Solana's Evolution Into the On-Chain Everything Exchange: Prop AMMs, Perpetuals, and the Future of DeFi Infrastructure

The Solana ecosystem stands at a pivotal moment in its development. While token prices have retreated from their January 2025 highs, the underlying infrastructure powering on-chain trading has undergone a remarkable transformation. Proprietary Automated Market Makers—known as Prop AMMs—have emerged as perhaps the most significant innovation in Solana's DeFi stack, fundamentally changing how liquidity is quoted and traded on the network. This evolution is setting the stage for what many builders and researchers believe will be Solana's defining opportunity: becoming the on-chain everything exchange.

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Dan Smith, a researcher at Blockworks who has been deeply studying Solana's market structure, recently shared his findings and perspectives on the state of the ecosystem. Having just returned from Breakpoint in Abu Dhabi, Smith provided an insider's view of the builder sentiment, the major announcements shaping Solana's future, and the data-driven case for why prop AMMs represent a paradigm shift in decentralized trading. His analysis paints a picture of an ecosystem that is maturing rapidly, even as external observers remain fixated on token price performance rather than the fundamental infrastructure improvements taking place beneath the surface.

The Lightspeed Investor Relations Platform: Professionalizing Solana's Capital Markets

The crypto industry has undergone significant maturation over the past several years, transitioning from an era of ICOs and white papers sold primarily to retail investors into a phase where professional institutional capital demands proper disclosure, regular communication, and standardized reporting. Recognizing this shift, Blockworks has partnered with the Solana Foundation to launch the Lightspeed Investor Relations platform, a first-of-its-kind portal designed specifically for Solana's capital base.

The platform addresses a fundamental need that has emerged as the industry has professionalized. As Smith explained, "The marginal flows are now being driven by investors that have many, many years, if not decades of experience in traditional finance where the disclosure is much more formalized, the cadence at which you communicate outwards from company to investor is formalized, and the level of access that you provide into your financials or your growth metrics or your core KPIs or your goals or even the risks that you see against your own company is standardized."

The Lightspeed IR platform will aggregate data not just on SOL as an asset, but on every application and business building on Solana. This includes comprehensive data coverage for protocols like Jupiter, Jito, Helium, Pump.fun, Orca, Meteora, and others. The platform will feature research reports, monthly notes on Solana, and quarterly reports on individual protocols. Raydium's quarterly report is already live, with Helium next in the pipeline.

This initiative comes at a time when some of the most prominent protocols in the ecosystem are already moving toward more formalized communications. Teams at Jupiter, Spark, EtherFi, and Grass have begun publishing quarterly reports and hosting quarterly calls, recognizing the importance of transparent communication when managing multi-billion dollar or half-billion dollar token ecosystems. The Lightspeed platform aims to standardize and accelerate this trend across the broader Solana ecosystem.

Breakpoint Vibes: A Tale of Two Sentiments

The annual Breakpoint conference in Abu Dhabi provided an interesting lens through which to view the current state of the Solana ecosystem. According to Smith, there was a notable split in sentiment between builders and investors at the event. "If you talk to anyone building something, jazzed up, motivated, feeling good, felt like they were getting traction in many ways or competition was heating up, so they were extremely locked in. But if you talk to investors, it sort of had a different view of the world where it was more of the bear market blues."

This divergence in sentiment reflects a fundamental disconnect between token price performance and underlying protocol fundamentals. Many tokens have experienced significant declines from their early 2025 highs, but the actual usage metrics, revenue generation, and infrastructure improvements have remained strong or continued to grow. The question becomes which cohort—builders tracking fundamentals or investors watching prices—is correctly reading the market's direction.

The conference itself took place on Yas Island within Abu Dhabi, which Smith described as feeling similar to Orlando with its theme parks and commercialized atmosphere. Despite the unconventional setting, the content delivered was substantial. Smith personally presented two talks: one on the state of revenue on Solana, effectively making the case for why Solana needs to win as "the everything chain," and another on the launch of the Lightspeed IR platform.

One of the running jokes throughout the conference was that "MEV Day should have just been renamed to Prop AMM Day." The mini-conference held before the main event focused heavily on proprietary automated market makers, with extensive data presentations and discussions about how these new market-making constructs are reshaping Solana's trading infrastructure.

