Howdy class!

Jack’s out today, so I’ll be your substitute teacher. That means yes to snacks, no to pop quizzes, and a strong maybe on rolling in that ancient CRT TV strapped to a cart. Honestly, it depends on which bootlegged DVDs you managed to smuggle in — because if we’re stuck with Shrek in 144p and hardcoded Russian subtitles, we might actually have to learn something.

On today’s syllabus: key market insights and an exclusive first look at a brand-new protocol from Drift!

Swift Protocol takes on DeFi’s execution problem

The DeFi trading experience is a balancing act. 

Market makers juggle cost and efficiency, while traders deal with delays, slippage and the ever-present reality of MEV extraction. Onchain execution can be slow, liquidity is often scattered across different venues, and gas fees — even on Solana — still exist.

These are just a few of the problems that Drift — the largest derivatives platform on Solana — set out to solve with Swift Protocol. Its new trading standard is designed to maximize execution speed, minimize slippage and make trading truly gasless across perpetuals and spot markets. 

Most onchain trades today are scattered across AMMs, order books and private market makers, leading to suboptimal execution. Swift Protocol consolidates these sources into a single execution layer. Instead of waiting for confirmations, Swift broadcasts orders to market makers, who compete to fill them in milliseconds, ensuring better prices and deeper liquidity. Not too shabby.

For Swift Protocol to work, it needs liquidity providers to be active participants. Traditionally, market makers on Solana manage order book quotes, a process that can be inefficient. JIT market making improves this by only submitting fills when needed, reducing unnecessary gas costs. Swift further enhances this by introducing a WebSocket-based system that simplifies market maker integration, allowing them to react to orders instantly and efficiently.

Swift also removes gas fees for traders, and does not impose additional costs on market makers, according to Chris Heaney, co-founder of Drift and lead on Swift Protocol. “JIT makers already pay gas to submit their fills. They don’t have to pay any additional gas fees vis-a-vis what they're currently paying," he told Lightspeed. This minimizes unnecessary gas expenses and ensures capital efficiency. Heaney explained that one reason market makers appreciate this system is "because they pay less gas providing JIT fills than they do placing and canceling quotes on an order book.”

Swift's model also addresses one of the biggest challenges in onchain trading: MEV, or maximal extractable value. In simple terms, MEV occurs when transactions are reordered, inserted or censored within a block to create profit opportunities for arbitrage bots or validators at the expense of traders. One common way this happens is through slippage. Traders set a maximum slippage limit to ensure their trade still goes through if prices move, but in many systems, market makers can immediately fill the trade at that limit to extract extra profit.

Swift Protocol removes this risk by using a Dutch auction system, "which means a user can’t instantly pay their max slippage. It works similar to Uniswap X and other intent protocols,” Heaney explained. Instead of letting market makers instantly fill an order at the worst possible price a trader is willing to accept, Swift forces them to compete for the best price.

As good as all of this sounds, I still had to flag the protocol's championing of staking-based order prioritization — or the idea that orders could be prioritized based on how much of the platform's governance token a user has staked. My issue was with whether deep-pocketed traders and firms would get an unfair advantage in terms of execution priority. I’m no fan of plutocratic systems.

Heaney clarified that there will be no staking-based prioritization at launch, though the team is still considering how to best implement it. 

“Proposed designs only provide a ‘first look’ to staked market makers, so normal market makers can still fill users as well,” he said. He went on to explain that "in combination with the Dutch auction, a staked market maker can only fill a user first if they're willing to give them a great price."

By collapsing execution times, removing gas fees for traders, and structuring orders to minimize MEV, Swift offers a new take on how high-performance trading can work in DeFi. If the protocol delivers on its promises, it could set the standard for how fast, efficient and fair decentralized trading should be. 

The Swift Protocol is now live for perpetuals trading, with spot markets coming soon.

— Jeffrey Albus

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Despite the ongoing market downturn, Solana's Real Economic Value (REV) holds strong at $778.1m in Q1 2025 — significantly higher than the $127.6m reported just a year ago.

With Jito Tips ($423.4m) and Priority Fees ($327.4m) leading the way, it’s clear that a lot of onchain demand is still there, even if local outcomes fall short of initial forecasts for the quarter.

— Jeffrey Albus