DAMM v1 Pool Design Guide

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.

DAMM v1 is a legacy product, but many teams still need to understand how to evaluate or maintain an existing DAMM v1 pool. This guide helps you think like a product owner: what kind of market are you creating, what LP behavior do you want, and what return stack supports that behavior?

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Step 1: Choose the pool curve

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Use a constant-product pool for volatile markets

Choose a constant-product DAMM v1 pool when the token pair needs open-ended price discovery. Good fit:

• Project token paired with SOL or USDC.
• Long-tail assets.
• Markets where price can move significantly.
• Liquidity that should cover a wide price range.

Product tradeoff: liquidity is spread across the full curve, so it is simple and robust, but not as capital efficient around a narrow price band.

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Use a stable pool for pegged or correlated assets

Choose a stable pool when both assets should trade close to a target relationship. Good fit:

• Stablecoin pairs.
• Correlated assets.
• Assets where low slippage near a peg is more important than wide price discovery.

Product tradeoff: stable pools are efficient near the target relationship, but they are not designed for assets that can freely reprice against each other.

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Use an LST pool for supported SOL/LST markets

Choose an LST-aware stable pool when token A is native SOL and token B is a supported liquid staking token. In DAMM v1, this is a permissioned depeg configuration rather than a generic permissionless stable-pool option. Good fit:

• LST protocols building liquidity.
• SOL/LST swap routes.
• Markets where the LST appreciates against SOL over time.

Product tradeoff: LST pools improve the fit for staking-token markets, but teams still need to account for LST protocol risk and depeg risk.

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Step 2: Understand the LP return stack

DAMM v1 LP returns can come from several layers: A strong pool does not need every layer, but it should have a clear reason for why LPs will stay.

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Step 3: Decide whether the pool needs a farm

A farm is useful when organic fees and vault yield are not enough to attract the target depth. It is a separate incentive layer around DAMM v1 LP tokens, not a setting inside the AMM pool state. Use a farm when:

• The market is new and needs bootstrapping.
• The project wants to compete for aggregator routing.
• A partner wants to reward LPs for supporting strategic liquidity.
• The pool needs a campaign window around launch, migration, or growth.

Avoid relying only on farms when:

• The reward budget is too small to change LP behavior.
• There is no plan for liquidity after incentives end.
• The reward token is highly volatile and could distort displayed APR.
• The pool has no expected trading demand.

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Step 4: Evaluate Dynamic Vault fit

Dynamic Vault yield is valuable when the pool contains supported assets such as major stablecoins or SOL. It is less relevant when a token side has no supported vault strategy. Ask:

• Does one side or both sides of the pool have Dynamic Vault support?
• How much of the return expectation comes from vault yield?
• What external strategy risks does the vault introduce?
• How important is immediate withdrawal liquidity for this LP audience?

Vault yield is best used as a durability layer, not as the only reason to LP.

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Step 5: Decide whether to lock liquidity

Liquidity locks are useful when trust and continuity matter. Consider a lock when:

• The project wants to demonstrate long-term liquidity commitment.
• The pool is part of a token launch or migration.
• Community members are concerned about sudden liquidity removal.
• A partner or launchpad requires a visible commitment.

A lock improves confidence, but it does not eliminate market risk. Locked LP tokens are still exposed to the pool’s assets and the pool’s underlying mechanics.

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Step 6: Read APY as components, not one number

When reviewing a DAMM v1 pool, split the displayed return into parts:

• Base APY from virtual price growth.
• Fee-over-TVL from recent trading fees.
• Vault yield from eligible Dynamic Vault strategies.
• Farm APR from reward emissions.

This prevents a common mistake: treating a temporary farm APR as if it were permanent pool yield.

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Step 7: Match the pool to the audience

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Traders

Traders care about execution quality: depth, slippage, reliability, and routing.

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LPs

LPs care about return, risk, ease of withdrawal, asset exposure, and incentive duration.

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Projects

Projects care about liquidity depth, market confidence, token distribution, and sustainability after campaigns end.

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Integrators

Integrators care about predictable pool behavior, existing liquidity, and whether the market is still maintained. A good DAMM v1 pool design aligns all four groups.

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Recommended DAMM v1 patterns

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Stablecoin pool

• Use a stable pool.
• Prioritize low slippage and routing volume.
• Use Dynamic Vault yield where supported.
• Add farms only when you need extra campaign depth.

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SOL/LST pool

• Use an LST-aware stable pool when supported.
• Emphasize virtual price tracking and reduced staking-token mismatch.
• Consider partner rewards during early liquidity growth.
• Educate LPs on LST and depeg risk.

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Long-tail token pool

• Use a constant-product pool.
• Consider a liquidity lock for trust.
• Use farms for launch or migration windows.
• Be realistic about organic volume after incentives end.

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Final checklist

Before promoting or maintaining a DAMM v1 pool, answer:

• What curve does this market need: constant-product, stable, or LST?
• What assets are in the pool, and what risks do they introduce?
• Does the pool have eligible Dynamic Vault yield?
• Is there an active farm, and when does it end?
• How are fees and APY displayed to LPs?
• Is any liquidity locked?
• What is the plan after incentives decline?

The best DAMM v1 pools are not just high-APR pools. They are pools with a clear market purpose, sustainable LP reasons, and transparent tradeoffs.