Phoenix Perpetuals: Bringing Prop AMM Innovation to Derivatives

Perhaps the biggest announcement from Breakpoint was Ellipsis Labs revealing Phoenix Perpetuals, a new perpetual futures DEX designed to address Solana's historical underperformance in the derivatives market. While Solana has excelled at spot trading—particularly for SOL/USD pairs where on-chain volume now rivals Binance—the ecosystem has struggled to capture significant perpetual trading activity.

The Phoenix Perpetuals design applies lessons learned from prop AMMs to the derivatives space. As Smith explained, the first critical innovation is making it cheap for market makers to update their quotes efficiently. Traditional order books on Solana proved too expensive for effective market making, which is why prop AMMs emerged in the first place. Phoenix addresses this through what they call "splines"—a system that allows market makers to layer an AMM-like curve on top of an order book structure.

"You have an order book and you also have the ability to layer a like AMM-like curve on top of that. So it gives you the ability to basically set a min price, a max price, and then how deep your liquidity is within that range," Smith detailed. This hybrid approach provides the flexibility of CLOBs while maintaining the efficiency benefits that have made prop AMMs successful in spot markets.

The second crucial innovation Phoenix brings is the ability for market makers to inject arbitrary quoting logic into their pricing, enabling flow segmentation. This allows market makers to differentiate between informed traders they want to avoid and retail flow they're eager to trade against. Phoenix is currently in private beta, though the program has been found on mainnet by researchers already examining its design.

Other teams are also entering the Solana perpetuals space with novel approaches. Bulk is developing a system that processes trades mostly off-chain before settling back on-chain, while Phoenix maintains a fully on-chain architecture. The competition is healthy for the ecosystem, as each approach offers different tradeoffs in terms of latency, decentralization, and user experience.

Understanding Prop AMMs: The Foundation of Solana's Trading Renaissance

To understand why prop AMMs matter, one must first understand the problem they solve. Traditional order books on Solana failed to deliver on their promise of enabling performant market making that could quote users better prices by avoiding toxic liquidity. The fundamental issue was cost: it was simply too expensive for market makers to continuously update their quotes on-chain.

Prop AMMs emerged from builders who intimately understood Solana's unique market structure. Unlike EVM chains where users typically navigate to DEX landing pages like Uniswap or Aerodrome, Solana users have historically routed through aggregators like Jupiter, and more recently D-Flow or Titan. This aggregation layer means that liquidity doesn't need to live in one central order book—instead, it can be distributed across multiple venues while still being accessible to all traders through the aggregator.

The key insight driving prop AMMs is that they can update prices by responding to oracle feeds rather than requiring trades to flow through the pool. In a traditional constant-product AMM like Uniswap V2, the only way the price updates is when a trade moves through it. This makes such pools inherently susceptible to adverse selection—they actually need toxic arbitrage flow to keep prices accurate. When prices on centralized exchanges like Binance diverge from on-chain prices, arbitrageurs extract value by buying cheap on-chain and selling expensive off-chain.

Prop AMMs flip this dynamic. They can move their entire liquidity curve with a single oracle update that costs less than a penny. "When you get that very, very rapidly, very, very cheaply, very, very frequently," Smith explained, market makers can quote aggressively without fear of being picked off by arbitrageurs who are simply faster at reading Binance's order book.

Flow Segmentation: The Secret Sauce of Prop AMM Profitability

The second critical innovation in prop AMMs is their ability to implement arbitrary logic for flow segmentation. Market makers can examine incoming trades and differentiate based on the source of the flow. If a trade originates from a wallet-based aggregator like Phantom or OKX wallet, that's likely retail flow that market makers want to capture. If a trade comes from an address with a history of sophisticated trading, market makers might widen spreads or refuse to trade entirely.

Smith illustrated this with a specific example: "There's this somewhat famous trader, YUBQ is the first four letters of the address. Yeah, you don't want to trade against this guy. He's actually quite good. He's certainly sophisticated and he knows what he's doing." Most prop AMMs have blacklisted this address, though Humidify has notably chosen not to, as part of their competitive strategy.

