💱 Interleaving the SDEX & AMMs

[JFWooten4]

This discussion extends decentralization points made in note 2.1.1, SCP#25, and Cede timeframe. Its principles favor efficiency over incumbent business models employed by community members that have directly helped me over the years. Sorry about that, but keep innovating because you all are incredible people! 🤝

The inspiration for this post came from @earrietadev's @FxDAO community.¹ Last week, Soroban AMM troubles emerged after a contract upgrade running the platform's only liquidity pool.² This stopped users from withdrawing their funds and placed all deposits at risk.³ 😐

The nuances of these developments are still very new to society at large, likely because so few presently understand the immense centralization of risk in the trading markets. It's my understanding that this is why DEX aggregation hasn't been widely discussed across the industry; it's clearly no fault of any Stellar developers. That said, it drives directly into one of our shared objectives:

The Stellar Network should support decentralization wherever possible, but not at the expense of the majority of its values.

This post explains that perspective as clearly as I can with five days to write it. Ideally, it's the start of a wider conversation, as there is certainly nothing I can do to stop you from deploying anything you want on Soroban. It's part of the endless debate of decentralization quandaries that I believe SCP so eloquently balances. 🧠

1. Accessible Education Breakthroughs

Speaking of Soroban news, I'd like to highlight @SirTyson for his outstanding recent informational videos.⁴ It's rare to find a developer of such high caliber as Garand who can also explain their work in plain English. This ongoing treat stands strongly as a magnet for new users discovering the network.⁵ 🧲

⁶

Garand's sentiments in this short release captured the wide array of applications we can build:

Soroban has so many use cases. Use cases that the people building it haven't even begun to imagine yet... Truly, the sky is the limit.

These groundbreaking applications can be so much more than another trading avenue. Per Sec 3.3, these new applications can tie directly into egalitarian engineering sentiments. Hopefully, we can get more industry understanding around the stellar work Garand and the rest of the network's contributors have recently pioneered. 🌐

1.1 Latency Sensitive Background

As he's publicly communicated, Garand is a huge security nerd (oversimplified). I don't want to put any words in his mouth, but I will tell my recollection of the only conversation we've had as communicated in #1504. Namely, certain directive aspects of his work at a major hedge fund may seem "greedy", but I've done quite the same and materially respect him for it—this is just for context.

While Garand might simplify it down to "kernel hacking" on his LinkedIn, he was working on hardware-enabled high-frequency trading enabled by centralized exchanges. Namely, the technology he worked on let his employer make trades that they can't lose (or at least almost never lose). 🧐

These business models rely on the extremely convoluted market structure for American trading, which we will get into specifically in 2.2. I respectfully submit that we can further the network's goals by understanding lightly how this work allows for the kind of risk-free trading Garand saw at Coinbase.⁷ Given the fragmentation of today's liquid exchange venues, this latency is virtually impossible to remove.

1.2 A Fresh Start

But we have a unique opportunity with the SDEX to imagine how we might build markets as they should be rather than as they have been. While most of the network's liquidity today revolves around a few trading pairs, it may just power all the world's assets tomorrow. Given we're designing the network for the next billion lumenauts, might we briefly appreciate the extremely unique position of the SDEX?

If we agree that we want stocks and bonds on Stellar, then it's counterproductive to ignore American securities laws. Namely, it is our interpretation after extensive diligence that virtually all other "decentralized" exchange platforms can be classified under existing centralized exchange regulation.⁸ This opinion is not yet formalized, and the SEC does not have an explicit stance on DEXes outside of present enforcement actions, as I affirmed with two Commission staff on Monday.⁹

Based on the work everyone like Garand does to simplify and accurately explain Stellar, I wholeheartedly believe we can establish a universal set of network interoperability, reporting, and modification standards. Alongside the exceptional on-ramping and redemption flows we've built, might we focus also on the trading functionality so gravely needed for cross-currency remittances? Perhaps our long-term approach on this front can obviate the presently costly market access, interface, and reporting costs. 💼

2. Market Fragmentation

Hello, my name is John,¹⁰ and I am a little obsessed with order books. It all started as a small research idea while I worked and went to school.¹¹ But over the years, it became something foundational to my life's purpose of building real savings and retirements for masses of people. 🤝

To understand my perspective, could I share with you a very brief overview of my trading journey? Namely, might I share with you why exactly the American stock market is broken? It's my opinion that the history buried here tells a compelling tale for controlled decentralization, as promoted by our network values.

Our discussion starts with understanding for-profit exchanges. Particularly, did you know that the U.S. has nearly 100 stock exchanges?¹² These competitors each offer effectively the same order liquidity, but they continually undercut each other in fees or kickbacks.

2.1 Independent Autonomy

This plethora of trading venues, akin to different liquidity pools, presents a tangible difficulty for routing trades. In these last few weeks, we've already seen the emergence of multiple products that promise to capture the best exchange rate across native and Soroban liquidity pools.¹³ And these systems face fundamental rent-extraction incentives to skim off each trade.¹⁴

Might I ask: if the goal here is empowering anyone anywhere to invest in their future, should our underlying market tooling complicate trading for the sake of profits? I respectfully submit that smart contracts on other chains have had years to mature, but they still barely offer anything not present on the native chain or easily possible. While we are early in web3, we are not early in markets, which have naturally developed to serve a select few.¹⁵

Accordingly, might we look to the long-term implications of interleaving the SDEX with AMMs under the frame of how markets evolved and can now expand? I'm quite frightened by how other decentralized exchanges developed because they bring the same troubled past of siloed liquidity spread across disparate proprietary venues. In fact, some DEXes like dYdX have already started down the slippery slope of implementing maker-taker fees. 😨

2.2 A Liquidity Singularity

Once liquidity becomes diversely spread across the market, there is almost no way to "put the genie back in the bottle." Do you see any innovation surface across these contracts, or only isolated clubs? I started trading because I believed in the market as a path to a more abundant life, not a means to pay some broker huge fees. 💸

It seems the network aims for similar goals: empowering anyone to invest, transact, and capitalize on basic capitalistic financial infrastructure. I just don't want you or someone you care about to join the network only to instantly face a hidden tax on each operation because liquidity is not efficiently organized. Seven years ago, I quit my job to trade full-time, hoping to amass wealth through the investment vehicles touted by society, not to enrich a select few.

This is why I'm so concerned about the emergence of non-protocol DEXes across the industry, which naturally compete. In the spirit of open-source, might I suggest that the best approach follows the organic and necessary axiom that one source of liquidity lets us best match all orders between all parties fairly? In contrast, we can let new options compete for trading interest and follow the footsteps of Wall Street: 🏛

2.3 Requisite Routing Function

The red circle above is effectively what DEX aggregators do in the context of traditional centralized liquidity pools that are not central exchanges. This is what the Soroban AMMs are, paralleling "exchange ECNs" and "dark ATSs." Again, the problem here is that you have to compare between vast amounts of disparate liquidity pools for every transaction or get a worse price.

I've seen this happen across financial markets for years, and it always leads to a gatekeeping eventuality where only a select few middlemen can access the best pricing. 😞 From what I've seen on other chains, which looks remarkably similar to our trajectory, the exact same is slowly happening to web3. The immediate question for me is whether or not we should protect something so fundamental to human life like trade itself.

