Author: Gu Yu, ChainCatcher

DeFi has not seen a new popular narrative for too long.

However, in the past year, a new concept in the DeFi market that has rarely been noticed by ordinary users, yet has been repeatedly discussed by professional traders and researchers, is rapidly gaining traction: PropAMM.

Months ago, Kyle Samani, co-founder of Multicoin Capital and current chairman of Forward Industries, tweeted that PropAMM is one of the most important innovations in market microstructure in recent years and predicted that this structure would become the main mechanism for on-chain trading in spot, perpetual contracts, and even prediction markets this year. ETHlab has also publicly stated that it regards PropAMM as one of the most important research directions.

In the main battleground of the PropAMM concept, Solana, the PropAMM market represented by Bisonfi, HumidiFi, and SolFi once reached 70% of the total DEX market share this year. Previous DeFi protocols like Haedal, LFJ, and Genius are also vying to launch PropAMM products on other public chains like Ethereum, Base, and BNB Chain.

Jump Crypto reported that in March 2026, Solana's leading PropAMM processed $19.87 billion in trading volume on SOL/USDC and SOL/USDT, approaching the combined trading volume of Binance, Coinbase, OKX, and Bybit for similar USD trading pairs.

However, paradoxically, this new mechanism that has influenced a large amount of on-chain trading volume is almost imperceptible to ordinary DeFi users.

Many native PropAMM projects lack official websites, detailed documentation, and even have an X account that hardly tweets. When users trade on aggregators like Jupiter, 0x, and LFJ, they only find lower slippage and better execution, without necessarily knowing that the quote providers are no longer traditional AMM pools, but rather some closed, professional market-making engines.

This is precisely what makes PropAMM worth paying attention to: it may not change the narrative of DeFi's values like AMM, but it is quietly altering the actual experience of on-chain trading.

1. What is PropAMM?

To understand PropAMM, one must first understand the problems with traditional AMMs.

Uniswap, Curve, Raydium, and Orca are examples of traditional AMMs, which essentially place liquidity into a public pool where trading prices are determined by fixed formulas or price curves. Anyone can provide liquidity, and anyone can trade, with rules that are transparent, open, and composable.

This was once one of DeFi's greatest inventions. However, it also has inherent flaws: price updates are not flexible enough, capital utilization efficiency is not high enough, and it is prone to being exploited by more professional traders who "pick off cheap goods" (MEV). When the prices on centralized exchanges have already changed but the on-chain pools have not had time to update, arbitrage bots will quickly execute trades to reset the prices to reasonable levels. Ultimately, ordinary LPs often suffer impermanent loss, and regular traders may encounter higher slippage and worse execution.

PropAMM takes a completely different approach. Instead of allowing countless ordinary LPs to deposit money into a pool waiting for trades, it is operated by a professional market-making team using proprietary funds and algorithms to continuously provide buy and sell quotes on-chain.

The market defines PropAMM as: an on-chain market-making program that can provide executable buy and sell prices for trading pairs; unlike passive AMMs that primarily rely on fixed curves, it can continuously adjust prices and liquidity behaviors based on proprietary market-making logic.

In simple terms, traditional AMMs are like vending machines where prices are determined by public formulas; PropAMM is more like a professional counter, where market makers adjust prices based on overall market prices, inventory, risk, and trading flow.

The funds in PropAMM are not spread across a wide price curve waiting for rare trades but are concentrated as much as possible in "the places where the next trade is actually going to happen." This is why it can improve capital efficiency.

HumidiFi founder Kevin mentioned in an interview that HumidiFi uses its own inventory and predictive price model for quotes. Traditional AMM liquidity is passively sitting in the pool, while PropAMM updates prices multiple times within each block, even approaching once every 50 milliseconds under the current infrastructure of Solana.

Kevin further stated that with an inventory of about $8 million, HumidiFi can regularly handle daily trading volumes of $500 million to $1 billion. This level of capital efficiency is difficult for traditional AMMs to achieve. The logic is to push the concentrated liquidity of Uniswap v3 to the extreme: all liquidity only serves the next trade, rather than lying dormant far from the current price.

2. Trends and Controversies

Lifinity is widely regarded as the first project to introduce a proprietary AMM model, launching on the Solana chain in January 2022. It positioned itself as an "oracle-based AMM" at the time, actively updating prices using oracle price feeds to reduce impermanent loss and mitigate toxic flow, and is seen as an early prototype of PropAMM.

Although Lifinity introduced the early concept, it was a batch of new generation projects that erupted on Solana starting in 2024 that truly popularized the term "PropAMM" and formed a scaled ecosystem. The earliest core projects in this batch mainly include three: SolFi, ZeroFi, and Obric.

