Solana - Liquidity on Openbook and Jupiter

Hi there,

I’m a market maker, mainly on Solana. I was one of the top MMs on Mango before it went offline. I’ve been talking with Ivan about providing liquidity for stSOL on Openbook and he suggested that I make a proposal for a grant. Before I get into the proposal and why we think it makes sense, maybe I should give some background/context. You can also just jump to the proposal section at the end (in bold).


Serum - Used to be the main spot market exchange on Solana and was started by FTX. Other projects like Mango and Raydium were built on top of Serum.

Mango -pretty much the most advanced DEX I’ve seen so far, full orderbook exchange offering PERPs, margin trading and lending/borrowing. This is where I started and came to know other people in the ecosystem.

Raydium - an AMM that is built on Serum.

Jupiter - A swapping platform that is an aggregator that gives you the best price for any pair by looking at pretty much all AMMs and exchanges on Solana.

After what happened to FTX, the community wanted to distance itself from FTX-related or FTX-controlled projects like Serum. Openbook is the fork of Serum that has no connection to FTX. It was led by Max Schneider and a small group of people. I was one of the people that helped bring it up and my role was/is to provide liquidity. I was the first to quote there and I currently have the vast majority of the volume.

The transition to openbook was very quick, I was quoting in less than 3 days of us starting to work on the project. Within a week, Raydium had moved, Jupiter integrated and Jump trading started quoting too.

Here is an article from Wired on the initiative:

Some relevant tweets from Max and myself from that article

Here is the volume data for Openbook, you can see I usually have 60%-80% of the entire exchange’s maker volume, the next is Jump at 15%-20%.

To trade on openbook, most people would just use and it will sometimes suggest openbook when it has the best price. You can also trade directly by using a UI like this.

Openbook lets anyone build a UI and host it and earn some fees. The idea of the project is to be transparent and support the ecosystem.


I want to bring more pairs to openbook, so I’d like to start quoting stSOL/SOL pair.

I was introduced to Ivan by Soju, I first talked with Ivan about taking a loan so that I can start quoting stSOL and SOL. Normally, MMs would ask for a fee as well as the “inventory” (assets) to quote the token, but I only wanted the inventory.

I already have a deal like this with Marinade, their mSOL token is similar to stSOL. You can see me quoting mSOL/USDC here with their inventory here. I’m the only MM right now.

I have done this many times with others and not only Marinade, so there a few people that can vouch for me on Solana, including Max Schneider and Daffy (Mango founder). However, Ivan suggested that I, instead, apply for a grant for a smaller amount and then I use that to quote and if it looks good, we can take it from there.

I would suggest a grant of 1k stSOL and 1k SOL. For comparison, Marinade gave me 2.6k mSOL.

Why this is good for Lido:

  • Providing liquidity means it’s easier to buy/sell/stake/unstake stSOL on Solana.
  • Helping Openbook helps the ecosystem on Solana which is good for all of us.
  • You can always view my live quoting online on and see if my prices are good on relative to other venues (mostly AMMs).

I also wanted to cover a point that Ivan discussed with me offline. This is about using an AMM vs a real market maker.

In summary, AMMs originated on Ethereum because the transaction speed is very low so it’s an approximate solution to what a real MM does. AMMs are simple to use and are fully onchain and they don’t need a fast blockchain at all. However, they sacrifice a lot to achieve that, they are extremely inefficient in terms of PnL.

AMMs are unaware of actual market price and the outside world e.g. if stSOL has a significant change in price because someone staked a large amount of SOL, an AMM will continue letting users buy at the current price and essentially buy at a discount until the price is pushed all the way to what it should be, whereas a real MM would simply quote a new price that reflects what they think is the correct market price.

AMMs only make money when most of the flow is retail (normal users buying/selling) and the market is going sideways (zigzag), but when there’s a lot of bots and the market is moving mostly in one direction, they lose money and they call that “impermanent” loss i.e. loss/negative PnL On Solana, AMMs don’t make much sense, because we have the speed to have an orderbook exchange like Serum/openbook/Mango which can have a simple interface (like to swap for users so you still offer the ease of use to retail users.


1 Like

Why choose to quote stSOL/SOL here while quoting mSOL with a stablecoin. any concern on the coin pair selection?

If the grant is settled, LEGO will give you the tokens as the inventory. If you stop quoting, could Lido get the coins back?

Any measure to judge if it “looks good”?

I’m actually working on quoting mSOL/SOL right now, I just need to implement the model. You’ll see it very soon. It should have more volume than mSOL/USDC.

I initially requested a loan i.e. I’d give it back eventually, however Ivan suggested a grant is easier to get. I’m happy to have it as a loan instead but hopefully would be a bigger amount so I can have bigger order sizes.
Btw, I don’t see why I’d ever stop quoting, there is really no reason to stop.

