The Efficiency Gap: Professional vs. Public Liquidity on Solana
A recent research preprint has uncovered a significant disparity in execution quality between professionally managed liquidity pools (propAMMs) and traditional public automated market makers (AMMs) on the Solana network. The study, which analyzed data from late 2025 through mid-2026, highlights that traders using professional pools enjoy drastically lower execution costs—averaging just 0.26 basis points—compared to the 2.59 basis points found in public pools. This divide underscores a shifting landscape where active management is becoming the gold standard for price efficiency in decentralized finance.
The Advantage of Professional Management
The superior performance of propAMMs is largely attributed to their ability to actively manage pricing risk and inventory. Unlike passive public pools that rely on static formulas, professional operators like Jump Crypto’s BisonFi adapt their quotes based on the freshness of market data and the perceived "toxicity" of incoming trade flow. By identifying retail-driven trades versus predatory arbitrage, these operators can offer tighter spreads. However, this efficiency creates a complex environment for swappers, as the best prices are often contingent on the specific routing path and the counterparty’s profile, rather than being universally available to all participants.
The Hidden Cost for Passive Depositors
While traders benefit from tighter quotes, the study suggests that passive liquidity providers (LPs) often bear the brunt of market volatility. In public AMMs, stale quotes allow arbitrageurs to "pick off" liquidity whenever the outside market moves, a phenomenon known as loss-versus-rebalancing. The research noted that while propAMMs saw positive "maker markouts"—indicating the trades remained profitable for the pool—public AMMs often faced negative returns. This highlights a fundamental tension in the ecosystem: low execution costs attract traders but do not necessarily translate into a sustainable investment case for the passive depositors who supply the underlying inventory.
Ensuring Quote Reliability through Routing
As the market moves toward more sophisticated liquidity models, the role of aggregators like Jupiter and 0x becomes critical in maintaining quote reliability. The research identified instances of "spoofing" or price deterioration, where the final execution price on certain chains was significantly worse than the initial quote. To combat this, advanced routing engines are now implementing parity tests and sidelining underperforming liquidity sources. For the end-user, the ultimate goal is a system where the "advertised" price matches the "delivered" price, ensuring that professional management leads to genuine market efficiency rather than just optical advantages.
