Fermi Labs
@FermiLabs
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Verifiable Finance at the speed of light. Building @FermiTrade and @ContinuumChain https://t.co/s5nzgXwZSI
Joined February 2023
1/ We’re excited to announce our $1.2M pre-seed round, led by @equilibrium_co & @BigBrainVC . With this funding, the @fermilabs team is focused on building a scalable and capital efficient orderbook DEX on Solana.
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Continuum is now live on testnet. You can check out the explorer here: https://t.co/RiEVfjtJu0 And learn more from the whitepaper: https://t.co/0JZ6CowUaA (This is the last post in the thread)
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Continuum will be the base layer powering @FermiTrade, the first perps DEX offering FIFO ordering guarantees.
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The fair ordering guarantees are available to all users via two mechanisms - instant inclusion reciepts (<2ms for co-located clients) with canonical queue position & timestamp included; and timelock encryption on the tx to eliminate the possibility of any fine-grained re-ordering
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Onchain Market Microstructure today is strictly inferior to centralised venues, due to a lack of sub-block ordering and inclusion guarantees. Continuum introduces a new primitive - a blockchain built around a Verifiable Delay Function serving as proof of elapsed time, allowing
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Introducing @ContinuumChain - the first blockchain with fair ordering guarantees at microsecond resolution.
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>To have price discovery on a CLOB you must have FIFO: yes, absolutely. A key point that many miss. >but FIFO is incompatible with permissionless sequencing: no? It is indeed possible to enforce FIFO at millisecond (ms) resolution and make any exclusion or re-ordering
Consider the following. To have price discovery on a CLOB you must have FIFO, but FIFO is incompatible with permissionless sequencing. Therefore you can’t have price discovery on a permissionless CLOB. You can have extremely liquid markets. But not price discovery.
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MEV will persist as long as block builders retain the privilege to decide ordering & inclusion within a block. A question that's not asked often enough: is it possible to cryptographically enforce strict FIFO ordering & inclusion at ms resolution? If so, that would finally give
Thesis Drop: MEV has become the dominant limit to scaling blockchains. Our data reveals that the dominant paradigm of MEV extraction has moved to on-chain searching, and is starting to consume most of the capacity of most high throughput blockchains. 🧵 👇
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3/ 🔍 Highlight of the Week: Onchain trading has developed from fixed AMMs to customized AMMs and order books. Now, e.g., @eulerfinance & @FermiLabs are pushing capital efficiency beyond existing limits. Open questions remain on blockchain scaling & ordering guarantees.
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Agreed, this exact approach makes the most sense re clobs on solana. Fermi’s architecture includes an off-chain ordering, inclusion and matching pipeline, with matched trades settling directly on the solana L1. Along the way we include some gadgets to fix the ordering and
@defi_monk You also don’t need an L2 to build a clob. It’s the most bearish thing I’ve seen so far. Run the book of chain and match off chain, and only submit matched orders to the L1. You can skip all the bridging UX.
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4/ The problem - onchain orderbooks today are illiquid. This is driven by the problems of capital inefficiency, high latency, and lack of ordering guarantees - making markets on present day onchain orderbooks is a nightmare for LPs. Making orderbooks fair, fast, efficient, and
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3/ Orderbooks are some of the highest throughput systems in existence (in terms of number of messages) - They are also the “rails” responsible for matching and settling over $130T in transactions annually. As such, it's one of the most critically important pieces of digital
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2/ We’d also like to give a shout out to the angels that were early backers of our vision: @FarmerJoe0x, @macbrennan_cc / @temporal_xyz , @TheOnlyNom, @abondar92, @NotDeGhost / @osec_io, @ashwathbk, @mhonkasalo, @gaius1337. Additionally, @SolanaFndn for a grant funding our
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@0xalpo Off the top of my head: 1. No deterministic transaction ordering & inclusion guarantees [everyone spams the validators, attaches priority fees, and prays for the best] 2. Trying to include everything in consensus path [latency critical applications, like HFT - cannot be bounded
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One of the most specific visions for the future, kudos @toly & the solana dev team. While they are focused on building the best possible global state machine that physics allows, we @fermilabs are focused on building the best possible exchange layer atop this absolutely
If you think about science fiction 50 years from now There is still going to be finance I envision it as an atomic single state machine globally synchronized as fast as physics allows We have an opportunity to build that now What else would I be working on? Legend @toly
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Bullish CLOB-AMM flippening.
🚨JUST IN: @PhoenixTrade, a decentralized limit order book on Solana, surpassed @RaydiumProtocol to become the second-largest DEX on Solana by 24H volume, hitting over $1B in trading volume for the first time.
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We’re excited to share a working copy of our whitepaper: https://t.co/gMGX3Bco9X We model the impact of the intent based order book on Fermi, on market depth, slippage, trading price, and ROI for LPs. [1] see ref 3 in whitepaper. (7/7)
drive.google.com
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Fermi is the first implementation of a capital efficient DLOB architecture, that separates deposit requirements and the ability to place limit orders - potentially unlocking orders of magnitude more capital utilisation than present DEXes. (6/7)
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What if there was a far less costly way to ensure credibility of orders? Models show that around ~1% deposit, potentially together with reputation scores, should be sufficient to ensure over 99% credibility of orders - i.e. representing a strong informational signal, without
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But at what cost? As should be apparent, this liquidity is being massively underutilised - not actually being used for trades, hanging around purely to give credibility to the informational signal it represents. (4/7)
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