Proprietary AMMs Dominate DeFi Markets, Challenging Decentralized Vision

Decentralized finance (DeFi) has taken on a new form in recent times. Proprietary Automated Market Makers (propAMMs), a type of trading platform, have become increasingly prevalent in DeFi markets.

According to an analysis by DWF Ventures, propAMMs account for around 15% to 27% of daily on-chain DEX volume. However, when it comes to specific trades, such as SOL-to-stablecoin trades routed through Jupiter, propAMMs have a significantly higher share, with over 90%.

This shift towards propAMMs has significant implications for the DeFi ecosystem. The original vision of decentralized exchanges was to create open markets where anyone could see the pool and trade against it according to rules written into code.

However, propAMMs have introduced a new dynamic to DeFi. These platforms are essentially electronic currency dealers installed inside a blockchain, with private software watching outside markets and continually changing what they're willing to buy or sell for.