Who will take on the routing orders for cryptocurrencies and tokenized stocks? Rialto bets on propAMM.

Written by: KarenZ, Foresight News

Once stock tokens are on the chain, the market will quickly face a more specific question: how to create continuous, reliable, and reasonably priced trades for these assets on the chain.

Rialto addresses this layer. It defines itself as an on-chain spot exchange, supporting asset types such as crypto assets, stock tokens, ETFs, and commodities. But what Rialto truly emphasizes is not just the "category coverage" itself, but also the quotes, market making, routing, and settlement behind each order.

What is Rialto's background?

Rialto has come to the forefront in the context of collaborating with Robinhood Crypto, Offchain, and Arbitrum. This combination essentially indicates Rialto's position.

On the team side, Rialto team member Riley (@riley_gmi) previously worked at trading-related organizations such as BlockTower, Arca, ASXN, and RockawayX. This background resonates with Rialto's product direction. Another team member, boccaccio, formerly worked at the crypto media and information platform Blockworks.

Furthermore, according to a tweet from Telegram and Discord bot Whalebot Web3 developer Icebergy posted on July 3, he has joined Offchain, covering Offchain Labs' venture capital department Tandem, Arbitrum incubator Onchain Labs, and claims to have been collaborating with Rialto for the past few months.

What is Rialto? How does its core mechanism work?

Initially, Rialto only supports the Robinhood Chain network and has launched more than 90 Robinhood stock tokens along with major crypto assets on the Robinhood Chain. It is important to clarify here: users are trading stock tokens, not the original stocks in the brokerage account.

Its trading process can be condensed into three steps: quoting, sorting, and settling. After a user initiates an order, Rialto requests real-time quotes for the order size from all candidate liquidity sources, including propAMM and traditional DEX pools; then it sorts the net outputs after deducting network costs; and finally, it atomically executes the winning path on-chain. An order is either fully filled according to the agreed conditions or canceled. An order can also be split among multiple sources under certain circumstances to achieve a better result.

The core here is propAMM. Rialto defines propAMM as an on-chain market maker that quotes using its own inventory and pricing logic. The difference from common AMMs is that traditional AMMs primarily rely on pool balances and fixed formulas to form prices, while propAMM continuously references external markets and actively updates quotes. For crypto assets, reference prices can come from order books of deeper liquidity exchanges; for stock tokens, reference prices can come from the major listing exchanges of the underlying stocks.

Rialto further breaks down the quoting logic of propAMM. The first layer is the fair price, where the latest oracle updates provide the contract with the current fair price of the trading pair, forming the optimal buy and sell prices.

The second layer is inventory management. You can think of propAMM as an automated market making counter that holds two types of assets, such as stock tokens and USDC. Market makers usually do not want to accumulate too much of a particular asset. If the stock tokens in the vault are already skewed towards too many, the system will lower the quotes for users continuing to sell stock tokens to the pool, making such transactions less profitable; conversely, it will be more inclined to let users buy stock tokens. In this way, the price itself becomes a tool to adjust inventory.

The third layer is oracle updates. The slower the oracle updates, the greater the quoting penalty; the spread will widen with block delays to reduce the risk of outdated prices being arbitraged.

The fourth layer is the liquidity curve, where buy and sell price differences form near the fair price, and the further away from the mid-price, the deeper the distribution, similar to the depth distribution in an order book.

Rivo Altus is the propAMM operated by Rialto, which will quote for stock tokens and cryptocurrencies and is one of the candidate liquidity sources participating in competition for each order. Only when it provides the best execution result in a transaction will Rivo Altus become the final path.

Additionally, Rialto has launched a partnership program that allows trading applications, terminals, bots, or agents to route order flows. Currently, Rialto's exchange API has been integrated by protocols such as Arcus, Index, and LI.FI.

Rialto's competitive point is turning routing authority into trading quality

Rialto's competitive point is right here. It places different liquidity sources at the same pricing table, re-evaluating each order. propAMM, Rivo Altus, and traditional DEX pools all have to speak with net outputs. Users do not need to judge which pool is deeper nor manually compare paths; Rialto will make the selection based on execution results.

Rialto mentions that aggregators will turn the scattered propAMM quotes into a single best buy and sell price and route the orders to the best pricing source, splitting orders if necessary to access the optimal depth from multiple sources.

This also distinguishes Rialto from ordinary trading frontends. The value of an ordinary frontend lies more in its entry and display, while Rialto emphasizes order execution more. Who can find better quotes, who can organize multiple liquidity sources, is closer to the key position in on-chain capital markets.

Regarding fees, Rialto will show the fees before the user confirms the trade and incorporate the fees into the final quote. Its trading fee is 0.50% (the platform fees for several currency pairs tested by the author were 0.1%). If users trade through third-party integrated entry, additional integration fees may apply.

Additionally, on-chain settlements will also incur network gas fees, usually paid by the user's wallet. When using gasless trading, the relay covers the network fees. If a transaction is canceled, the trading fee will not be charged, but the gas consumed for submitted transactions is non-refundable. Gasless trading compensates for the experience part. Users can choose to have the relay pay the network fees on their behalf.

According to the latest data from Rialto’s official website, ETH is the most actively traded asset on the platform, with a 24-hour trading volume of approximately $128 million; in contrast, the trading volume for individual stock tokens mostly stays in the range of several thousand to several tens of thousands of dollars.

Conclusion

What Rialto needs to prove in the future is very specific: whether the tradable assets on Robinhood Chain can expand, whether Rivo Altus's quoting can remain competitive amid volatility, whether external liquidity sources are sufficiently rich, and whether the net outputs after routing can consistently outperform user-searched trading paths.

If these questions are gradually validated, Rialto will be fighting for not just trading entry, but the authority for order routing. The on-chain market for stock tokens will not only be determined by the number of assets but will ultimately come back to each order: who quotes? Who fills the order? Who helps users achieve better results?