If we can agree that everyone should get the same best access to liquidity, then what do you think about unifying markets? Namely, might we focus on exchange, the essence of an efficient capitalist society? Should we leave something so fundamental to our advanced, developed, and practiced ideals of specialization up to the whims of a select few middlemen? 🎩

2.4 Price Competition

The founding document of the NYSE was a price-fixing agreement between Wall Street. Brokers pay backend fees like these to the plethora of middlemen in the present market system. Do you think extracting value through commissions like these via "smarter trade routing" should be enabled by the SDEX?

To answer this question in the narrow case of the SDEX, might we contemplate the history of traditional centralized financial markets? It's my interpretation of history that, in the long run, all intermediaries go bankrupt. Namely, the evolution of traditional liquidity routing presents a compelling case for the race to zero.

The parallel of displaced orders would be a UniswapV4-style Soroban order book, where you can pay kickbacks or direct bribes to fragment the market. The end result of these shenanigans is a plutocracy where governance can self-fulfill perpetual illiquidity across centralized matchmakers. Might we make investing most accessible and performant for real users instead of circular path payment bots, as insightfully predicted by @orbitlens infra note 18. 💡

2.5 Classic Operations

An efficient market to me means the most value possible given to all participants. If there's a payment taking place, it means the lowest requisite transaction cost. And if it's a digital marketplace of buyers and sellers, it means quite the same.

A middleman, call them the New York Stock Exchange, charging an extra fee to "authorize" and effectuate a transaction? Well, that sounds like an antiquated business model to me. And indeed, at $90 billion dollars in value, these are profitable business models.

Do you think we should block masses of people in developing countries from investing? Transaction costs alone mean many never even have access to these markets in the first place—this is the promise the network offers to everyone. 🌍 Can't this goal be most efficiently reached with native operation performance?

2.6 Regulatory Compliance

Financial markets thrive because of liquidity, which we can most easily use when concentrated in the hands of the people. It's the grease in the wheels empowering a global payment system, which is why I believe we must protect it from middlemen at all costs. If we want to bring this liquidity to scale with no centralized party, might I suggest that the core trading functions must stay under classic transparency?

Consider briefly the case of executing a reverse stock split using clawbacks, where users have deposited into liquidity pools. Early on, brilliant traditional market advocate @jonjove identified this requisite use case for institutional adoption. And the functionality was expertly integrated into universal liquidity pools with due consideration. ⚙️

The stable protocol best deals with these regulated edge cases key to basic financial functions like liquidity, which drives safe institutional adoption. I wholeheartedly believe that we need native participation to decentralize the rules rather than delegate delicate trading edge cases to explicit contract rules. Might we best achieve comprehensive liquidity with this collective existing rules consensus so that certain core financial innovations stay within our collective regulatory scope of safe oversight? 🛡️

3. Unique Values

There seems to be no other truly decentralized, distributed, and permissionless order book. Do you think this makes the SDEX something special and worth all protections to continue explicitly managing the ledger's liquidity without external states? Should we keep it in whole?

Nakamoto's unkept promise was an escape from the tyranny of centralized control. But the liquidity questions plaguing the industry around central exchanges still leave true ownership entirely up in the air.¹⁶ They well achieved new monetary standards since:

"21 million is not a feature of Bitcoin. It is Bitcoin."

Might I respectfully suggest that, as the globe's financial system and given the materiality of liquidity in the global financial system:

"Liquidity is not a feature of Stellar. It is Stellar."

---

I respectfully submit to the community that interleaving the SDEX with AMMs furthers our just principles since doing so:

• makes the Stellar Protocol clear, concise, and opinionated;¹⁷
• introduces new functionality that is opinionated and straightforward to use;¹⁸
• isolates only one obvious way to accomplish a given task;¹⁹
• biases the Stellar Protocol towards user safety,²⁰
• makes the Stellar network secure and reliable;²¹
• biases the Stellar network towards safety, simplicity, reliability, and performance over new functionality;²²
• allows the Stellar network to run at scale and at low cost to all participants of the network;²³
• could help the Stellar Network support off-chain transactions, e.g., Starlight;²⁴
• enables the Stellar network to power cross-border payments, i.e., payments via exchange of assets, throughout the globe, enabling users to make payments between assets in a manner that is fast, cheap, and highly usable;²⁵
• facilitates simplicity and interoperability with other protocols and networks;²⁶ allows the Stellar network to support an orderbook that values simplicity over functionality, and one that primarily serves to enable cross-border payments;²⁷
• allows the Stellar network to make it easy for developers of Stellar projects to create highly usable products;²⁸
• and facilitates liquidity as a means to enabling cross-border payments throughout the Stellar network.²⁹

Might the best work here extend to advancing the protocol for the whole network rather than a few central interests? Given more time, I'd be happy to elaborate further on any of these points either in writing or orally. Moreover, if we support egalitarianism and everyone participating on the same playing field, then might we contemplate further the competitive advantages of interleaving the SDEX with native AMMs so that liquidity stays core to the protocol?

4. Storied Guiding Principles

As someone deeply involved with early crypto liquidity, might @jedmccaleb understand firsthand the quandaries of disparate liquidity pools? In 2012, Jed wrote: "One thing you can do with it is exchange bitcoins for fiat without the need for a centralized market such as Mt. Gox. Which will be very useful for Bitcoin," when discussing preliminary ideas for Stellar. This prescient viewpoint introduced me to the foundational ethos that "liquidity begets liquidity."

Might we continue championing the network's distributed exchange, as it was originally named? Specifically, can we continue innovating on the exceptional core concept released in the first version of the protocol? Namely, interleaving liquidity pools ought to protect users since:

Multiple exchanges will only increase volatility since each market will be thinner. The only thing that will decrease volatility is liquidity.
— Jed McCaleb

Since any account can send an order to the SDEX, its order book is uniquely egalitarian in that all market participants follow the same rules, treatment, and pricing. You receive the same exchange rate whether you are a major European bank or a rural Kenyan farmer. Perhaps the equal execution enabled by SCP and primed to scale can best empower global, inclusive, and decentralized liquidity?

Footnotes

1. I won't pretend to understand completely everyone's unique and interesting projects. Enrique has made incredible progress developing on Soroban with fast reactions, an ongoing decentralization ethos of community efforts, and grassroots developer advocacy within events. 👏 ↩

2. When I say "only," I don't mean that this is the single source of any liquidity. Inherently, anybody approved by an issuer when applicable can post a native offer or deposit into a liquidity pool. But it was the only pool selected for additional governance token incentives. 💸 ↩

3. The immediate, unannounced migration fixed a bug that let attackers empty a pool's reward reserves. 🕷️ Luckily, nobody drained any deposited funds before @rahimklaber found the exploit. 😌 But the entire liquidity protocol had to deploy new routers, pool identifiers, and balances. 🤔 ↩

4. See tremendous state expiration explainer, informative technical specifications, and historical data education. ↩

5. I'm continually impressed by the permissionless, comprehensive, and public nature of Garand's posts. They break down innovations for everyone to understand and implement, no doubt after countless months of development. Hopefully, more pupils from @stanford-scs will join network development efforts. 🌌 ↩

