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Hey all, happy Tuesday. While ETH outperformance continues to dominate market headlines, something interesting is brewing on Solana. Its DEX landscape is shifting fast, with “prop AMMs” seizing a growing share of trading volumes in recent months. What are they, and why does it matter?

ETH’s Giga-bid

ETH’s outperformance remains a dominant theme to start the week, with both ETH/BTC and ETH/SOL trading higher, up ~1% and ~3.7%, respectively. This outperformance is in large part being driven by well-capitalized players giga-bidding the asset. Both digital asset treasury companies (DATCOs) and ETFs have materially increased their ETH holdings in recent times. In fact, ETH is being stacked by both of these players at a faster rate than both BTC and SOL are.

Looking at the share of ETH held by DATCOs, these companies acquired .32% of the ETH supply on Monday alone. These companies now hold 1.89% of the ETH supply, up from .03% at the start of June.

ETH DATCOs are the most traded stocks in this sector, as well. While BTC DATCOs account for 92% of the market cap of the sector, ETH DATCOs accounted for 73% of the sector’s trading volumes yesterday. While the share turnover may be a sign of fervor, higher volumes materially improve the DATCOs’ ability to acquire more of the asset. More share turnover allows the company to sell equity through ATM offerings with less impact on market price, in addition to supporting a more liquid options chain for convertible debt buyers to hedge deltas. Yesterday, Tom Lee’s BMNR cleared $9.13b in volume, while MSTR only cleared $4.15b.

Examining ETF flows, ETH is the fastest horse as well. Looking at ETF inflows, ETH ETFs added $326m last week, more than BTC at $253m and SOL at $3.7m.

This comes after a blockbuster July where ETH ETFs brought in $5.4b in AUM. This impact is more apparent when examining the ETF flows relative to the underlying asset’s market cap, where ETH ETFs acquired 1.36% of the ETH supply, while BTC and SOL ETFs only added .26% and .15%, respectively.

With the bid presented between both DATCOs and ETFs, ETH has the hot ball of money. While the asset seemed left for dead just a few months ago, the multi-year highs in price made last week serve as a good reminder of just how quickly crypto markets can run the cycle of “it’s so over” to “we’re so back.”  

— Luke

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Introducing the Chainlink Reserve — an onchain strategic reserve of LINK tokens.

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Prop AMMs: Changing Solana’s market structure

In recent weeks, there’s been a lot of renewed chatter about “prop AMMs” on Solana. But what exactly are they, and why should we care? First, let’s narrow down the definition. Prop AMMs are private AMMs where the liquidity is protocol-owned (i.e., provided by the team themselves; no external LPs) and quotes are adjusted based on oracle prices. Since oracle updates are about 100x less compute-intensive than swaps, the market maker in a prop AMM can push quick updates to their internal pool parameters many times a second, enabling them to quote tighter spreads compared to traditional public AMMs with pooled liquidity.  

Below, we see that prop AMMs on Solana have consistently registered >$5Bb in weekly volume since mid-June. A new market entrant — HumidiFi — has overtaken SolFi in trading volume in the past two weeks. 

Although prop AMMs remain closed-source, aggregators like Jupiter and Titan can still interact with their contracts and execute transactions through their pools. This feature has been key to their success, particularly for highly liquid assets like SOL-stablecoin or stable-to-stable pairs. The chart below shows that prop AMMs like SolFi, ZeroFi and Obric have a higher percentage of their volume (>85%) coming from DEX aggregators. In contrast, the opposite happens with traditional DEXs that are more reliant on memecoin volumes. Raydium and PumpSwap, which derive >80% of their volume from memecoins, have the lowest percentage of volume coming from aggregators. These DEXs originate most of their volume from trading platforms like Axiom, or bots hitting their programs directly.

In this regard, market share per asset type and volume composition across Solana DEXs point toward increased specialization. The chart below shows monthly SOL-stablecoin volumes by type of DEX. We observe that prop AMMs have gradually taken over SOL-stablecoin volumes since their emergence in November 2024, now accounting for ~57% market share. Another fascinating insight from this chart is that Solana’s microstructure has been more favorable to prop AMM + routers than onchain orderbooks (e.g., Phoenix), which are insignificant on the L1 today.

In contrast to the trend above, traditional AMMs like Raydium and PumpSwap remain more efficient in handling liquidity for long-tail assets like memecoins. Prop AMMs are virtually absent from this vertical because it’s too risky for them to actively manage liquidity for new assets, many of which don’t even have live oracle price feeds.

Looking forward, we foresee that DEX dominance will increasingly bifurcate based on asset maturity. On the one hand, long-tail assets (e.g., new memecoins) will be dominated by traditional AMMs like Raydium and Pump. On the other hand, it appears that prop AMMs like HumidiFi and SolFi will gradually dominate liquid markets (e.g., SOL-USD, stable-to-stable pairs).

— Carlos

1. Is MSTR a Ponzi? (Lyn Alden & Andy Constan) – What Bitcoin Did

Lyn Alden and Andy Constan go deep on Bitcoin treasury companies like Strategy, debating whether they’re outright Ponzi schemes or legitimate vehicles for leveraged bitcoin exposure. They discuss how these companies actually generate returns, why premiums to NAV exist and the conditions that could cause the model to unravel. Lyn lays out her cautiously bullish case for well-run treasuries, while Andy argues that the structure depends on new capital in ways that can’t last forever.

2. The Evolution of Speculation

Kyle from DeFiance Capital published an opinion piece discussing capital formation in crypto over time. From ICOs (2017-19) to low-float, high-FDV tokens (2020-23) and the outperformance of extremes (either pure memes or fundamentals-driven assets) in the past two years, Kyle argues that we’re entering an institutional era where cynicism and short-term thinking are costly. Using Hyperliquid as an example (no VC funding, HYPE launched as a purely onchain token, $1b in annualized revenue), he contends that the upcoming wave of digitalization will bring more quality founders to the space, ultimately leading to many Hyperliquid-like opportunities for investors who adopt a long-term mindset and operate as partners alongside teams.

3. I played around with 20+ Web3 AI products, here is what I found…

Jeff (@Defi0xJeff) published a blog post reviewing 20+ Web3 AI tools and highlighting seven standouts across trading signals, research and execution. The piece finds the category early but useful: Gigabrain offers quick alpha analysis with exact trading set up for perps, but the product is quite expensive; Rei’s Unit gives solid high-level analysis but lacks live onchain data; Almanak and Cod3x automate strategies but have some UX frictions; Senpi offers PnL analysis and smart-money copy trading; xFractal provides comprehensive token analysis on Solana; and Elfa provides strong social listening and sentiment APIs.

It’s the summer of DATs and the party is going strong. 

But when October rolls around, everyone will be looking to DAS: London to hear from these meta-defining voices on where things stand and where they’re headed.

Get your ticket today with promo code: 0X100 for £100 off

📅 October 13-15 | London