Raydium V4 vs. V5: Which Protocol is Better for Launching your Token

Raydium V4 vs. V5: Which Protocol is Better for Launching your Token

Raydiuma popular decentralized finance platform (DeFi), has recently introduced Raydium v4 and v5, replacing its previous versions v2 and v3 respectively.

This article explores the differences between Raydium Version 4 and Version 5 (formerly v2 and v3) and provides guidance on which might be the best option for your token launch.

Raydium Version 5: New Features and Protocols

Raydium Version 5 introduces a new user interface (UI) and a new standard protocol for liquidity pools, known as CPMM.

This is an improvement over the old AMM (Automated Market Maker) protocol used in Version 4. The new protocol aims to create a more efficient and cost-effective method for liquidity provision, eliminating the need for an open market.

Key Benefits of Version 5

Radyum version 5 comes with a number of enhancements:

- Enhanced Protocol: The CPMM protocol in Version 5 allows the creation of liquidity pools that are cheaper and more efficient.

- Simplified Process: Creating a liquidity pool is simpler, requiring only the base token, the quote token and the launch price.

- Cost Efficiency: Eliminates the need for additional market parameters, reducing the complexity and cost of setting up a liquidity pool.

Challenges with Raydium Version 5

Despite promising features, Raydium Version 3 faces several challenges that could affect its immediate adoption:

- Indexing Problems: Version 5 has problems indexing correctly on popular platforms such as DexScreener and BirdEye, making it less visible to traders.

- Low Transaction Volume: The new protocol has significantly fewer transactions compared to Version 4, which impacts its liquidity and attractiveness.

- Trading Delays: Initial trading delays have been observed, which can hinder early trading activities and volume generation.

Case Study Example

I created a token with the tool from Smithii to later make its release on Raydium Version 3 and it demonstrated these problems:

A delay in the initiation of trading and minimal transaction activity due to poor visibility and lack of indexing. You can see it in Birdeye.

I had a 40-minute gap to be able to start trading my token, which is not something I often see.

Why Raydium Version 4 May Still Be the Best Choice

Given the current limitations of Version 5, Radium Version 2 remains a more reliable option for those looking to attract significant trading volume and market interest:

- Increased Volume and Visibility: Version 4 supports higher transaction volume and better integration with trading bots and indexers.

- Proven Stability: The older AMM protocol is well established and trusted by the community, ensuring a stable and predictable environment for token launches.

Creating Liquidity Pools in Version 4

Using Radium Version 4, you can create a liquidity pool with advanced options for market parameters, ensuring greater control and customization. While it may not be as inexpensive as Version 5, it offers a balance between cost and market presence.

Our Liquidity Pools creation tool supports both versions of Radyum and you can choose the best one for you.

Conclusion

Raydium Version 5 (formerly v3) has the potential to revolutionize the provision of liquidity in DeFi with its new CPMM protocol and cost-effective features. However, until indexing and visibility issues are resolved, Raydium Version 4 remains the safest and most effective option for launching a token.

For now, leveraging the established Version 4 infrastructure will help ensure greater market capitalization and trading volume, laying the groundwork for a successful launch of your token.