6. See original material in WhyDRS Discord, sourcing from @BibicJr and featuring @bobmahalo. ↩

7. It is my present understanding based on this conversation that Garand ingeniously developed a latency arbitrage strategy whereby he identified, via one-way ping latency, which of three cloud providers used by Coinbase hosted the order book for an asset. Next, he spun up an instance at the identified data center and, using his proprietary latency tests, kept refreshing the instance until his virtual instance was initialized on the same rack as the Coinbase server. ⚡ Once he was on the same Ethernet switch, his connection to Coinbase was so fast that it was trivial to execute arbitrage against other popular crypto exchanges with pro accounts. ↩

8. See, e.g., public discussion, cessation of DSTOQ operations through Liechtenstein custodian, and pending conflicts. ↩

9. This is my present understanding, which the Syndicate bases its regulatory filings along. 📜 However, it is subject to change and should not be taken as professional advice. We're actively working to clarify the narrative for other Stellar assets, especially tokenized mutual funds. ↩

10. I've been building on Stellar around the SDEX for just over three years because I wholeheartedly believe the network will be the efficient financial system the world so desperately needs. I've been helping around on the docs lately while our community organizes to work on mainstream frontend interfaces. 📃 Accordingly, organizing our approach to consolidate liquidity seems pressing to preserve a clear, direct, and efficient order execution path. ↩

11. Trading naturally grew into a huge passion of mine, where I saw firsthand the damage of fragmentation. The turning point for me was when a third of my biggest trade ever went to a brokerage in commissions and fees. Even if you're trading less leveraged assets without derivatives, the small transaction costs created by markets can really add up. 📈 ↩

12. See 24 national exchanges, internalizing brokers, and 72 dark pools. ↩

13. See, e.g., services splitting path payments into optimal chunks, splitting orders between three equivalent AMM contracts, and quantifying aggregated LP depth statistics. ↩

14. Further, many of these routing systems are closed-source proprietary software with material secrecy risks, especially for foundational financial infrastructure. ↩

15. See discussion, study, and explainer of early emerging brokerages around the Dutch East India Company. 🧂 ↩

16. See, e.g., unaligned risks, internalization forces, and unsound models. ↩

17. See supra note 8 regarding convoluted trade history reporting for IDEX contracts. Even with modest standardization, developers will need to implement contract, function, and data standards for each and every unique liquidity pool. Might it be simpler for end users to follow the existing native liquidity pool execution standards? ↩

18. Interleaving has been vocally spearheaded even before the present masses of circular path payments. We want users to have the most financial success, and this might be challenging without natural understanding. Let's do it together through a common exceptional protocol process! 💬 ↩

19. Id. We can give users a standardized, clear, and shared source of all execution with validator-level interleaving optimization. Wallets should not need to independently route large path payments through different routes to guess at specification optimizations. Similarly, trades with comprehensive price optimizations obviate interface size-arbitraging overhead. ↩

20. Without an entirely automated best flow, users risk proprietary systems like the internalization that plagues traditional markets. See also internalization rate at 21, SEC investigation, and liquidity report. ↩

21. Users get maximum security when only they hold the keys to their assets, which can't happen with upgradable contract software development. While I'm not suggesting anything like that might happen in our community, it is a fundamental weakness solved exclusively through network consensus. Do you think collective scrutiny keeps funds securely processed? 🔐 ↩

22. Reliability and performance can greatly transform without extensively complicated systems built on the frontend wallet side to extract spreads. Without the need to route between disparate sources of liquidity or transaction processing, might the whole network best employ validation resources? 💻 It seems the aggregation logic in particular could significantly expend ongoing Soroban computational resources. ↩

23. The material base functionalities of core embody a universal financial system, like efficient payment performance. But employing Soroban transactions costs more from all deployment, management, and processing standpoints. Might we focus on the existing efficiencies in the protocol's liquidity pools? ↩

24. As SPEEDEX develops, future scaling can include liquidity pools in a comprehensive efficient system. This continues the empowering decentralization promises of automated liquidity participation so that anyone can inclusively help build SDEX liquidity as a dominant use case. Since this innovation emboldens the native liquidity functions, might the best path forward become a CAP bringing native liquidity to scale all together? ↩

25. With native liquidity in one place, might all migrants and global transfers benefit from the best rates based on all available liquidity? Optimizations here can keep currency conversion at its lowest so that money gets to the places that truly need it most. Wouldn't this be a better destination than an arbitrage bot, price slippage, or optimization miss? ↩

26. As a destination for liquidity, the network becomes much easier to reference when assets have a single point of reference similar to a cohesive best bid or offer. Requiring pricing consolidation into a single point of failure unnecessarily separates offer inputs across needlessly competing liquidity venues. There will always be competing DEX aggregators because smart contracts have an inherent competitive nature absent from the protocol. ↩

27. Without interleaving as a best system, smart contracts with proprietary routing can dominate discovery. But forcing permissionless developer standardization would be impossible without the extensive transparent consensus around protocol upgrades. 🛠 I respectfully submit to the community that synchronizing disparate Soroban contracts would, in all likelihood, be no more efficient than pushing through a CAP introducing a new fee band to native liquidity pools, for example. ↩

28. Do you think direct protocol functions in Horizon are easier to use than a DEX aggregator's contract? It's my interpretation that "the Stellar network" doesn't mean a centralized router on Soroban, despite upgradability. Alone, any interoperable governance standard here again just becomes as important as on-network protocol. 🌐 ↩

29. Might liquidity be most effective as presently consolidated on the global SDEX? By combining liquidity pool optimizations, we can bypass traditional financial mishaps from brokers approximating spreads. Could a single native standard best synchronize all users with a simple pool of capital? ↩

[rahimklaber]

• biases the Stellar network towards safety, simplicity, reliability, and performance over new functionality;

I think Interleaving the SDEX with AMM will decrease performance. I'd imagine that this would make the path finding algorithm more complex.

[JFWooten4]

Hi @rahimklaber,

Thank you for your thoughts, both here and shared on Discord. It was inspiring to hear via DMs how you got into the network, largely for humanitarian, real-world use cases. Over the years, I've found this to be a common thread linking us together.

In an effort to further these foundational principles that uniquely belong to the network, might I quickly review my own understanding of these ethos? Chiefly, I understand that the founders wanted a decentralized payments network that was cheap, fast, and inclusive, based on personal identity, not computing power. We seem uniquely adept at providing such a system given the lethargy, centralization, and gatekeeping present in other financial systems.

I'm writing this as someone who just wants the most efficient technology possible under our stewardship because I've felt so keenly the vast inadequacies of legacy markets for practically my whole life. They have ripped apart my family, taken nearly every drop of opportunity I've identified right out of my hands, and pulverized my aspirations as a mainstream asset manager.¹ There is nothing I want more than for the network to succeed, and I believe wholeheartedly that we will triumph enormously over other technologies given the proper execution of scalable, decentralized, egalitarian markets.

1. Extensive Recent Community Actions

Since this post, quite the collective discussion has popped up on the subject. Perhaps most relevantly, you were rightly given accolades for uncovering the deadly bug.² 🎖️ The context under which this occurred is materially-relevant to the rest of this discussion, so I will link it here:

Also, we wouldn't have heard live about your expert white-hatting if it weren't for Jayrome, who kindly reached out to community members to solicit AMA questions before the event. Jayrome relentlessly contributes their time, expertise, and consideration through open discussions, prudent facilitation, and news aggregation. They did an unbelievably tremendous job asking with relevant tone-setting context from 2022, genuine tact for differing perspectives, and an open mind toward possible solutions.