The ability to segment flow enables a fascinating business model: prop AMMs aim to provide delta-neutral top-of-book liquidity while capturing spread on every trade. They want a high volume of uninformed trades that don't know where the price is going, allowing them to profit from the bid-ask spread without taking directional risk. This is fundamentally different from traditional AMMs, which essentially always trade against the most informed flow and consequently suffer significant impermanent loss.

For assets like Orca's governance token (ORCA), which don't have centralized exchange listings to reference for pricing, the flow segmentation question becomes even more interesting. If prop AMMs are quoting ORCA, they might reference other on-chain sources for price discovery, or they might develop proprietary algorithms to determine fair value. The absence of a centralized price reference doesn't prevent prop AMMs from operating—it just changes how they source their pricing signals.

The Numbers: Prop AMMs Eating Into Centralized Exchange Volume

The data tells a compelling story about prop AMM success. Looking at SOL/USD spot trading volume on a weekly basis, Solana's prop AMMs—led by Humidify—have been capturing increasing market share from Binance. The trend shows Binance volume decreasing in absolute dollar terms while Solana's share of total volume increases.

A critical insight from this data involves the nature of the volume itself. Much of the trading activity represents arbitrage—specifically, atomic on-chain arbitrage that previously required managing positions across centralized exchanges. When Binance's price jumps from $120 to $125 while passive on-chain AMMs still quote $120, arbitrageurs previously had to buy on-chain, then manage the risk of selling on Binance in a separate transaction. Now, because prop AMMs update their quotes so efficiently to mirror Binance prices, this entire trade can happen atomically in a single on-chain transaction.

"What this has made me realize is how much volume on centralized exchanges is just selling that extra leg from capturing the arbitrage," Smith observed. The efficiency of prop AMMs is effectively onshoring this arbitrage activity, pulling volume away from centralized venues.

This trend received a major boost with Coinbase's announcement that they will enable any DEX trade through the Coinbase app, sitting on top of Jupiter as an aggregator and using Jupiter's referral relationship features. This means Coinbase users can access any Solana token directly within the Coinbase interface, with trades routed through on-chain liquidity. The question of Coinbase's pricing power on these trades is significant—Smith expects fees around 1%, similar to other UI fees in the space, which could represent substantial revenue.

Oracle Updates: The Heartbeat of Prop AMM Activity

One of the most striking pieces of data from Smith's research concerns the share of Solana's non-vote transactions attributable to oracle updates from prop AMMs. This metric has spiked above 20% of all non-vote TPS—roughly 175 TPS of market makers competing to offer users better prices.

"This is market makers racing to offer users a better price, which is fascinating to me," Smith noted. The volume of oracle update activity represents a fundamental shift in what Solana's block space is being used for. Rather than purely speculative memecoin trading, a significant portion of network activity now consists of sophisticated market-making infrastructure improving price discovery and liquidity provision.

The growth trajectory is particularly notable. This trend dates back to November of the previous year, making it an 18-month trend rather than a fleeting spike. Smith expects this number to potentially 10x as prop AMMs expand coverage to more pairs. Currently, roughly 30 to 50 different pairs are being quoted by prop AMMs, but the potential exists to quote X stocks, credit instruments, forex pairs, and other assets as these markets develop on Solana.

Importantly, while oracle updates represent 20% of non-vote transactions, they constitute only about 2% of REV (real economic value). This is by design—oracle updates are optimized to be extremely cheap, which is the entire point of enabling efficient market making. The transactions update state without creating contention, which is fundamentally different from user trades that compete for execution priority.

Humidify's Unique Approach to Market Making

Among prop AMMs, Humidify has distinguished itself through both its market share and its unique approach to flow segmentation. Data shows Humidify far exceeds other prop AMMs in the frequency of oracle updates, though it's unclear whether this is simply because they cover the most markets or reflects a strategic difference in their update cadence.

The more notable distinction involves their approach to sophisticated traders. While most prop AMMs have blacklisted addresses known to extract value consistently, Humidify has chosen not to blacklist, instead relying on aggressive oracle updates to minimize the window for informed traders to pick them off. As Kevin from Humidify explained in a previous interview, this provides a competitive angle to improve their pricing.

