Behold, an Infinite Jest style explainer on Drift Protocol v1.

<aside> 📚 Prerequisites/Useful Links: vAMM

Perpetual Swaps


1 - dAMM Introduction

What is Drift?

Drift Protocol is a decentralized exchange for derivatives on Solana. The primary market currently served is perpetual swaps (SOL/BTC/ETH/LUNA/AVAX/BNB/MATIC) quoted in USDC.

How is it different from other perpetual DEXs?

Drift uses a vAMM (virtual Automated Market Maker). Moreover, it's the first completely configurable vAMM (hence, dynamic vAMM or dAMM). It is configured by the:

Given that the dAMM is configurable, it aims to optimally allocate the fee pool to incentivize more and more volume. After extensive research and testing, the goal is for the entire process to be systematized and transparent.

Why would anyone want to trade on a vAMM?

  1. A vAMM is a designated market maker on chain (a maker that must never pull liquidity).