I believe so earnestly that these open communal discussions are the secret instrument we can leverage to overtake entrenched incumbent interests. Indeed, might the optimal solution for these network-wide quandaries come from the artful, attributable, and permissionless Discussions we've already seen lead to stellar outcomes in CAPs 51, 53, and 56?

1.1 Previous Functional Mobile Advancements

Before diving into the nuances, I'd like to applaud your longstanding efforts to bridge different platforms to Stellar with a single SDK. 👏 Too often, work might not see the light of mainnet despite the material efforts behind its development. But many of our long-term challenges can be overcome seamlessly thanks to those key thoughts, incremental improvements, and persistent bug fixes.

As I've tried to express, I might not be intimately familiar with the particular nuances of JS/Native/JVM implementations and their core XDR (not Horizon)—just yet at least. But it's clear to see that you're making ongoing progress on what just might be the next big community project. And it's quite inspirational for me, at least, to think that you're able to do all that on top of traditional work.

But I do know markets, and I've seen so clearly today's central intermediaries exposed to hacks as intricate as your bug.³ This is why your work can make such a comprehensive difference, empowering users with a direct DEX wallet in the palm of their hand. Might we one day finally escape the totalitarian controls choking present financial systems' global liquidity?⁴

1.2 Introducing Communal Discussion and Quotes

Unfortunately, much of this thinking work can get lost in the fast pace of release schedules. In the spirit of documenting AMM design choices,⁵ I'll append some discussions from the Stellar Global Discord. Namely, most of these messages stem from shared concerns over a network participant's transparency, integrity, and liquidity governance influence.

1.2.1 Adam: Trading Execution Materiality

what really attracted me to stellar is the sdex order books. once you add an interface, it suddenly feels like stellar has centralized orderbooks.. the stellar sdex orderbooks creat and offer the most free market this world has ever seen...
the orderbooks on the sdex give EVERY asset on the network a starting point and reference for price. having this time tested and trustworthy reference point provides an adavantage to every asset in its search for fair value. this advantage is unseen on other networks.

— adam.xlm

without the sdex isnt stellar just another smart contract blockchain...
like what makes it special once yo ditch the best part?
no chain has anything like the sdex orderbooks...
the sdex orderbooks are still more advanced than any set of orderbooks on any chain. and we still have just enough volume in the sdex to prime the pump for an insane surge of liquidity

— adam.xlm

the entirety of the sdex amm's provide the market participants with a reasonable aprroximation of the the fair value of the assets in the whole of the system. amm's compliment the orderbooks and vice versa.
it is a whole organism now. an entire economy has developed inside the sdex. it is the reference point of fair value for anyone attempting to use the fragmented liquidity on soroban.
we have black boxes providing prices on soroban that are far from the value derived by the trusty sdex. the sdex is a strength of stellar and should be utilized to roll out the soroban economy in an orderly fashion. it gives an opportunity for intrachain arbitrage that is unseen in other chains.

— adam.xlm

1.2.2 @ddombrowsky: Order Book Independence

One other thing to consider: why would stellarx implement the api to trade tokens on the new soroban aqua exchange? Taking the "D" out of the DEX definitely seems like a step backwards...
the horizon API gives you everything, not just the tokens that aquarius decides are important. For example: where can I find the simple UI to swap blend and usdc using the comet pool?

— aLatvian

Case in point: the 1inch dApp is blocked in all of the US of A. If amm and dex moves off of stellar core, you should expect nearly all site-specific implementations of these features to be blocked in the US.

— aLatvian

Right now, I can place an order on a thin orderbook and it might be filled if there's a path payment through it at that price. Without the amm, I'd have to rely on just the volume in that pair, or maybe someone who happens to be running a bot against some soroban pool somewhere.
There's also the fact that in ALL other chains, if I want to swap, I need to go to one site that runs a good UI for one pair into a common token (eth or op or sol or whatever), and then at least 1 other site to get to what I want. Expensive, slow, and annoying.

— aLatvian

1.2.3 Active Competative Differentiation Work

I'm interested to learn what the fees on soroban will be when adoption grows. Stellar classic fees make fee sponsoring very doable and also allow for low value transactions. The latter I really can't judge yet; soroban be just as efficient in terms of fees as the dex is for conversions of low amounts?

— Wouter

We already have tech no other chains have since years. What is needed, not just in Stellar but in the whole crypto bubble, is to actually build things for people out there. Look at the current financial system, it's bloated, slow, old and everything.

— tupui.xlm

At the Meridian round table, I chatted with a bunch of the soroban devs to try and figure out what their needs were wrt soroban DEXs...
To be clear this is early stages, which is why I wanted to open the conversation at Meridian. Ideally, we'd have something where both soroban and classic could use the SDEX orderbook and both classic AMMs and Soroban AMMs could use SPEEDX as a shared "backend"

— Garand (SDF)

1.3 Appreciated Thought-Provoking Perspective

Again, I'll call into light your stellar past technical work expanding the ecosystem's toolkit. I'm continually impressed by both your comprehensiveness and deployment skills, whether it's expanding on trailblazing contract streaming or creating a brand new account servicing project complete with its own permissionless documentation. And to think much work here started just four short years ago with an intuitive tokenization offering—just incredible, Rahim. 👏🏽

Given this deep technical background, I'm all the more impressed by your continuous community outreach. Not only have you found bugs such as your community contribution here, but you are also constantly in contact with developers and users alike to address concerns! Having recently discovered the thread myself, it was awakening to read your conversation with Adam about recent flaws in another Soroban AMM that centralized control of deposited liquidity into a select few hands.

Especially on other chains, some industry participants prioritize crafting a good story to sell to investors for some easy initial funding. 📊 When these developments lead to material losses in freedom, security, and money for users like us, it's both refreshing and uplifting to know that your skills serve to defend the peoples' interests. We're all just trying to make this work as we go along, and your behind-the-scenes passion energizes! ⚡️

2. Enabling Trusted Global Liquidity

Part of Stellar I find so incredible is the heavy lifting done by community validators behind the scenes. The diligent and selfless contributions bring accessible transactions to all. In this light, I originally wanted to have our own nodes spun up to try testing for the simulated ongoing execution burdens.

Part of the reason for this logic is that I don't want to sit here asking for something for nothing. Namely, I'm only a motherboard, CPU, and NVMe drive away from getting things spun up.⁶ But that's presently outside my scope of operational capabilities across organizations per survivability constraints supra note 1.

That said, can we all agree that the contemplation given to my beliefs ought to be weighed independently of my present socioeconomic standing? As I've tried to shortly capture, the beauty of the network really shines when it shares the best industry tech with all classes of society. Could introducing "loyalty tiers," as is so common on central exchanges, run counter to the ethos that genius can come from anyone?

2.1 Enduring Network Design Perspectives

Expanding on the chief question asked in the video from Meridian,⁷ might we take a holistic consideration as to the cost of liquidity as it stands today? As voluminous comments in the singular conversation forum so far have revealed, liquidity is a key aspect of the network for users, developers, and advocates together. Reflecting on the asked investment of time, energy, and composability into interleaving liquidity, might we consider the sum network benefits?

