Kyle Samani is back: this time, we have to get rid of CEX in efficiency

From:Kyle Samani

Compile Odaily Daily Planet@OdailyChina); Translator Azuma()@azuma ethI'm not sure

Editor: The man who was the best at calling out Solana, Multicoin Capital, the former co-founder of the previous high-profile retreat, Kyle Samani was killed again

Yesterday evening, Kyle Samani published an article on Thread in a personal X account. In the paper, Kyle Samani, who continues to be agitated by his “shows” (in this case, non-derogatory) rhetoric, uses “efficiency” as a breakthrough in the short-formula under the central narrative, and explains how Solana’s ecological now dominant PropAM will be able to achieve efficiency and even crush the traditional centralization model, proving that PropAM is one of the most important innovations in market microstructures in recent years and decades。

• Articles can be found at:THE MAN WHO SCREAMS "SOL" IS OUT OF THE ENCRYPTION WORLD)Kyle Samani's retreat, something elseI don't know。

Here is the original text of Kyle Samani, compiled by Odaily Planet Daily。

PropAM is one of the most important innovations in market microstructures in recent years, perhaps even in decades。

In order to facilitate your understanding of this conclusion, let's first look at how the market merchants (MM, Market Markers) offered a price at the CEX。

a marketer usually shares a physical co-location with an exchange. each marketer runs algorithms on one server and connects to another server through a single network cable (e.g. 50 metres) of uniform length, which runs the exchange system。

There is a constant flow of data between traders and exchanges。Whenever a marketer sends an order to the exchange — whether it is a price limit, a withdrawal or a purchase order — the exchange needs to broadcast the information to all the other marketers; then the other market chambers re-issue their order on the basis of the new information; so it circulates and repeats indefinitely。

A simple diagram is provided below。

Now let's see how Solana's propAM works。

The beauty of Solana's propAM is that the block chain itself is directly “hosting” the market algorithm. This means that the system no longer needs to send billions of messages between the market and the exchange, and that the market algorithm will operate directly on the same physical machinery as the exchange。

The new diagram follows. Right, just the Solana block chain

There has always been an old-fashioned view in the encrypted money industry that, because decentrization requires communication between global nodes, it is bound to be slower than centralized systems (with higher delays)。

But if you understand this in another wayIn practice, chain-based hosting algorithms may be less delayed than a centralized exchange in traditional finance。

Why do you say thatThis is due to the delay required to update the price of the propAM, which relates only to electronic movement within the same physical silicon。For example, if the previous market list results in a change in the price of SOL-USD, this information will be immediately visible to all propAM and used for the pricing of the next market list. Everything happens inside the same silicon tablet, and two-way communication between servers is no longer required。

It needs to be noted that propAM does require frequent prophecies, but it's not a problem, and it doesn't change the overall facts that I described above。

The most important thing is stillWhen the exchange - in the above case the Solana block chain - directly hosts the propAM algorithm, the price of a marketer changes in real time within the same physical silicon。

propAM has become the dominant mechanism for spot offers on Solana and is narrower than all major CEXs。i expect this market structure to become the dominant mode of chain transactions this year, including spot, perps and even forecast markets。

the biggest challenge for propAM is that there is currently no way to ensure that taker is the best execution because:

• All propAM algorithms are not public (which is actually reasonable, because traditional market algorithms are also private)
• The result is undetermined (non-deterministic) when there are multiple propAM routes。

However, the issue could be resolved. I expect all the other polymer teams to come up with solutions this year, like the Jupiter and the DFlow at the spot end, and the Phoenix at the end of the contract。

The current propAM is still not fully optimized and is also constrained by the Solana block chain itself. This year Solana will launch a series of major upgrades that will significantly improve the performance of propAM, including:

1. (A) HIGHER CU (CALCULATION UNIT) CAPS PER TRANSACTION AND GREATER SIZE OF THE TRANSACTION
2. HIGHER CU CEILING PER BLOCK
3. Alpenglow: reduce slot time from 400 ms to 100-150 ms
4. DoubleZero: Reduce global network delays
5. application-controlled execution
6. multiple parallels。

If, without these upgrades, Solana's propAM on the main network can already offer a narrower offer than any CEX, then imagine how powerful their performance will be as the upgrades get online。