Running markout analysis—which measures profit or loss at various time intervals after a trade—shows that Humidify has the most positive markouts at the 1 second, 3 second, 5 second, 30 second, and 1 minute horizons compared to competitors like SolFi. Even against sophisticated traders like YUBQ, whose maximum alpha appears to occur around the 30-second mark, Humidify's markets remain positive across all timeframes.

This creates an interesting strategic question: if your update frequency is aggressive enough, can you profitably trade against anyone? Humidify seems to be betting yes, while other prop AMMs have decided that blacklisting certain addresses is the safer approach. Both strategies appear viable, though they optimize for different outcomes.

The Path to Being the Everything Chain

The broader thesis emerging from Solana's trading infrastructure evolution is the potential to become what Smith calls "the everything chain"—a platform where any asset across any market in the form of any instrument can be traded. This requires success not just in spot markets, where Solana has demonstrated strength, but also in perpetuals, where the ecosystem has historically lagged.

"The idea of the everything chain means you need any asset across any market in the form of any instrument," Smith explained. "And so it's great at spot today. Prop AMMs have really innovated and looked at Solana's core problem set and said, how can we take this problem set and still achieve the end goal of quoting users better prices?"

The launch of Phoenix Perpetuals represents the next step in this evolution. If the same market microstructure innovations that made spot trading competitive with Binance can be applied to perpetuals, Solana could challenge Hyperliquid's dominance in that market segment. Notably, while Hyperliquid has excelled at perpetuals, it has struggled to attract spot liquidity—the inverse of Solana's historical strength.

The combination of successful spot trading, day-one token listings, and competitive perpetuals would create something approaching an on-chain Binance experience. Add in the potential for equities, forex, and other traditional financial instruments, and the vision of the everything chain starts to look achievable.

The Token Holder Dilemma: Aqui-Hires and Value Destruction

While the infrastructure story is compelling, the conversation also touched on serious concerns about token holder value in the current market structure. Recent events involving Tensor and Axelar highlight the risks token holders face when teams are acquired without regard for outstanding tokens.

In both cases, teams were effectively aqui-hired—the talent was acquired while leaving token holders without recourse. The Axelar situation is particularly concerning, as massive volume spikes appeared in the days before the announcement, suggesting potential insider trading. Smith noted the irony that "maybe it's not actually insider trading because these are just like collectibles"—a reference to the SEC's guidance that memecoins wouldn't be regulated as securities.

The fundamental problem is the "token plus equity" model that has become standard in crypto. Tokens sit junior to equity, which sits junior to debt. When an acquisition happens, equity holders get paid while token holders get nothing. Smith outlined the math: if a team has 30 employees and receives a $10 million acquisition offer (which he described as likely generous), the options are to decline on moral grounds (likely resulting in eventual layoffs as revenue-starved teams fail), accept the deal and let token holders get rugged, or accept and force a pro-rata payout to token holders.

The third option—distributing acquisition proceeds pro rata to token holders—is arguably the ethical choice, but creates enormous overhead when token holders would receive mere cents on the dollar. Axelar was trading at a $130 million market cap, so even a $10 million deal would only provide about 8 cents per dollar of token value. Still, Smith ultimately concluded this was the right thing to do, expressing disappointment that founders chose to keep acquisition proceeds rather than providing any token holder recovery.

This problem extends beyond aqui-hires to the broader question of protocol governance. The Aave controversy demonstrates how the labs entity versus DAO structure creates misaligned incentives. Labs have obligations to equity holders and may have raised funds specifically for projects, while DAOs and token holders have limited recourse when labs make decisions that don't prioritize token value.

MetaDAO and Potential Solutions

The MetaDAO model offers a potential solution to some of these token holder vulnerabilities. If treasury funds are locked in a DAO structure, founders physically cannot abscond with raised capital—they would need token holder approval for any disbursement. If a founder left, token holders could vote for an unwind and receive their proportional share of treasury assets.

However, this model doesn't solve the aqui-hire problem. If a major company acquired MetaDAO's team for a billion dollars, there's no clear mechanism to prevent the talent from departing while leaving token holders with governance rights over nothing but a treasury. The underlying asset—the team's expertise and future productivity—isn't captured by the token structure.

