> ## Documentation Index
> Fetch the complete documentation index at: https://docs.meteora.ag/llms.txt
> Use this file to discover all available pages before exploring further.

# Pool Liquidity Modes

> How to create DAMM v2 pools using concentrated liquidity or compounding fee mode

DAMM v2 supports three collect fee modes, each suited to different LP strategies. This guide covers the two pool creation approaches developers use: **concentrated liquidity** (modes 0 and 1) and **compounding fee** (mode 2).

| Mode        | `collectFeeMode` | Price Range          | Single-Sided | Fee Behaviour                                      |
| ----------- | ---------------- | -------------------- | ------------ | -------------------------------------------------- |
| BothToken   | `0`              | Concentrated or full | ✅            | Fees claimable in both tokens                      |
| OnlyB       | `1`              | Concentrated or full | ✅            | Fees claimable in quote token only                 |
| Compounding | `2`              | Full range only      | ❌            | Portion of fees auto-compounds back into liquidity |

***

## Concentrated Liquidity Pools

Concentrated liquidity pools allow LPs to focus capital within a chosen price range, earning more fees per dollar deposited when the market price stays within range. These use `collectFeeMode` `0` (BothToken) or `1` (OnlyB).

**Key characteristics:**

* **Custom price range** — Set `minPrice` / `maxPrice` to concentrate liquidity. Use `MIN_SQRT_PRICE` / `MAX_SQRT_PRICE` for full-range.
* **Single-sided supported** — Deposit only token A (one-sided) or both tokens (balanced).
* **Fees claimable** — LPs claim accumulated fees separately from their position.

### TypeScript SDK

```typescript theme={"system"}
import { Connection, Keypair } from "@solana/web3.js";
import {
  CpAmm,
  CollectFeeMode,
  BaseFeeMode,
  ActivationType,
  MIN_SQRT_PRICE,
  MAX_SQRT_PRICE,
  getSqrtPriceFromPrice,
  getBaseFeeParams,
  getDynamicFeeParams,
} from "@meteora-ag/cp-amm-sdk";
import BN from "bn.js";

const connection = new Connection("https://api.mainnet-beta.solana.com");
const cpAmm = new CpAmm(connection);

const tokenADecimals = 9;
const tokenBDecimals = 6;

// Define your price range (or use MIN/MAX for full range)
const minSqrtPrice = getSqrtPriceFromPrice("0.5", tokenADecimals, tokenBDecimals);
const maxSqrtPrice = getSqrtPriceFromPrice("2.0", tokenADecimals, tokenBDecimals);

// Calculate initial sqrt price and liquidity
const { initSqrtPrice, liquidityDelta } = cpAmm.preparePoolCreationParams({
  tokenAAmount: new BN(1_000_000_000),
  tokenBAmount: new BN(1_000_000),
  minSqrtPrice,
  maxSqrtPrice,
  collectFeeMode: CollectFeeMode.BothToken, // or CollectFeeMode.OnlyB
});

// Configure fees
const baseFeeParams = getBaseFeeParams(
  {
    baseFeeMode: BaseFeeMode.FeeTimeSchedulerLinear,
    feeTimeSchedulerParam: {
      startingFeeBps: 100, // 1%
      endingFeeBps: 25,    // 0.25%
      numberOfPeriod: 10,
      totalDuration: 3600,
    },
  },
  tokenBDecimals,
  ActivationType.Timestamp
);

const poolFees = {
  baseFee: baseFeeParams,
  compoundingFeeBps: 0, // not used for concentrated liquidity
  padding: 0,
  dynamicFee: getDynamicFeeParams(25),
};

const positionNft = Keypair.generate();

const { tx, pool, position } = await cpAmm.createCustomPool({
  payer: wallet.publicKey,
  creator: wallet.publicKey,
  positionNft: positionNft.publicKey,
  tokenAMint,
  tokenBMint,
  tokenAAmount: new BN(1_000_000_000),
  tokenBAmount: new BN(1_000_000),
  sqrtMinPrice: minSqrtPrice,
  sqrtMaxPrice: maxSqrtPrice,
  initSqrtPrice,
  liquidityDelta,
  poolFees,
  hasAlphaVault: false,
  collectFeeMode: CollectFeeMode.BothToken, // 0 or 1
  activationPoint: null,
  activationType: ActivationType.Slot,
  tokenAProgram,
  tokenBProgram,
});

console.log("Pool:", pool.toString());
```

***

## Compounding Fee Pools

Compounding fee pools use a constant-product full-range (x·y=k) model where a configurable percentage of trading fees are automatically reinvested back into pool liquidity as token B. The remaining fees are claimable by LPs.

**Key characteristics:**

* **Full-range only** — Uses the full price range. `minPrice` / `maxPrice` config values are ignored.
* **Balanced pools only** — Both tokens required at creation. Single-sided deposits are not supported due to DEAD\_LIQUIDITY.
* **`collectFeeMode: 2`** — `CollectFeeMode.Compounding`.
* **`compoundingFeeBps`** — Controls the fee split (0–10000 bps). E.g. `5000` = 50% compounds back, 50% claimable.
* **Fee fields** — Swap results expose `claimingFee` + `compoundingFee` instead of a single `tradingFee`.

<Note>
  Compounding pools work best for long-term LPs who want fee income to grow their position size automatically.
</Note>

### TypeScript SDK

```typescript theme={"system"}
import {
  CpAmm,
  CollectFeeMode,
  BaseFeeMode,
  ActivationType,
  MIN_SQRT_PRICE,
  MAX_SQRT_PRICE,
  getBaseFeeParams,
  getDynamicFeeParams,
} from "@meteora-ag/cp-amm-sdk"; // requires ^1.3.7

// Compounding pools use full range
const { initSqrtPrice, liquidityDelta } = cpAmm.preparePoolCreationParams({
  tokenAAmount: new BN(1_000_000_000),
  tokenBAmount: new BN(10_000_000_000),
  minSqrtPrice: MIN_SQRT_PRICE,
  maxSqrtPrice: MAX_SQRT_PRICE,
  collectFeeMode: CollectFeeMode.Compounding,
});

const poolFees = {
  baseFee: getBaseFeeParams(
    {
      baseFeeMode: BaseFeeMode.FeeTimeSchedulerLinear,
      feeTimeSchedulerParam: {
        startingFeeBps: 100,
        endingFeeBps: 25,
        numberOfPeriod: 10,
        totalDuration: 3600,
      },
    },
    tokenBDecimals,
    ActivationType.Timestamp
  ),
  compoundingFeeBps: 5000, // 50% of fees compound back into liquidity
  padding: 0,
  dynamicFee: getDynamicFeeParams(25),
};

const positionNft = Keypair.generate();

const { tx, pool, position } = await cpAmm.createCustomPool({
  payer: wallet.publicKey,
  creator: wallet.publicKey,
  positionNft: positionNft.publicKey,
  tokenAMint,
  tokenBMint,
  tokenAAmount: new BN(1_000_000_000),
  tokenBAmount: new BN(10_000_000_000),
  sqrtMinPrice: MIN_SQRT_PRICE, // full range
  sqrtMaxPrice: MAX_SQRT_PRICE,
  initSqrtPrice,
  liquidityDelta,
  poolFees,
  hasAlphaVault: false,
  collectFeeMode: CollectFeeMode.Compounding, // mode 2
  activationPoint: null,
  activationType: ActivationType.Slot,
  tokenAProgram,
  tokenBProgram,
});
```