Toly personally engaged in "pulling down".

Written by: SpecialistXBT

"On-chain Nasdaq"

It is well-known that Solana has long had a PerpDEX dream.

When founder Toly conceived the Solana architecture in 2017, the goal was to create a blockchain that was "fast enough, cheap enough, fast enough to run a usable order book on."

Nine years later, Solana's most successful PerpDEX, Drift, was hacked for $285 million, and since then has not recovered.

The "sudden death" of Drift did not shake Solana's obsession. In the foundation's narrative, Solana's ultimate goal is ICM, the "on-chain capital market"—moving stocks, commodities, and derivatives onto the chain to create a permissionless Nasdaq.

Previously, Solana could be considered an "inoperable" public chain for PerpDEXs, unworthy of this narrative. However, just last month, Solana's Alpenglow consensus layer upgrade entered community validator testing. This new consensus mechanism aims to reduce Solana's transaction confirmation time from around 12.8 seconds to about 150 milliseconds, approaching the matching speed of traditional securities exchanges. The technical obstacles in the way are being removed piece by piece.

Solana purchased the @perps account

The foundation wants a "flagship" PerpDEX more than ever.

Beloved "Phoenix"

This PerpDEX is called Phoenix, and the development team is Ellipsis Labs.

On Solana, Ellipsis Labs is a reputable name. This team is led by Jarry Xiao and Eugene Chen, who launched their self-operated AMM SolFi at the end of 2024, a trading venue without a frontend, not accepting retail liquidity providers, and relying solely on market makers' own funds for quotes. After SolFi went live, its trading volume surged rapidly, reaching 60% of the total AMM trading volume on Solana at its peak.

Phoenix is the product of this team transferring the same skills to contract trading. According to Ellipsis Labs' own statement, market makers can update quotes at lower costs, thus maintaining tighter spreads and deeper books, while traders also are exempt from gas costs.

An entirely on-chain perpetual contract order book running on Solana, without relying on any off-chain components, had indeed not been achieved before Phoenix.

The foundation evidently thinks so too. Over the past two weeks, Toly and several foundation members repeatedly forwarded and commented on Phoenix, with a visible increase in promotional density.

However, the foundation members' promotions sparked backlash from the community.

Other Solana-based PerpDEXs, such as Pacifica, Bulk, and Jupiter, are doing the same things but have never been mentioned by the foundation.

Pacifica's founder, Constance, expressed restraint, saying, "The team chose Solana in 2025, has never received any funding from the foundation, nor has it raised money from investors. We just want to make a good product and let the market decide." She stated that people often ask if Pacifica's growth comes from foundation support, and the answer is no. In her view, this kind of tribalism, forcing developers to cater to specific needs, will burn existing bridges before more have been built."

Bulk's co-founder kdotcrypto expressed regret over the foundation's bias: "They promote what they believe benefits them the most. Pushing others away just because a team meets a certain standard turns friends into enemies."

Are interests aligned? Yes

The logic on the foundation's side is, in fact, self-consistent.

Toly's core argument is that he prefers protocols that run entirely on-chain and can interact with other smart contracts, because only such protocols can generate income for Solana's validators. PerpDEXs like Pacifica and Bulk that conduct order matching off-chain, no matter how much trading occurs, do not provide a single cent to Solana.

Solana developer Anza's Max Resnick directly pointed out, "Pacifica is to Solana what Hyperliquid is to Arbitrum; even if Pacifica truly overtakes Hyperliquid, it won't benefit Solana in any way."

Solana's shareholder, Multicoin partner, also endorsed this behavior of "branding alliances": "The chain can be neutral, but the foundation doesn't have to be; it is only natural to focus limited resources on the teams they are most optimistic about."

The logic of the "Solana gang" roughly follows this pattern. A public chain is like a shopping mall that survives on rent and sales commissions. Protocols that run entirely on-chain are like merchants renting shops in the mall, paying commissions based on sales. PerpDEXs that match orders off-chain are more like companies that only print the mall's address on their business cards, conducting actual business elsewhere. Customers come looking under the mall's banner, with no money staying in the mall.

Kdotcrypto and Pacifica reject this analogy.

Bulk's rebuttal is that its shop is indeed within the mall. Bulk is operated by Solana validators and shares the same validator set as the mainnet, with 12.5% of exchange revenue distributed to Solana validators. Kdotcrypto calculated that the value brought by this revenue share vastly exceeds that of a hundred thousand on-chain transactions.

Pacifica's Constance pointed out that users must first bridge their funds to Solana to use Pacifica, which itself creates a tangible network effect. Moreover, Pacifica has made SOL the platform's first and only non-stablecoin collateral asset.

Toly acknowledged that there is an overlap between Bulk and validators, but this overlap is merely "the same group of people casually doing their job," not "the same security system."

On the mainnet, SOL holders can vote to switch on a functionality to forcibly change fee rules, but they cannot do so on Bulk, because bulk's revenue share is determined by the operator running it, and the SOL in the stakers' hands cannot influence it. While both systems share the same group of operators, saving costs does not equate to being tied together. Toly likened this relationship to the overlap between Wormhole cross-chain bridge guardians and Solana validators: it looks like one group of people but effectively operates independently.

As for validator income, Toly stated that the mainnet can rely on high-frequency trading to earn income through burning base fees; even if only a tiny amount is burned per transaction, at a load of one hundred thousand TPS, this still accumulates to billions over the year.

"You are not our brothers"

Solana has the right to make its own choices.

The foundation is entitled to bet its limited resources on what it believes is the correct architecture, which is its right. A blockchain's neutrality does not mean the foundation must equally distribute resources to every team; prioritizing resources towards its most favored direction is inherently justifiable. Toly and Tushar did not say anything wrong about this.

However, the arrogance displayed by the Solana team is another matter.

A tweet from Toly called other Solana PerpDEX teams enemies destined to be "infinitely forked". Meanwhile, foundation members repeatedly shared a tweet, unverified, claiming Phoenix is "six times cheaper" than Hyperliquid.

This "six times" only holds true for a carefully chosen trading pair, specifically the only gold RWA contract on Hyperliquid that has turned off its growth mode and thus carries full fees. In regular crypto trading pairs on Hyperliquid, Phoenix is only approximately 1.23 times and 2.88 times cheaper in maker and taker fees, respectively; including common rebate discounts that traders generally use, the gap is further narrowed.

Compared to most growth-mode HIP-3 contracts, Hyperliquid is actually cheaper.

Large trading firm WhiteWhale's testing conclusion on Phoenix is quite harsh: it forces desktop use, with visible liquidity depth being only about one-fifteenth that of Hyperliquid, lacks advanced order types, and requires an invite code for access.

Phoenix may not be inferior, but it is just too early.

A product that is not ready to handle traffic, pushed into the spotlight by the foundation with the loudest voice, damages not Hyperliquid, but Phoenix's own reputation.

PUMP is not a native Solana team, yet it dominates on Solana, while Pacifica has never taken a cent from the foundation and still becomes the highest trading volume PerpDEX on Solana. The data that real users vote with their feet cannot be bought with the foundation's promotional budget.

Traders will not blindly trust the foundation's endorsement; the winner is the product that offers the best experience.