Markedly, the choices we make around items like whether or not contracts call the DEX have significant downstream effects on whether the network runs well for users like us or the centralized institutions presently so dominant across other chains. I like to think there's a reason the large majority of demonstrably-compliant web3 investment products employ the network (or at least originally launched here). All this despite the current lack of attention on self-custody options available to all.⁸

Might the self-custody implication inherent in existing exchange business models draw attention away from the DEX?⁹ This might lead to a number of quandaries that came up in this discussion, such as trading volume compared to proprietary venues, AMMs, and HFTs.¹⁰ I believe wholeheartedly in our unique opportunity to collaboratively explore the most efficient globalized solution that satisfies the longstanding needs of traders, developers, and innovators.¹¹

2.1.1 @jedmccaleb: Blockchain Liquidity Innovator

Might we emphasize Jed's brief remarks on the panel given their precedential history in markets, as shown by being one of three current footnotes in the Wikipedia page for order books? The particular footnote posits that Jed was the first person to develop an order book link plot showcasing market supply and demand, back when it was just them working alone on Gox. When asked about their view from two years ago that "people love the DEX," Jed optimistically referenced the evolution of the DEX, telling Jayrome:

The basic functionality still needs to exist within Stellar.

Can we agree that this steadfast commitment to form refreshingly positions the network in an industry where some leaders are so improperly influenced by Wall Street? Namely, might we best align with our mission to better humanity through the nonprofit nature of SCP combined with the decentralized governance it implies? While alternative systems serve to enrich a select few, might we objectively ask what could best serve users, absent external business interests?

To bring this point to light, I recently executed an offer to buy an asset from an issuer I like. However, a majority of the liquidity for this asset lives in Soroban AMM contracts, so I learned after later consultation. Might we jointly develop a scaling solution that doesn't incur at least 80% slippage?

2.1.2 @tomerweller: Seeking Efficient Replacement

Tomer seems equally hopeful for a network with more liquidity, trading, and access.¹² My understanding of their perspective so far is a focus on composability between protocols built on top of the network. In the discussion, Tomer said they didn't yet have much "to add on top of what was said" at Meridian.¹³

I sincerely appreciate Tomer's experienced, meticulous, and transformative work throughout the ecosystem. That said, might we bound ourselves for material compliance violations using the two alternative options they propose, based on Soroban and presently in the incubatory stages of development?¹⁴ We're all for a new visionary, collaborative, and dynamic system; by my understanding—building on the same team.

But the core function of asset exchange implicates not only regulatory security but also practical custody risks which the previous surprise update acutely brought to light. Combined with the recent hikes in AMM "listing fees," might we contemplate further which path could best grow the network? Fees which, I feel obliged to remind everyone, are paid in speculative tokens for the vast majority of present implementations.¹⁵

2.1.3 @rice2000: Community Collaboration Focus

From the original 2022 panel to today, Justin has stood firm as a neutral arbiter between Jed and Tomer's viewpoints.¹⁶ It doesn't seem like Justin explicitly prefers any one route, based on limited in-person conversations, historic public info, and recent statements. These sentiments were also true by my interpretation of the 2021 Open Protocol Meeting adopting native AMMs.

In conversation with the community projects Justin highlighted on Reddit, developers believe trading needs to be the first Soroban use case because you can't call the DEX from contracts yet. But, as discussed, we can transform the DEX together to deploy infrastructure that doesn't overly burden a central point of failure. Indeed, Justin seemed to lightly nod when Tomer voiced that "another option" is "people like Garand" prototyping evolved order books implementing SPEEDEX.

Might we continue supporting parallelization, decentralization, and concurrent trade execution to "prevent liquidity fragmentation and arbitrage?" Garand is only one of many SDF members who's voiced such concerns over needless extractive arbitrage.¹⁷ After a crowd survey, Justin responded in 2022 with their thoughts on the most efficient path forward:

I actually think having public discussions about controversial issues like: "where scalability verses the DEX—which one to favor?"

3. Smart Contract Trading Systems

As I've communicated with Tomer and ecosystem participants at large, might we design the evolution of the DEX using a "regulation-aware development strategy" (from Sec 3)? Compliance work takes many years of solid foundations, which Block Transfer has previously found in the steadfast, utilitarian, and resourceful network. Might we continue expanding on substantial past efforts to implement multithreaded batch trade execution?

As we will see in the next three subsections, the argument here is materially related to the never-ending debate of centralization vs. decentralization. But when applied to liquidity itself, we need a forcing function to an agreed-upon standard not dissimilar to the GPL. The chief difference between traditional "distribute wealth and power" arguments and fundamental markets is that anything other than a single venue enables wasteful arbitrage.¹⁸

In examining this question, I will present three common systems employed across lesser chains. These are the sort of arguments I can't really make in a formal filing given their derogatory nature, so I appreciate this opportunity to expand on these thoughts in a meaningful way outside of litigation. 💜 Could you consider reading these sections as if you were the new Chair of the SEC?

3.1 Off-Chain Order Book Systems

Our community cares greatly about order books because, as "inefficient" as they might be in data-structure analysis, they form the basis of an efficient market. There is no global financial system when each and every transaction relies on the goodwill of a select few.¹⁹ Indeed, might the democratic, egalitarian, and accessible provision of liquidity best serve an increasingly decentralized society?

I've believed in the DEX since the moment I understood SCP, this video, and Wall Street's exclusive club.²⁰ And I believe with every ounce of my being that we're dooming future generations to continued exploitation by these bastardizing central planners if we fail to protect the last bastion of a free market present in the network. Here and now is our opportunity to fulfill Nakamoto's vision for a disintermediated base financial infrastructure, capable of the globe's payments, trades, and balances—not a select few.

We have an unbelieve community of active builders striving for so much more than another venue, as shown in our discssion about how we can build real products not just for finance. As I explain the centralization t ocome, might we remember so muc hof the founding and core teams' vision for a network serving the masses of tommorw, a vision exceptionally executed across the protocol? ight we continue deplyoing the freest market possibly ever created to defeat the unproductive net social expense of off-DEX arbitrage?

3.1.1 Unspoken, Silent Centralization Incentives

Pictured is an image from the present homepage of ZeroEx Holdings, Inc.; better known as 0x. Here are their regulatory filings disclosing material venture investing for every year in the first three years of its existence. These filings detail how this corporation sold at least $84,121,200 to a paltry 45 investors at minimum, a significant sum of money that undemocratically shifts the power from Uniswap users to the corporation behind its development.²¹

The public fee schedules available from 0x²² reveal take rates starting at 0.15%—conservatively.²³ These are not expenses passed on to a decentralized group of liquidity providers. And they are not safeguarding fees built around investor protections of regulatory frameworks in toto.

These are economic rents siphoned off to a select few groups of early investors who were lucky enough to capture the immense value of liquidity singularities. And it is precisely this centralization that allows them to force transactions through the complex intermediated frameworks necessary to most efficiently transact on their system. Should we really let our freedoms, governance, and oversight stay in the manipulative hands of these centrally-controlled middlemen?

3.1.2 Unspeakably-Efficient Path Handling

No matter how you slice and dice your interpretation, Rust in the execution environment will never operate as fast as validators' C++ logic. This presently enables the unbelievable efficiencies of 6-hop order routing without a central party. Might this unique differentiation of the DEX best allow us to compete with monopolistic, entrenched, and stagnant incumbents' domineering grasp on global financial liquidity?²⁴

I will go on to compare this opportunity with the present system which continually faces material regulatory scrutiny. Might the only way to maximize capital formation, efficient markets, and investor protections be to design a system which fundamentally disallows centralized censorship of specific items deemed inappropriate in the legacy regulatory context? This idealistic future, originated in the founding vision of Stellar, exists only in a distributed trade execution environment.

