Lightspeed Prop AMMs Are Solana's Biggest DeFi Innovation | Chris Hermida
Aug 29, 2025
Chris Hermida, co-founder of Switchboard, dives into the innovative world of proprietary Automated Market Makers (prop AMMs) on Solana. He discusses their rise, functionality, and the critical role of order flow in decentralized finance. The episode explores how prop AMMs enhance market efficiency and transparency, marking a shift from traditional models. Hermida also highlights the competitive dynamics within the DeFi landscape and the influence of advanced technologies like oracles on price discovery, promising an exciting future for users.
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Oracle-Backed AMMs Beat Passive Pools
- Prop AMMs are programmable Oracle-driven AMMs that update pricing from off-chain sources to compete for aggregator order flow.
- They deliver tighter spreads and more reactive liquidity for large liquid assets than passive AMMs.
Aggregators Enabled The Prop AMM Wave
- Aggregators like Jupiter funneled retail flow on Solana, making Prop AMMs viable by giving a predictable access point to orders.
- That flow concentration lets Prop AMMs quote tighter spreads and reduce LP adverse selection.
Follow The Order Flow
- Focus development where end-user order flow exists because volume validates the cost of running reactive Oracle updates.
- Prioritize integrations with dominant aggregators to capture most retail volume.