Smith's takeaway was to be extremely selective about token investments. With no explicit regulations backing token holders, good outcomes depend entirely on "good stewards and trust in individuals to make decisions that are beneficial to token holders." Without that trust, many protocol tokens are effectively memecoins with fundamental valuations based on faith rather than enforceable claims.

The Bull Case for 2026: Sustainable Growth Over Speculation

Looking forward, the most compelling aspect of Solana's current development is the shift from speculative, spiky growth to sustainable infrastructure growth. The memecoin mania of early 2025 drove massive REV through contentious trading—users paying premium priority fees to front-run each other on volatile tokens. That activity has cooled significantly.

But underneath that speculative froth, a different kind of growth has been building. Oracle updates from prop AMMs represent consistent, non-contentious activity that generates value regardless of whether Trump coin is pumping. As Smith framed it, "They'll probably always be speculative activity and that might drive spikiness in terms of contentious fees paid, but you could see growth from this perspective of oracle updates, prop AMMs, continuous quoting of more assets being kind of like consistent growth under the hood that when spiky activity comes along, that's like a boost."

The classic adage about new technology looking like a toy applies to crypto as well—except in crypto, the newest thing often looks like a casino. The memecoin trading surge was Solana's casino phase, but the infrastructure being built to support that trading is the real product. Market makers competing to offer users better prices, efficient oracle update systems, and sophisticated flow segmentation are not going away when the next speculative wave arrives.

Competition Heats Up in DEX Aggregation

Jupiter has historically held a monopoly position in Solana's DEX aggregation space, but competition is intensifying. D-Flow and Titan have emerged as rival challengers, offering alternative routing for on-chain trades. This competition benefits users through improved execution and puts pressure on all participants to continue innovating.

Smith mentioned that his next research focus will be running markout analysis against Jupiter Z, their RFQ (request for quote) system, to see how makers perform compared to prop AMMs. This comparison will be particularly interesting because RFQ systems and prop AMMs represent fundamentally different approaches to providing liquidity. RFQ systems allow market makers to quote specific prices for specific order sizes, while prop AMMs broadcast continuous liquidity curves updated via oracles.

The outcome of this competition will shape how liquidity is ultimately provided on Solana. If prop AMMs consistently outperform RFQ systems in markout analysis, we might expect more capital to flow toward prop AMM-style liquidity provision. Conversely, if RFQ offers advantages for certain market conditions or asset types, the ecosystem may develop a hybrid model leveraging both approaches.

The Institutional Transition

The launch of Lightspeed IR reflects a broader transition in crypto from retail-dominated markets to institutional participation. Smith described the historical arc: "2017 ICO era, everybody was selling a white paper and a dream, and it was getting sold to largely retail. 2019-2020 era, the first wave of more serious capital started coming in. Venture firms started backing smaller teams and projects. That era was riddled with startups, and 99% of them died, but the 1% that lived started to mature and grow, generate real revenues at a profitable rate."

The current phase represents institutionalization of these surviving protocols. With multi-billion dollar assets trading in the wild, owned by sophisticated investors accustomed to quarterly reports and regular management communication, the standards for protocol communication have permanently shifted. Teams that fail to adapt risk being excluded from institutional allocations.

This presents an opportunity for the Solana ecosystem to distinguish itself through professionalized investor relations. If Solana protocols collectively adopt higher disclosure standards and more regular communication cadences, the ecosystem becomes more attractive to institutional capital seeking familiarity and transparency.

The Road Ahead

Solana's evolution toward becoming the on-chain everything exchange depends on continued infrastructure innovation and successful expansion into new market segments. The spot market success driven by prop AMMs provides a template, but perpetuals, options, and traditional financial instruments each present unique challenges.

The Phoenix Perpetuals launch will be a critical test case. If the market microstructure innovations that worked for spot trading translate successfully to perpetual futures, Solana will have demonstrated that its infrastructure advantages extend beyond a single market structure. This would validate the broader thesis that Solana's high throughput and low costs enable fundamentally better trading experiences across asset classes.

Meanwhile, the competitive dynamics between prop AMMs, RFQ systems, and traditional AMMs will continue shaping liquidity provision on the network. The data clearly shows prop AMMs winning in terms of markouts—they're profitable while passive AMMs are bleeding value to arbitrageurs. But market structure evolves, and new innovations may emerge that challenge the current prop AMM dominance.