The only way to mimic this efficiency in the status quo is to consolidate all recordkeeping into a single entity. This powerful overlord can thus know all information, theoretically offering the most efficient system. But we've seen this gatekeeping develop firsthand through the monopolization clearly present in America's DTCC, and it's not pretty.

3.1.3 We Are Not Ripple

In the BFT world, benevolent dictators unilaterally decide exactly who starts off with power. And in a mathematical system as complex as the market, these initialization conditions have profound long-term implications. Might we step back and ask ourselves if it's worth deviating from the ingenious course we've been charting together for over a decade?

Should we burden the network with spam due to "someone who happens to be running a bot against some Soroban pool somewhere," as aLatvian said? Or should we protect our existing implementation in Stellar Core, obviating the needless localization of functionality as basic as cross-border exchanging payments? Perhaps create a just society where we might share the natural abundance afforded by liquid markets and their implications?

There's a reason "ALL other chains" face the material operational limitations presently un-afflicting the DEX.²⁵ Should any meaningful volume shift hands into Soroban venues, we risk seeing the network's good name getting smeared in the legal ambiguity of a Wells notice.²⁶ Is this the fate Jed envisioned when they wrote:

Imagine a world where, anytime you travel, you never have to exchange currency except at the point of sale. A world where you can choose to keep all your assets in, for example, Google stock, cashing out small amounts as you need to pay for things. Cross-asset payments make this world possible.

3.2 ZK Scaling and Rollups

My original implementation of a stock market was designed to scale with optimistic rollups, as they're an easy answer to the scaling question plaguing less efficient blockchains. Another option, zero-knowledge proofs, offer similar promises. Admittedly, this is not my area of expertise by any means.

But I know markets, and the fundamental problem we ran into with these systems is that they require an order book which lives somewhere other than on-chain. The latter case often requires contracts to both simplify and propagate complex off-chain math. These abstractions create the unholy mess of a market present in the U.S.²⁷

The power of longstanding Rust contracts is undeniable, per Garand's sentiments. We're at the start of an unparalleled journey to build an innovative financial system that actually serves the needs of its users, not its executives. Might we move past the elementary applications so common on other chains which we have already efficiently solved using validator-level logic?

3.3 "UniV4-Style" Future Development Pitfalls

Throughout the conversations, we've all generally agreed that "the SDEX order books are still more advanced than any set of order books on any chain." Indeed, in my view, Uniswap V4 is just a mechanism to cope with the reality that other chains are not efficient enough to offer limit orders, falling back to the systemic risks of central netting. ⚠️ If we are to replace the mammoth intermediaries gatekeeping the financial system, we cannot ignore the fundamental need for priced offers.

Markets are not continuous functions like an AMM pricing curve. They do not follow your rules no matter how many times you run them through a Monte Carlo simulation.²⁸ As I presently understand these V4 contracts, they attempt unsuccessfully to tame the exposure participants face as the market moves against them, a natural uncertainty in the business of making a market for a spread.

The further down this path of control you center, the closer you get to today's market infrastructure. Pamphile explained the material challenges exceptionally when they wrote, "it's bloated, slow, old and everything."²⁹ Can we really centrally control something as complex as markets themselves?

3.3.1 Constitutional Corporate Overlord, Investors

As is made abundantly clear in this response to their SEC investigation, Uniswap "Labs" is a for-profit C corporation with "leading U.S. institutional investors, such as Paradigm, Andreessen Horowitz, and Union Square Ventures" and "more than 100 employees."³⁰ This document also highlights that the enterprise has kept its algorithms under the oppressive protection of rent-seeking software licenses.

I am in no way whatsoever implying that similar business practices might emerge over the years from existing network participants. But even if the ecosystem's Soroban developers adhere strictly to the nonprofit principles embedded in SCP, they'll still be targets for regulatory action the moment they touch absolutely anything we're building at Block Transfer. It was also discussed that the SDF could deploy "definitive" Soroban AMMs to centralize liquidity, but this would very unambiguously place the Foundation in the crosshairs of similar threats.³¹ ⚖️

The stakeholders in today's systems are and have always been investors and issuers. Might any other party involved in the exchange process exclusively serve to siphon value away from those two groups? Should we defend the DEX as the last bastion of a free financial market?

3.3.2 Unacceptable, Unaccountable Execution Centralization

Along the path of centralization, incumbents try to sell "faster access" as a "trading benefit" to investors. However, if we're truly designing a global (and ultimately interplanetary) financial system, at some point we're going to run up against round-trip propagation time of digital signals.³² This is exactly what Uniswap Labs' latest "invention" has introduced through the Unichain POC.³³

I say "invention" because absolutely nothing here is new. I could sit down and list dozens of regulatory filings which detail these exact exchange changes across the American securities landscape. The points at which certificates, settlement, and reporting became centralized come to mind—leading to the ultimate endgame of massive profits paying out to Silicon Valley over Main Street.³⁴

Given America has the world's most advanced, developed, and liquid market for capital, might we learn from the pitfalls of Wall Street? If we can right their wrongs, perhaps we can free ourselves from the shackles of a select few financial intermediaries. Shackles which have so poignantly determined entire directions of progressing nations. 🕌

3.3.3 Requisite Insurance for Adoption

I've spent the past four years talking to just about every anchor, trader, and regulator I know about blockchain. Following the prior logic, institutional adoption of actual trading on a self-custody basis requires gargantuan insurance products when using bootstrapped smart contracts, which we very clearly see pose hazards per your work. Could trading be the most important aspect of a financial system that we are presently left to master?³⁵

Everyone generally wants to move fast when it comes to launching into a sustainable business state—completely understandable.³⁷ But might it be prudent to slow down and build something longstanding to serve generations of users to come? At Meridian, Tomer posited that:³⁸

There is no certainty. At the end of the day, it doesn't matter how many audits you go through; it doesn't matter how much testing you do. Sometimes there are bugs.

While we in the DRS community appreciate that there will be bugs in any computer systems, we'd prefer our funds not be at risk in flash crashes perpetuated by complex trading infrastructure. 🫤 Would it be best to strictly apply an unwavering software mindset to something as important as markets? Or might we conceivably best serve the plausible needs of our expanding ecosystem through a feasible uniform front?³⁹

4. Legal, Composable, Community Solution

Since understanding its deep humanitarian implications, I've bet my entire career that SPEEDEX works, and that it works stellar. Without true offers on the DEX, I see no future using today's technology in which I'd like a stake in this industry.⁴⁰ Do you think Wall Street's time is up, as do the thousands of members in our grassroots community afflicted by their unadulterated theft? ⌛️

Markets have proved time and time again the immense necessity of limit orders as the base building blocks of liquidity for the tens of thousands of long-tail assets issued on the network. The proven DEX is anything but the black box pictured above, which is explicitly not the case for smart contracts, aggregators, and frontends.⁴¹ Might a tenable investment in efficient markets today serve the network's issuers for all eternity?

