Ellipsis Labs Announces Phoenix Perpetuals: Bringing Institutional-Grade Derivatives to Solana

The team that revolutionized spot trading on Solana is now setting its sights on derivatives. At Breakpoint 2025, Ellipsis Labs CEO Eugene Chen announced Phoenix Perpetuals, a fully on-chain perpetual exchange that aims to cut trading costs by up to two-thirds compared to existing Solana perpetual platforms—bringing on-chain trading costs to parity with giants like Binance.

Summary

Ellipsis Labs has been quietly building some of Solana's most impactful trading infrastructure, and their track record speaks volumes. The company's spot trading innovations have already saved retail traders "tens of millions of dollars" by dramatically reducing price impact on trades. Now they're applying those same lessons to the perpetual futures market.

Phoenix Perpetuals represents the culmination of years of on-chain market structure research. The platform introduces prop AMM (proprietary automated market maker) technology to derivatives, allowing market makers to provide liquidity more efficiently while protecting themselves from toxic order flow. This innovation, which Ellipsis Labs pioneered in spot markets, fundamentally changes the economics of on-chain trading.

The announcement is particularly significant because it demonstrates that Solana's DeFi infrastructure has matured to the point where it can genuinely compete with centralized exchanges on both cost and user experience. Chen revealed that spot trading on Solana now matches or beats Binance pricing, and Phoenix Perpetuals aims to achieve the same milestone for derivatives.

Perhaps most importantly for the broader ecosystem, Phoenix Perpetuals is designed to be fully composable. This means other developers can build on top of the platform's liquidity and risk engine, potentially spawning an entirely new generation of derivatives products including vaults, options, and social trading platforms.

Key Points

The Journey from Passive to Active Liquidity

When Ellipsis Labs entered the Solana ecosystem, trading was dominated by passive AMMs—the standard Uniswap-style pools where liquidity providers simply deposit assets and let an algorithm handle pricing. While functional, these systems couldn't compete with the tight spreads offered by active market makers on centralized exchanges.

The company's first major product, Phoenix Spot (launched in 2023), introduced a fully on-chain order book to Solana. This allowed professional market makers to actively quote prices, immediately cutting price impact on million-dollar trades from 30 basis points to 15 basis points. The order book architecture represented Solana's first major step toward institutional-grade market structure.

The Prop AMM Revolution

Ellipsis Labs' next innovation proved even more transformative. In 2024, the company introduced Solphi, which pioneered what Chen calls the "prop AMM revolution." This hybrid approach strategically places some trading logic on-chain while keeping other components off-chain, optimizing for both efficiency and security.

The key insight was that different aspects of trading strategy have different requirements for transparency and speed. By carefully selecting which components live where, prop AMMs can quote tighter spreads and deeper liquidity than either pure on-chain order books or traditional AMMs. The results have been dramatic: that same million-dollar trade now costs just 5 basis points in price impact on Solana spot markets—matching Binance's pricing before exchange fees.

Phoenix Perpetuals Architecture

Phoenix Perpetuals brings these proven innovations to the derivatives market. The platform is described as non-custodial and fully on-chain, meaning traders maintain control of their assets while benefiting from verifiable execution at Solana's characteristic speed.

The user experience priorities are clear: gasless trading for retail users removes friction, while the prop AMM market structure ensures competitive pricing. Market makers benefit from a structure that allows them to "dodge toxic flow from toxic traders"—essentially protecting professional liquidity providers from strategies that consistently extract value from the market.

Ecosystem Composability

One of the most forward-looking aspects of Phoenix Perpetuals is its emphasis on composability. Unlike many perpetual exchanges that operate as isolated products, Phoenix is designed to serve as infrastructure for the broader ecosystem.

Chen outlined several potential applications that could be built on top of Phoenix Perpetuals: trading vaults that implement automated strategies, perpetual-based options products, gamified trading experiences, and social trading platforms. By making the liquidity and risk engine accessible to other developers, Ellipsis Labs is positioning Phoenix as a foundational layer for Solana DeFi rather than just another trading venue.

Building on Solana's Unique Advantages

Chen emphasized that these market structure innovations are "truly only possible on Solana." The blockchain's high throughput and low transaction costs create a design space that simply doesn't exist on other chains. While Layer 2 solutions on Ethereum compete on similar metrics, Solana's permissionless and unified environment allows teams to experiment and iterate more freely.

