Dark AMMs, JIT and future Perp Market Microstructure Innovation Dark AMMs are a new class of AMM that have popped up recently that enable market makers to provide superior resting liquidity for spot assets. They make use of some tricks around CU usage and how the tx scheduler works to reduce adverse selection for the market maker. They’re “dark” in the sense that their quoting logic is opaque compared to traditional AMMs. They’ve started dominating spot volume on Solana as more market makers move from quoting on CLOB/AMMs to running their own Dark AMM. Can Dark AMMs be used for Drift’s perps? Yes! Drift’s design enables JIT liquidity, i.e., the ability for a market maker to place and fill a user’s order atomically. Whereas a vanilla CLOB enforces strict matching logic, making it incompatible with Dark AMMs, Drift’s support for JIT liquidity enables a market maker to layer their own Dark AMM on top of Drift. How would it work? 1) Market makers can write a Solana program which has an instruction that takes a user’s order and does a JIT fill. 2) The market maker continuously sends CU optimized txs that update the program’s params which determine the quoting logic. 3) The program exposes a method to simulate the program’s current quotes. 4) Drift keeper bots add the Dark AMM program as one of the liquidity sources they use to fill user orders. Bots are also able to fill against the Dark AMM by calling into the program directly. They both simulate to determine if they can successfully fill against it. Similar to how Jupiter aggregates across multiple Dark AMMs for spot, Drift is able to do the same for perps. This is only possible because Drift provides a simple JIT interface for any market maker to innovate on top of it, meaning they can quickly iterate on improving resting liquidity for users without needing to deploy a new exchange. This ultimately speaks to the broader power of composability in DeFi. As a core primitive hardens (i.e., the Drift risk engine), further innovations can be layered on top. Excited to see market makers experiment with this. Please reach out if you’re interested 🙏🏻