sided fee collection gives professional market makers more flexibility. Whether these features help Raydium close the gap with active AMMs on execution, and reinforce its position in issuance, will be the key metrics for this upgrade’s value realization.
Tokenomics and Security: The Foundation for Upgrades
Raydium’s token model and security architecture underpin these functional upgrades. RAY is Raydium’s native utility and governance token. Holders can stake for rewards, participate in liquidity mining, enjoy fee discounts, and vote in community governance. Of each protocol fee collected, 12% is allocated for RAY token buybacks. On the security front, Raydium has updated its program admin permissions to Squads V4, implemented a 24-hour timelock, and adopted multi-signature security measures, including offline-isolated machines and physical keys. On the Gate platform, as of May 18, 2026, RAY remains actively traded, and users can check real-time prices and market depth via Gate.
Potential Risks and Uncertainties After the Upgrade
The potential risks of this upgrade must also be fully recognized. First, the adaptive algorithm for dynamic fees is complex; improper parameter settings could result in unexpectedly high fees, suppressing trading demand. Second, the real-world performance of limit orders—such as fill rates and slippage control—still needs to be tested in live market conditions. Third, one-sided fee collection could lead to imbalanced LP returns during extreme one-way price movements. Finally, and most critically, Raydium faces structural fragmentation in the Solana DEX ecosystem—a protocol-level feature upgrade alone may not reverse the trend of declining market share, and this will require time and market data to validate. The moat built by active AMMs like HumidiFi through high-frequency execution is not easily overcome.
Summary
On May 18, 2026, Raydium completed its CLMM protocol upgrade, introducing three major features: in-pool limit orders, dynamic fees, and one-sided fee collection. These enhancements systematically improve the protocol’s trading toolset and capital efficiency. As the Solana DEX ecosystem accelerates toward "integrated issuance" and "professional high-frequency execution," this upgrade aims to boost execution competitiveness within the passive AMM framework. However, Raydium currently holds only about 1.2% of total trading volume and faces dual competitive pressures from active AMMs (led by HumidiFi) and vertically integrated passive AMMs (such as PumpSwap and Meteora). The real impact of the upgrade depends on actual trading volume growth, optimization of LP returns, and expansion of token buybacks. Market participants should focus on changes in protocol usage data following the upgrade, rather than short-term price movements alone.
FAQ
Q1: When did Raydium’s CLMM upgrade go live?
Raydium officially completed its CLMM protocol upgrade on May 18, 2026. The upgrade is backward compatible, with virtually no disruption perceived by users.
Q2: How does the limit order feature work?
The new limit order feature is an optional add-on that allows users to set orders at specified price points within the concentrated liquidity pool. When the market price reaches the set value, the order executes automatically, without relying on external order books.
Q3: How does the dynamic fee mechanism operate?
Dynamic fees automatically adjust based on market volatility. During periods of high volatility, fees rise to compensate liquidity providers; during low volatility, fees decrease to reduce trading costs, achieving a dynamic balance between market efficiency and LP returns.
Q4: Does this upgrade affect RAY tokenomics?
This upgrade does not change the RAY token economic model or introduce new emissions. Staking, governance, and buyback mechanisms for RAY remain unchanged. Enhanced protocol usage will indirectly support RAY demand and staking yields by increasing trading volume and fee income.
Q5: What is Raydium’s current competitive position in the Solana DEX market?
As of mid-May 2026, Raydium accounts for about 1.2% of Solana DEX trading volume over the past seven days, trailing Meteora (64.9%) and PumpSwap (29.0%). Raydium sees smaller average trade sizes but higher trading frequency, with an average trade value around $117. The platform faces structural pressure to transition from passive AMM to more efficient models.
Q6: Is the RAY token tradable on Gate?
As of May 18, 2026, the RAY token remains actively traded on Gate. Users can view real-time prices and market depth data on the platform.
Q7: How can I participate as a Raydium liquidity provider?
Users can become liquidity providers by depositing tokens into standard AMM pools or CLMM pools via the Raydium interface. After this upgrade, LPs can also choose to enable one-sided fee collection, further optimizing their return structure. Gate users holding RAY tokens can stake to receive a share of protocol revenues.