The biggest unknown remains regulatory. The SEC's guidance on memecoins provided some clarity, but questions remain about how protocols should structure themselves to protect token holders while remaining compliant with securities laws. Until clearer frameworks emerge, the token holder vulnerability problem will persist, creating risk for investors even in otherwise promising protocols.

For those building on Solana, the message from Breakpoint was clear: stay locked in. The infrastructure improvements of the past 18 months represent genuine progress toward making Solana the default venue for on-chain trading. Whether that translates into token price appreciation depends on broader market dynamics, but the fundamental improvements are real and measurable. The path to being the everything chain runs through continued innovation in market microstructure, and Solana's builders appear committed to that journey.

Facts + Figures

• Solana's prop AMMs now account for over 20% of all non-vote transactions through oracle updates, representing approximately 175 TPS of market maker activity competing to offer users better prices

• Oracle updates constitute only about 2% of REV despite being 20% of non-vote transactions, demonstrating the extreme efficiency of these operations which cost less than a penny per update

• SOL/USD spot trading volume on Solana is now competitive with Binance, with on-chain prop AMMs capturing increasing market share as Binance's absolute dollar volume decreases

• The Lightspeed Investor Relations platform will provide comprehensive data coverage for protocols including Jupiter, Jito, Helium, Pump.fun, Orca, Meteora, and others

• Ellipsis Labs announced Phoenix Perpetuals at Breakpoint, introducing a hybrid order book and AMM curve system called "splines" for efficient market making in derivatives

• Humidify generates the most oracle updates among prop AMMs and maintains positive markouts across all timeframes (1, 3, 5, 30, and 60 seconds)

• Coinbase announced enabling any DEX trade through their app by routing through Jupiter, with expected fees around 1% similar to other UI fees

• Currently approximately 30 to 50 different trading pairs are being quoted by prop AMMs on Solana

• Axelar's token traded at approximately $130 million market cap when the aqui-hire was announced, with suspicious trading volume spikes appearing days before the announcement

• The prop AMM growth trend dates back 18 months to November of the previous year, representing sustained infrastructure development rather than speculative activity

• Prop AMMs enable market makers to move their entire liquidity curve with a single oracle update costing less than a penny

• Traditional passive AMMs show negative markouts when measured against prop AMMs over the same time horizons

• The Lightspeed platform is a curated, non-open-access portal for liquid token funds, capital allocators, and asset managers focused on Solana

• Raydium's quarterly report is already live on the Lightspeed platform, with Helium's report next in the pipeline

• The trader known as "YUBQ" (first four letters of their address) has been blacklisted by most prop AMMs except Humidify, with their maximum alpha appearing around the 30-second markout horizon

Questions Answered

What are prop AMMs and why are they important for Solana?

Prop AMMs (Proprietary Automated Market Makers) are a new type of liquidity provision mechanism that solves fundamental problems with traditional order books and AMMs on Solana. They work by responding to oracle updates rather than requiring trades to move prices, which allows market makers to update their quotes extremely cheaply—less than a penny per update. This efficiency enables market makers to quote aggressively without fear of being picked off by arbitrageurs. Additionally, prop AMMs allow arbitrary quoting logic, enabling flow segmentation where market makers can differentiate between sophisticated traders they want to avoid and retail flow they want to capture. This has resulted in prop AMMs being consistently profitable while traditional passive AMMs lose money to arbitrageurs.

How is Solana competing with Binance in spot trading volume?

Solana's prop AMMs have driven SOL/USD spot trading volume to levels that now compete directly with Binance. The key insight is that much of the volume being captured was previously arbitrage activity where traders would buy cheap on-chain and sell on Binance. Because prop AMMs update their prices so efficiently to mirror centralized exchange prices, this arbitrage can now happen atomically in a single on-chain transaction rather than requiring management of positions across venues. This efficiency is pulling volume away from centralized exchanges, with Binance's absolute dollar volume decreasing while Solana's market share increases. The Coinbase announcement to route DEX trades through Jupiter will likely accelerate this trend.

What is the Lightspeed Investor Relations platform?