The Phoenix Perpetuals launch also highlights the maturation of Solana's broader infrastructure. Chen specifically credited teams like Anza and Firedancer for improving the base layer, Jito for deterministic sequencing, and wallet providers like Phantom and Privy for enabling self-custody without sacrificing user experience.

Facts + Figures

• Price impact on a $1 million Solana spot trade has decreased from 30 basis points (before Phoenix) to 5 basis points today—a 6x improvement
• The same $1 million trade on Coinbase costs 12 basis points plus exchange fees; on Binance it costs 5 basis points plus exchange fees
• Current Solana perpetual exchanges charge approximately 15 basis points in price impact on million-dollar trades—Phoenix Perpetuals aims to reduce this to 3-5 basis points
• Ellipsis Labs describes their spot trading improvements as having saved retail traders "tens of millions of dollars"
• Phoenix Spot launched in 2023 as Solana's first fully on-chain order book
• Solphi launched in 2024, pioneering the prop AMM architecture
• Prop AMMs have captured the majority of market share for major trading pairs on Solana
• Phoenix Perpetuals is currently live in closed private beta with active user onboarding
• Chen described Solphi as "the first step function improvement in on-chain microstructure since Uniswap v3"

Top Quotes

• "At Ellipsis Labs, our mission has always been to build better markets, better than what we see on centralized venues today."

• "If you've ever traded on Solana, odds are you've already interacted with some of our products without even knowing about it."

• "The prop AMM market structure innovation was truly only possible on Solana."

• "On Solana, we're able to compete for order flow based on price."

• "What we've done for the Solana spot markets we're now doing for derivatives."

• "We've created a market structure that fosters competition between market makers to drive spreads down while allowing them to dodge toxic flow from toxic traders."

• "The thing I'm personally most excited about with Phoenix is that Phoenix Perpetuals is fully on-chain and fully composable, just like all of our other products."

• "When we started this company, we were just running market structure experiments on-chain. Solana was the best place for us to run the experiments. We had no idea what type of impact we would be able to make."

Questions Answered

How does Phoenix Perpetuals differ from existing Solana perpetual exchanges?

Phoenix Perpetuals introduces prop AMM market structure to derivatives trading, which is the same technology that revolutionized Solana spot markets. Current perpetual exchanges on Solana charge around 15 basis points in price impact for large trades, while centralized exchanges charge 3-5 basis points. Phoenix aims to match centralized exchange pricing by creating more efficient liquidity provision. The platform also offers gasless trading for retail users and maintains full on-chain verifiability.

What is a prop AMM and why does it matter?

A prop AMM (proprietary automated market maker) is a hybrid system that strategically places some trading logic on-chain and some off-chain. This differs from traditional AMMs where all logic is on-chain, or order books where trading decisions happen entirely off-chain. The innovation allows for tighter spreads and deeper liquidity because different aspects of trading strategy can be optimized for their specific requirements. Prop AMMs have already proven their effectiveness in Solana spot markets, where they've captured majority market share.

Is on-chain trading actually competitive with centralized exchanges now?

According to Ellipsis Labs' data, yes—at least for spot trading on Solana. A million-dollar Solana trade now costs approximately 5 basis points in price impact, which matches Binance's pricing before exchange fees and beats Coinbase's 12 basis points. This represents a dramatic improvement from the 30 basis points that was standard before Phoenix Spot launched. Phoenix Perpetuals aims to achieve similar parity in the derivatives market.

What can developers build on top of Phoenix Perpetuals?

Because Phoenix Perpetuals is fully composable, other teams can build products using its on-chain liquidity and risk engine. Ellipsis Labs specifically mentioned interest in seeing trading vaults, perpetual-based options products, gamified trading experiences, and social trading platforms. The composable architecture means Phoenix serves as infrastructure rather than just an end-user product, potentially spawning an ecosystem of derivatives applications.

How did Ellipsis Labs improve Solana trading without most users knowing?

Ellipsis Labs' products are integrated into the trading infrastructure that powers many Solana applications. When users trade through aggregators or other front-end interfaces, they may be routed through Phoenix Spot or Solphi for the best prices without realizing it. The company has deliberately maintained a low profile, focusing on building effective products rather than marketing. This behind-the-scenes approach has allowed them to quietly save traders "tens of millions of dollars" in reduced price impact.

When can traders access Phoenix Perpetuals?

Phoenix Perpetuals is currently live in a closed private beta, with the team actively onboarding users from a waitlist. Interested traders can sign up through the company's website. The staged rollout allows Ellipsis Labs to refine the platform and ensure stability before a broader launch, following a similar careful approach to their previous product releases.