By 2025, projects such as HumidiFi, GoonFi, and Tessera V (launched by Wintermute) began to emerge, among which HumidiFi later rose to become the largest PropAMM on Solana, accounting for nearly 50% of all PropAMM trading volume.

In December 2025, the SoL vault company Forward Industries announced the launch of its self-developed AMM platform BisonFi, once again altering the market landscape, surpassing HumidiFi to become the PropAMM with the highest market share on Solana.

According to RootData statistics, there are currently 12 PropAMM projects in the crypto market, and considering that many projects have not formally disclosed, the potential number of projects is estimated to exceed 20, with more existing DeFi protocols announcing the adoption of the PropAMM mechanism.

However, as the main competitor to the PropAMM mechanism, Uniswap founder Hayden Adams' evaluation of PropAMM is quite restrained. He believes that the "efficiency" of PropAMM comes from external price sources, essentially assuming prices are discovered elsewhere and then injected on-chain; when a particular market itself becomes the largest market, oracles become irrelevant. In contrast, AMMs are more ambitious because they assume they are the place where price discovery occurs.

This statement points out the core controversy of PropAMM: is it enhancing DeFi or turning DeFi into the on-chain execution layer of centralized markets?

The pricing of PropAMM typically relies on external market prices, private models, and professional inventory management. It is very user-friendly but not friendly to ordinary LPs because most users cannot participate directly in market-making; it improves execution efficiency but decreases strategy transparency; it keeps more trading flow on-chain but turns liquidity provision back into a game for a few professional players.

Official Solana articles also candidly mention that PropAMM currently faces several issues: price updates rely on whether block leaders timely include transactions, updates still incur fees, aggregator integration is not completely permissionless, most code is closed-source, making it difficult for users to verify whether they receive optimal prices, and currently, PropAMM does not support truly open liquidity deposits.

In March 2026, DEX aggregation protocol 0x released a report stating that some PropAMMs on the Base network exhibited systematic pricing fraud. The research found that these operators exploited the Flashblock architecture of Base to post highly attractive prices within the last approximately 200 milliseconds before block completion to attract aggregator routing, but immediately adjusted prices when the next block started. Such behavior often leads traders to face an additional loss of 5 to 10 basis points - calculating $11 billion in monthly trading volume, a single liquidity source could lead to user losses of $500,000 each month.

This finding further reveals the dark side of PropAMM: when liquidity is controlled by a few closed-source professional institutions, these institutions may also exploit information asymmetry to harm user interests.

3. Why Pay Attention to PropAMM?

PropAMM is not a paradigm-level innovation like flash loans or AMMs. It will not redefine the fundamental grammar of DeFi, nor will it suddenly make every user aware of a new product form.

But it may represent a microstructural upgrade that DeFi must undergo before achieving mass adoption.

Because most users do not care whether their transactions are based on x*y=k, concentrated liquidity, or a proprietary pricing model of some professional market maker. What they care about is: are the prices good enough, is the slippage low enough, is the execution fast enough, and can they avoid being harmed by MEV and outdated prices.

The answer PropAMM provides is very realistic: for a better trading experience, DeFi may need to accept more specialized, closed, and strategic liquidity. This will have several impacts on the DeFi market.

First, the competitive standards for DEXs will change. In the past, DEXs competed on TVL, the number of trading pairs, and incentive力度; in the future, more important metrics will be execution quality. For the same SOL/USDC or ETH/USDC trade, whoever can provide better execution will gain aggregator routing and user order flow.

Second, the power of aggregators will further rise. PropAMMs typically do not directly target ordinary users but obtain traffic through aggregators like Jupiter, 0x, and LFJ. Whoever controls order routing will decide which type of liquidity gets the trading flow. DeFi is shifting from "pool competition" to "routing competition."

Third, the role of ordinary LPs will be compressed. For long-tail assets, early projects, and community tokens, traditional AMMs remain irreplaceable; but for mainstream trading pairs, ordinary LPs find it hard to compete with professional market makers. In the future, ordinary users may no longer do LP directly but participate in gains indirectly through vaults, deposit products, protocol tokens, or market makers' open quotas.

Fourth, DeFi will resemble traditional finance more. The essence of PropAMM is to bring professional market-making, inventory management, low-latency quotes, risk control, and private strategies on-chain. It makes on-chain trading more efficient and also makes DeFi more like a financial market driven by professional intermediaries.

The reason traditional finance has professional market makers is that complex markets require specialized risk-bearers. Early DeFi believed that code and open pools could replace everything, but the market ultimately proved that in high-frequency, high-volatility, and highly competitive trading environments, specialization remains important.

In a sense, this is a "step backward," weakening the early DeFi ideal of "anyone can be an LP," yet it may allow on-chain markets to genuinely possess the execution capabilities to compete with centralized exchanges for the first time.

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