Proprietary Market Makers Dominate DeFi Trades
The decentralized finance (DeFi) landscape is undergoing a significant shift as professional trading firms, also known as market makers, are increasingly participating in on-chain trades. A recent analysis from DWF Ventures found that proprietary automated market makers (propAMMs) account for around 15-27% of daily on-chain DeFi exchange volume.
In particular, the Solana blockchain has become a hub for propAMM activity, with one study estimating that over 90% of SOL-to-stablecoin trades are being routed through Jupiter's system. This means that users who think they're trading directly on Solana may actually be sending their orders to professional market makers.
PropAMMs have a significant advantage in terms of pricing and execution, as seen in Jump Crypto's research. The firm found that propAMM fills for SOL-USDC trades executed at a median price 0.72 basis points from the benchmark centralized-exchange midpoint, while 91.9% of fills were cheaper than the estimated cost for the lowest institutional centralized-exchange fee tier.