The Lightspeed IR platform is a first-of-its-kind investor relations portal built in partnership with the Solana Foundation, designed specifically for Solana's institutional capital base. It provides comprehensive data on SOL, the Solana blockchain, and all major applications building on the platform including Jupiter, Jito, Helium, Pump.fun, Orca, and Meteora. The platform also aggregates research reports, monthly notes on Solana, and quarterly protocol reports. It addresses the needs of professional investors who expect standardized disclosure and regular communication cadences similar to traditional finance. The platform is curated and not open access—interested parties can apply at lightspeed.vip.

What is Phoenix Perpetuals and how does it work?

Phoenix Perpetuals is a new perpetual futures DEX from Ellipsis Labs designed to address Solana's historical underperformance in derivatives trading. It applies innovations from prop AMMs to the perpetuals market through a hybrid system called "splines" that combines an order book with the ability to layer an AMM-like curve on top. Market makers can set a minimum price, maximum price, and depth of liquidity within that range, allowing efficient quoting without the high costs that plagued traditional order books. The system also enables flow segmentation, allowing market makers to implement arbitrary quoting logic to differentiate between informed and uninformed traders. Phoenix is currently in private beta with the program found on mainnet.

Why do prop AMMs generate positive markouts while traditional AMMs lose money?

Traditional constant-product AMMs like Uniswap V2 only update their price when trades flow through them, making them inherently susceptible to adverse selection—they essentially require toxic arbitrage flow to keep prices accurate. When prices on centralized exchanges diverge from on-chain quotes, arbitrageurs extract value from these passive pools. Prop AMMs solve this by updating prices through oracle feeds rather than trades, allowing them to mirror centralized exchange prices almost immediately. They can also implement flow segmentation to avoid trading against sophisticated arbitrageurs while capturing retail flow. Markout analysis shows prop AMMs like Humidify maintain positive profit at 1, 3, 5, 30, and 60 second horizons, while passive AMMs show negative markouts over the same periods.

What's the risk to token holders from aqui-hires?

Token holders face significant vulnerability when protocol teams are acquired because tokens typically have no legal claim on equity or acquisition proceeds. In the standard "token plus equity" model, tokens sit junior to equity, which sits junior to debt. When an acquisition occurs, equity holders get paid while token holders receive nothing. Recent examples include Tensor on Solana and Axelar in Cosmos, where teams were effectively aqui-hired leaving token holders without recourse. The ethical solution would be distributing acquisition proceeds pro rata to token holders, but this creates overhead and rarely happens in practice. This structural problem makes token investments dependent on trusting teams to make decisions beneficial to token holders without any regulatory backstop.

How much of Solana's block space is prop AMM activity?

Oracle updates from prop AMMs now represent over 20% of all non-vote transactions on Solana, or approximately 175 TPS of market maker activity. However, these updates only account for about 2% of REV (real economic value) because they are optimized to be extremely cheap—which is the entire point of enabling efficient market making. The updates don't create contention for block space since each market maker updates their own liquidity curve independently. This represents a fundamental shift in what Solana's block space is used for, from purely speculative memecoin trading to sophisticated market-making infrastructure that improves price discovery regardless of market conditions.

What was the sentiment at Breakpoint 2025?

Breakpoint in Abu Dhabi featured a notable split in sentiment between builders and investors. Builders were energized, motivated, and felt they were gaining traction—competition was heating up and they were extremely focused. Investors, however, exhibited "bear market blues"—trying to be motivated but feeling something was wrong. This divergence reflects a disconnect between token price performance (down significantly from early 2025 highs) and underlying protocol fundamentals (often still strong or improving). The conference itself featured extensive discussion of prop AMMs, with one running joke being that "MEV Day should have just been renamed to Prop AMM Day."

What does "the everything chain" mean for Solana?

"The everything chain" refers to Solana's potential to become the platform where any asset across any market in the form of any instrument can be traded on-chain. This requires success not just in spot markets (where Solana excels through prop AMMs) but also perpetuals, options, and potentially traditional financial instruments like equities and forex. The vision is essentially creating an on-chain Binance experience—comprehensive trading across all asset types with competitive execution. While Hyperliquid has dominated perpetuals but struggled with spot liquidity, and Solana has had the inverse problem, the launch of Phoenix Perpetuals and other innovations suggests Solana could achieve both, potentially becoming the default venue for all on-chain trading.