This episode features a roundtable discussion with Sam and Carlos from Blockworks Research, alongside Eric and Hayden from Jito Labs. Hayden previously worked at Blockworks before joining Jito approximately a year ago.

The conversation centers on Jito's newly announced Maker Priority Plugin (MPP), designed to solve market maker challenges on Solana. The discussion covers the technical implementation of BAM (Block Auction Mechanism) architecture, validator adoption dynamics, and future roadmap considerations.

The team also explores broader Solana ecosystem developments, including potential integration with upcoming protocol changes like Constellation and MCP, while touching on market structure improvements and asset tokenization opportunities.

Market Maker Pain Points and Non-Deterministic Scheduling

Market makers face uncertainty because "when you send a transaction out there, you're not really sure which validator it's going to hit, what client they're running, if they've made any modifications to the scheduler" - Eric

This non-determinism forces market makers to "quote wider because they don't have the confidence that when they send an update that it is going to land on chain, land in time" - Eric

The fragmented validator landscape creates an environment where "you could have different rules of the exchange every X milliseconds or X seconds" which isn't conducive to traditional market making - Hayden

Maker Priority Plugin Technical Architecture

The plugin provides "a dedicated TPU for BAM nodes" where market makers send transactions to the plugin TPU instead of individual validators - Eric

BAM scheduling operates in "50 millisecond batch auctions" with deduplication logic that ensures only the most recent update lands when multiple quotes are sent - Eric

If a market maker sends "10 sequential updates, we'll only land the most recent one as determined by a sequence number provided in the instruction data" - Eric

This results in "lower costs for the market maker" since "they don't have to spend the priority fee 10 times and they only land the relevant update" - Eric

Network Adoption and Validator Incentives

Currently "28% of the network is running BAM" meaning market makers benefit from deterministic scheduling "28% of the time, 72% of the time" they don't - Hayden

The plugin creates aligned incentives where "the more market makers that are using this plugin, the more that validators end up making" through conditional fees - Hayden

Second-order effects include "when you have tighter spreads, then you just have more trading. You have better prices" benefiting the entire ecosystem - Hayden

The goal is proving "with data that we're doing an experiment on market microstructure" to show markets operate better with this mechanism - Eric

Enhanced Time Precision and Batch IDs

Solana currently provides time updates "every slot" at "400 milliseconds" intervals, but "markets off-chain are moving much faster than in 400-millisecond ticks" - Eric

The team plans to introduce "a numerical representation of the actual BAM 50 millisecond intervention competition ID" for more granular on-chain time detection - Eric

This enables market makers to implement logic where "during BAM slots, quote tighter, outside of BAM slots, quote wider" based on deterministic batch identification - Hayden

Applications will be able to "detect passages of time in 50 millisecond intervals rather than being limited to 400 milliseconds" - Eric

Future Plugin Development and Ecosystem Impact

The team has "talked to the Phoenix guys" about perps support, with Phoenix already implementing oracles "that they can update every 50 milliseconds" - Hayden

Future perps plugins may address "liquidation" and other "highest priority operation that a perptex would require" beyond oracle updates - Hayden

The plugin foundation enables "more complex application-controlled execution" and potential features like "a BAM dark pool" using encrypted execution environments - Eric

Prioritization focuses on "what we could build in the BAM node that would be the highest impact to the Solana ecosystem" since "prop AMMs are responsible for an enormous percent of volume on chain" - Eric

Solana Protocol Evolution and Constellation Integration

Current Solana development priorities are "very clear" with focus on "faster, smaller blocks, like speed up consensus" compared to more scattered priorities from previous years - Carlos

Constellation proposes "a world where that's controlled by the protocol" instead of validators having "this monopoly over how transactions are scheduled" - Eric

BAM aims to "experiment with a world where builders have a say over how transactions are scheduled" as an alternative approach - Eric

Both BAM and Constellation address "censorship resistance" which is "incredibly important" for the ecosystem's long-term health - Hayden

Resources Mentioned

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