Active liquidity, not passive pools
A propAMM is an onchain market maker that prices trades using its own logic and its own inventory. This is a different model from the AMMs most people know. A traditional AMM, such as a constant-product or concentrated-liquidity DEX, holds liquidity that crowdsourced providers deposit, and prices trades with a fixed mathematical formula. That liquidity is passive: the price only moves as the pool is traded against, and it sits where it was last placed until someone consumes it. propAMMs provide active liquidity instead. Their prices are updated continuously, independent of whether anyone is trading, so quotes track the live market rather than lagging it. Because a professional operator manages pricing and inventory directly, propAMMs can quote tighter and use their capital more efficiently than a passive pool.Two parts: pricing and execution
A propAMM is a two-part system. An offchain pricing engine continuously estimates the pair’s fair value, usually from the most liquid venue for that asset, for example a major exchange’s order book for crypto or, for Stock Tokens, the primary listing exchange of the underlying equity. An onchain execution program then turns that view into executable liquidity, handling book construction, fees, and inventory management. Common pricing inputs include oracle providers, centralized-exchange order books, and the primary listing exchange for a tokenized equity or fund. The propAMM does not rely on the pool’s last trade as its only price signal.The oracle update
A passive AMM only reprices when a trade shifts its pool balance, so price discovery is outsourced to arbitrageurs. A propAMM instead reprices through a low-latency oracle update that publishes the operator’s fair value estimate directly onchain. No user trade is needed for the price to move; it tracks the maker’s continuously updated view of the market. Updates are pushed on a fixed cadence, often every 100ms, with an immediate update whenever fair value drifts beyond a configurable threshold. Each update is a compact payload carrying only the new fair value and any strategy parameters. The program rebuilds the full liquidity profile from current vault balances and stored configuration, which keeps updates small and cheap to submit.Oracle risk mitigation
propAMMs mitigate oracle risk by making quote freshness part of the pricing logic. If an oracle update is delayed, the program can widen spreads, withhold depth, or stop quoting until a fresh update lands. Operators can also compare multiple pricing inputs offchain before publishing a value and push an immediate update when the market moves beyond a configured threshold.What this means for you
- Tighter pricing. Active, continuously updated quotes generally mean better prices than passive pools, especially on liquid pairs.
- Reliable fills on supported assets. propAMMs focus on liquid, well-established markets where they can quote with confidence.
- No action required on your part. You do not need to know which propAMM you traded against. Rialto compares them all and routes your order to the best result automatically.