Could a truly nonprofit financial system built for its users minimize rents, as discussed? Or, as in the immediately succeeding message, will we continue to be handcuffed to titanic arbitrary capital requirements to bootstrap liquidity?⁴² Should the most performant trading system really frequently require at least three operations to min/max the pathfinding algorithm?

It might be hard for technical people like us to see some of the incredible implications of a 50 bps spread reduction.⁴³ But these innovations truly change people's lives—I've seen, felt, and shared it firsthand. In an increasingly abundant society in raw compute terms, might we best empower all network users with tooling that places the locus of economic control squarely in their hands?⁴⁴ 🤳🏼

Footnotes

1. This is not a reply about myself, but I just want to share my openly disclosed "stake at the table." I have approximately $3,000 in both my checking account and Roth IRA; everything else is in john.xlm. I sold the vast majority of my assets three years ago for $30,000, which I've been using to build the stock market on Stellar ever since. ↩

2. See the above post ("PREV") at n.3. See also infra § 1.3. There might be some legal jargon sprinkled in here for the regulators that read it, but really this is about how we might best empower people like you to smoothly access liquidity. ↩

3. See, e.g., the theft of retail spreads using proprietary, secretive, and gatekept execution venues. See also the worst parts of central exchanges mimicked in the exchange developments so commonly associated with other chains. Compare these routing inefficiencies with the incumbent fiat transfer system's arbitrary limits and practical implications, showcasing again the need for comprehensive systems. ↩

4. Consider, for instance, the "hack" of Nicehash hot wallets in Dec 2017, whereby assets were not held in your own wallet. Can we really trust the custody of every network trade to the corporate control of multisigs at best, none of which are actually your keys? More to the point, should we as users pay higher fees for the privilege of ceding our own custody? ↩

5. See, e.g., open discussions on key basic capitalistic tooling design approach, reasonings, and implementations. Relevantly, these developments occur in the open across our network ecosystem, not siloed away in the depths of some corporation. As someone who believes deeply in Conway's law, might the best approach to a decentralized, liquid, and open market be one in which all efforts come from transparent community collaborations? ↩

6. I particularly want to mimic some of the original SPEEDEX paper's results on a modern Threadripper. With some actual data, I can more meaningfully contribute to the conversation going forward. Albeit the precise configuration work is outside my maximal area of expertise. ↩

7. Which is different from the round table Garand mentions. I reached out to @SirTyson for comment on Nov 1 but haven't heard back yet. In the same chat linked in § 1.2.3, they say SPEEDEX "opens the door to a lot of interesting opportunities, such as higher trade volume, better compatibility between Soroban and classic ops, etc." ↩

8. See, e.g., the UI deprioritization of Stellar on the centralized exchange in note 7 of PREV, buried under every other supported USDC chain. See also similar treatment in the Circle developer dashboard. These starkly contrast with the plethora of legal filings explicitly referencing the network behind the closed doors of legalese. ↩

9. I say "attention" because, while users might not need to know technical specifics, we in the DRS community care quite extensively about the legal title to our portfolios. There are very legitimate centralization implications in upgradable smart contracts having their keys hacked, as we as a community have seen so commonly on other chains. Without protocol-level upgrade mechanisms, any contract migration or versioning falls into the trap of creating a new isolated source of liquidity. ↩

10. See also community sentiments to work against free markets by implementing AMM deposit locks as guarantors of liquidity. Might we best secure execution liquidity at all times through a collective collaborative effort to explore universal pools of capital? There are so many incredibly intelligent believers in the network with genius ideas; might a wholehearted and thus coordinated, decentralized, and sovereign approach best serve the network? ↩

11. I might not know exactly what will change about financial markets over the coming decades, which could materially impact the DEX's requirements. But I have deeply studied the history of markets over the past six years in an effort to understand what won't change, no matter how many centuries pass. Can you imagine a future where developers demand wider spreads, traders want fewer ways to game the system, or innovators want to build whole businesses on delicate foundations? ↩

12. See 2022 remarks that "the order books are extremely efficient as far as order books go, but order books in general are not the most efficient data structure." Might I posit that we can still develop production applications in Python despite the technical reality that Rust programs would run much faster, ignoring nostalgia ab initio? Perhaps marginal improvements here and there are less relevant given the contextual competition from COBOL mainframes so common in the correspondent banking system? ↩

13. According to further conversation, this statement was made before the recent social account takeover. I find this point relevant because one of the first things the attacker did was send out mass ETH phishing links. Might we keep this in mind when discussing the incumbent architectures that follow? ↩

14. See discussion on first and second options infra § 3.1 and 3.3, respectively. Given the involvement of these systems in the recent FBI Polymarket raid, might we take caution in the real-world liabilities associated with the exchange function. The present path of development could introduce material compliance risks to existing network projects, no matter their locale, given our SEP8-light implementation of book-entry securities. ↩

15. These tokens are issued, controlled, and governed at the whims of central organizations operating on the network. Indeed, this discussion stemmed from material concerns over the influence one such network participant had over the DEX due to their concentration of tokens. Might we widen our impact by ensuring that, just as with payments, there are no central intermediaries able to control the most key social function of trade itself? ↩

16. Please do feel free to jump in and comment if I'm missing anything here, though. 😅 Relevantly, by "adopting" later in this paragraph, I mean taking the CAP Core Team poll, based on the open community contribution framework. Might we further discuss elsewhere the migration of discussions from the stellar-dev mailing list onto GitHub Discussions, as implicated in supra § 1 at links 4–6? ↩

17. Consider, for example, the "small" arbitrage differences between securities on their home exchange and derived ADR poolings. It's been well documented that these micro inefficiencies materially afflict investor returns thanks to the unnecessary differentiation of base asset liquidity across physical geographies. Might we obviate the difficulty of reconciling segmented assets by conjoining their liquidity venues into one stable ecostructure? ↩

18. Consider, e.g., the posited scenario of a rural Kenyan farmer sending Euros through string receive. How can that person expect fair execution if the European bank has some large amount of value locked away in a single (or even many) Soroban AMM-type projects? If all the central bankers vote to concentrate their "liquidity rewards" on Yen, will the Kenyan be unreasonably forced to route payments through unnatural venues? ↩

19. See, e.g., banking implications at 1:18:20 demonstrated after the Chancellor was on the brink of second bailout for banks. Could these antiquated challenges exist chiefly because of the unambiguous tradeoffs implicit in the isolated, partitioned, and fragmented markets of yesterday? After fixing the conundrum of whom to trust via SCP, might we perhaps perpetuate Jed's founding vision of a single liquidity nexus? ↩

20. See collaboration disclaimer at § 2.2 in video description. Both of us generally understood that "protocols" like 0x could work with cautious deployment, but time has proved that the developers thereof have consistently put profit over order execution efficiency. Might venture-capital interests needlessly introduce these explicit tradeoffs, inherent in a creditum system not optimized with the SPEEDEX advancements? ↩

21. The eternal problem stems from the reality that their revenue, popularity, and indeed sustainability comes from attracting ever-increasing trading volumes. This has been the path Wall Street has followed for millennia, presenting a direct conflict of interest with the investing public. Even if the "best" Soroban DEX(es) dominate the network with the most liquidity, the power over democratic trading stays in the hands of a select few demoralizing organizations. ↩

22. Which are paltry at best aside from digging into smart-contract code. Compare these lax disclosures to the extensive public availability of pricing data from any number of traditional financial intermediaries. See, e.g., SEC-mandated Form 606, ATS, and 19b-4 reports letting investors know what fees they internalize. ↩

