Proprietary AMMs (Prop AMMs) on Solana
Proprietary Automated Market Makers (Prop AMMs) are a significant innovation within the Solana decentralized finance (DeFi) ecosystem, reshaping how liquid assets are traded . Solana itself is a Layer-1 blockchain designed for high throughput and low transaction costs, providing the infrastructure for these applications .
Key Characteristics and Examples
Prop AMMs are programmable liquidity pools that utilize oracles for real-time price discovery . Unlike traditional AMMs, which often rely on the last trade price, prop AMMs offer tighter spreads and better prices for traders, particularly for large-cap assets .
Notable examples of Prop AMMs on Solana include:
HumidiFi, in particular, has seen rapid growth, becoming one of Solana's largest decentralized exchanges (DEXs) by trading volume
56. It processed over $25.6 billion in trades in just 74 days and reached a peak daily volume of $1.68 billion
6.
Operational Model and Market Impact
Prop AMMs operate differently from traditional models like Raydium
8:
- Private Liquidity: Prop AMMs often offer private, vault-based liquidity 3. They do not have public frontends and quote prices privately, relying on a single market maker 3.
- MEV Reduction: This private structure helps shield order flow from high-frequency traders, reducing vulnerability to Maximal Extractable Value (MEV) 3.
- Aggregator Dependence: Prop AMMs primarily route volume through DEX aggregators such as Jupiter and Titan 34. The rise of these aggregator platforms has been crucial in enabling prop AMMs to capture significant retail trading volume .
- Market Dominance: Prop AMMs are increasingly capturing mature, liquid markets, such as SOL-stablecoin pairs 3. Recent data shows that prop AMMs account for 13% to 24% of monthly DEX volume since January 2025 3. In September, Prop AMMs, led by HumidiFi, surpassed traditional AMMs in Solana DEX volumes for the first time 4. HumidiFi alone accounted for nearly 50% of SOL-stablecoin trading volume in September 4.
While prop AMMs offer benefits like improved trading efficiency and reduced impermanent loss for liquidity providers, their proprietary and often opaque nature raises ongoing concerns about transparency and decentralization
5. Traditional AMMs like Raydium continue to dominate long-tail assets and memecoins
35.