PropAMMs Cut Solana Trade Costs, But Depositor Returns Plummet

A recent study compared the trade costs and returns of Solana (SOL) on propAMMs, which are pools controlled by professional operators, versus public automated market makers (AMMs). The results showed that propAMMs had a significantly lower reference-relative execution cost proxy, at 0.26 basis points, compared to 2.59 for public AMMs. This means that traders who use propAMMs can get better Solana swap prices.

However, the study also found that passive pool depositor returns crashed in this scenario. A trader wants more tokens for the same input, while a depositor supplies the inventory others trade against and needs compensation for the risks that inventory carries. Low execution cost can attract the first participant without being a sufficient investment case for the second.

When looking at maker markouts, which compare a fill with a later reference price, propAMMs showed a gross maker markout of +0.37 basis points, while public AMMs had -0.22. This suggests that propAMMs are providing better prices to traders, but it's essential to note that lower swap costs do not guarantee reliable quotes or positive LP returns.