23. See infra note 41. Should we accept that every trade across a society ought pay economic rents to these protocols' inagural centralized developers? Does such a system even markedly differ from today's plutocracy? ↩

24. See, e.g., the natural emergence of competing centralized liquidity venues when able to naturally compete on price through external incentives such as negative prices with PFOF. Perhaps this law is best exemplified through the emergence of Instanet using a small computing framework to compete with global monopolies. Given our unique opportunity to start with an existing egalitarian system, might we continue pushing towards the financial standard for conversions? ↩

25. See David at supra § 1.2.2. See also institutional adoption of the DEX as a native offering book in registered offerings. Might we inspire the rebirth of IPOs by supporting the documented application of issuing an asset by creating an offer? ↩

26. In numerous encounters with traditional web3 pioneers on other chains, I have repeatedly brought up the many nuances of offering regulations. However, they rightfully choose to ignore the consequences until their operations are so large that regulators "attack" their communities, acting as trust arbiters in a central schema. If we truly aim to take down the inefficient financial system once and for all, might we continue treading toward a truly decentralized DEX? ↩

27. See, e.g., routine complexity in § 2.2 of PREV. Compare convoluted routing which developed over half a century with elegant simplicities promoted by direct pairwise liquidity pools in CAP38. Might innate routing efficiency drastically simplify the process of building dApps on Stellar? 🌌 ↩

28. See, e.g., the collapse of the "technically-accurate" LTCM fund, GME shorts, and WTI turnover. See also a plethora of "six sigma" events perpetuated by "black swans." To paraphrase the man who created the SEC, the only thing we can be certain of is uncertainty itself. 🛡️ ↩

29. See Tupui at supra § 1.2.3. Other community members have asserted but not proven that long-tail illiquid, unregulated, and trailblazing assets are better off on AMMs. However, could this enforced trading policy unintentionally limit the free-market price discovery mechanism so efficient in today's long-tail equities? ↩

30. See, e.g., their legal mandate to maximize profits for shareholders, as upheld in the Supreme Court. See also the formation of a "Foundation" five years after Uniswap's parent company was incorporated. Why do you really think they started following SBF's "effective altruism" peddling? ↩

31. I have communicated this view with multiple SDF staff members over the years, including in the judge-only notes of our third SCF application. The underlying funding of an exchange venue is categorically different than the operations of root protocol rules. Indeed, this is precisely the paradox I ran into when I originally tried to position the Syndicate itself as a "stock transfer protocol," rather than the TAD3 compliance layer. ↩

32. As I understand it, this is about two seconds. Compare the base agreement timeframes across any network peer with the present efficiencies of locally computing paths on shared variables. Might a further specialization of select order batches best serve an increasingly asset-abundant ecosystem? ↩

33. See vague whitepaper, especially requisite sequencer limitations in § 3.1, centralized offline compute in § 3.2, and explicit liability assumption in § 3.3. Could these "innovations" still be light years behind SCP's trust decentralization mechanisms? Or is their flawed use of trusted execution environments a speedy central control mechanism we should also strive for? ↩

34. The endgame of this path also implicates American legislature of the final "crypto market," as this is the only way to hold central institutions accountable when they serve the public at large. Of course, the "market" will be just another trading venue for Wall Street's power brokers to mimic, bloat, and exploit for huge returns. Could we be doomed to repeat yesteryear's sins so long as there exist central parties involved in exchange? ↩

35. See ongoing fund clarity work, both internal and opened on Syndicate GitHub repos, in re note 9 in PREV. We respectfully submit to the network that you do not get a "second first impression" with regulators, especially given the tacit but not contextual background of Jed.³⁶ Are the relatively modest profits a select few developers enjoy by arbitraging Soroban AMMs worth giving regulators a bone to pick with us, ad infinitum? 🏛️ ↩

36. For example, would not specialized financial instruments compose the utmost confidence in the liquidity pool transfer mechanism at a protocol level, allowing new institutional applications? A material aspect of compliance work involves regulatory reporting, recordkeeping, and analysis. Perhaps we might offer overseers the most transparent information possible as presently empowered by native execution result codes? ↩

37. See, e.g., various developer discussions about the relative ease of deploying a new pool with a custom stableswap bonding curve or multi-asset pool composition for "diversification." Might these capital allocation quandaries necessarily exist in the market, solvable chiefly and simply by proper native balances incorporated into a higher optimized system? Perhaps the capable core developers and ecosystem participants could trivially implement new curves as needed but not satisfied by passive sell offers, should sufficient aid emerge. ↩

38. See infra note 28 quo videtur we are all in agreement. But I do not think the most basic of core infrastructure should require scores of bug bounties to attain modest credibility. Maybe the community's safety approach showcased in the Soroban update delay can be our guiding light to "take a minute, do things slow, do them steady, do them the right way from the onset, and fix the bug." 🐛 ↩

39. See, e.g., open protocol upgrades facilitated through public discussion, comprehensive analysis, and iterative disclosures. Compare the collective growth of such an important network function with the singular gatekept product-development approach employed across largely identical Soroban AMMs. Perhaps more concerningly, see also long-term natural supply-and-demand constrainment when upgradable underlying structures rely on an entity operating the order book itself. ↩

40. For time, I will omit further contemplations on design principles in re prior public discussion, quod erat appreciatively incorporated into CAP45. 🫱🏼‍🫲🏻 Tomer established that "you can't call classic order books from Soroban." Might we first "put a lot of effort into that" to rectify this limiting plight, since contracts share the root account infrastructure to hold classic assets? ↩

41. See, e.g., 0.15% ZeroEx, 0.25% Uniswap, and 0.25% Matcha online execution expenses, materially ignoring gas. The requisite siloing centralization showcased here runs antithetical to free markets. All furiosity aside, these are fundamental flaws in the endgame of these contracts, not the fault of talented developers like @earrietadev who have shown exceptional humanitarian consciousness by pivoting projects away from wasteful mining externalities. ↩

42. Might we contemplate the longer-term thinking that makes Stellar work so foundationally well across developing global nations? Should we force tomorrow's innovators to sell themselves into a system that extracts their passion to sustain liquidity DAO rewards, listing fees, and central development? That's not a network I'd like to be a part of expanding, given such a dire need for a system that puts us all on the same playing field. 🗺️ ↩

43. See, e.g., the billions made weekly through Wall Street exchange skimming using riskless theft of retail dollars through net-detrimental social-class exploitation. While a few cents today might look like peanuts, imagine what a difference to your retirement portfolio just an extra couple of bucks collectively in lumens would make, e.g., not three short weeks ago. These details are what's at stake when it comes to eliminating the hidden costs of centralizing PFOF, excess gas, and poor execution that so commonly serve to the detriment of long-term investor savings and retirements. ↩

44. This post is a labor of love born from deep analysis of how markets have evolved since the first public company. I've invested nearly everything available into trades demonstrating the efficiency principles preserved in our last bastion of a free market, totaling years of our much-needed rent expenses. While the conversation began with an acknowledgment that this will challenge some incubated business models across the network, I sincerely hope we might objectively analyze what could be the best step forward for the unbanked, given years of contract deployments serving only a select few institutional users. 🫱🏿‍🫲🏼 ↩