Yes, you can compare liquidity on before/after and see how often openbook is giving a better price. Also, if the volume on openbook hits above 200k$ at least, it’s definitely good for the ecosystem in general because right now the ecosystem really needs more users and a lot of users look at the current volume and available liquidity and decide to go elsewhere. Just as an example, I’ve just had a call today from Michelle from Solana Foundation talking about exactly this issue of attracting more users. I also had someone else last night ask me where to sell 100k$ worth of SOL and eventually they went to Coinbase because the liquidity was not there on Solana/Openbook, if I had enough liquidity, I’d have gotten that trade.

Btw, sorry for the late reply, I’ll turn on email notifications.

I support this proposal as

  • as stSOL will become more liquid with better prices
  • and it gives more depth (bigger orders)

@jbeezy what do you think?

Hey thanks for the proposal!

After syncing with Ivan, we had a couple comments/questions here:

  1. Trust assumption on the loan of stSOL and SOL:
  • Even though it is not a huge amount, there should still be some mechanism to get back the (st)SOL tokens lent if the MMing engagement were terminated in the future. What would assure this, trust-wise? What guarantees would be put in place?
  1. Performance and metrics:
  • Could we reach some MM performance metrics for this proposal? Possibilities:
    2.1. Average SOL-denominated volume before and after this engagement were to be started (SOL-denominated because USD-denominated would have too much influence from SOL’s price moving) + because in order book based exchanges, volume is a good metric for liquidity;
    2.2. Book depth at ±1%;
    2.3. Ideally there should be some commitment in increasing points 2.1. and 2.2. by some % number post engagement starting.

Thanks in advance for any clarity you can provide here :slight_smile:

Hi Carvas,

I know it’s very late now, honestly I wasn’t sure if you guys are still interested and I was working on other projects e.g. quoting BONK and working with other Solana exchanges.

Let me address each point please:

  1. Trust assumption on the loan of stSOL and SOL:

I can give a few reasons:

  • I’ve worked closely with people such as Max Schneider and Daffy who can vouch for me. These two guys in particular are central to the Solana ecosystem and they know me very well, on a personal level and we had similar deals before for higher amount than what I’m asking, please do talk with them.

I had similar deals with Marinade and recently BONK. You can ask David from Marinade about me or Nom from BONK. If you don’t know them, I can put you in touch.

  • We can limit the amount to something you’re more comfortable with e.g. 15k$ worth of stSOL, altho I’d prefer at least 30k$ because SOL price has gone a lot since I made this post. I can still make a big difference even with a small amount. You can then choose to increase that amount later.

  • There’s really no incentive for me to not pay back 15k$ worth of tokens given the damage it would do to my reputation that I worked for a year now to build. It wouldn’t make sense from a selfish point of view.

  1. Performance and metrics:

This is easy to check. As an example, BONK-USDC market had about 20k$ volume and very wide spread before I started quoting. Now it’s 500$k and the spread is <30 bps, and I’m almost always online (at least 95% of the time), that’s despite it being a volatile market. For less volatile markets like SOL-USDC (or stSOL-USDC), I can quote tighter (you’ll see ~10 bps for SOL-USDC).

One final IMHO important point:

Please note that I also help create the market and keep it going. That means:

  • creating the market on openbook.
  • cranking
  • updating “serum-vial” to stream trades
  • making sure all UIs (e.g. Solape and Marginfi) have it
  • quoting the market and providing liquidity.

This is not all done by me personally but I organise everything to keep it running because I know and work with all those different teams/people like Triton, Mango, UI teams, etc. I think I can confidently say that I have a good role in openbook as a project (beyond having most volume) which is a central project for the Solana ecosystem and I’m fortunate to be in this position after starting a year ago from scratch.

Thank you! and please feel free to talk to me on telegram (Ivan has my username), it will be much much faster than these forums.

In general I’d say this is interesting. Especially starting with a smaller amount and progressively increasing as spread and volume metrics are tracked and improve.

For the stSOL-USDC quoting, would you take the vol risk? So, would the amount of stSOL lent out be the amount returned after/if the deal is terminated at some point in the future?

@Ivan will have his final thoughts but from my perspective this seems very reasonable.

Yes, I will return the same amount you gave me. I’m only asking for stSOL btw, not SOL. So, I will be taking the risk.

Normally, I’d ask for a call option but since you can’t mint stSOL (like e.g. MNGO), that wouldn’t make sense. I’d suggest instead a small monthly payment to make up for the risk I’m taking, we can discuss offline. Please keep in mind that I also take care of everything as I mentioned above e.g. creating the marking, updating UIs, cranking, etc, I also work on openbook in general, for example: