Meteora's DLMM is designed with features that provide more flexibility for liquidity providers (LPs) and help LPs earn as much fees as possible with their capital.
DLMM was inspired by Trader Joe's Liquidity Book and in our implementation, we organize the liquidity of an asset pair into discrete price bins. Token reserves deposited in a liquidity bin are made available for exchange at the price defined for that particular bin. Swaps that happen within the price bin itself would not suffer from slippage. The market for the asset pair is established by aggregating all the discrete liquidity bins.
DLMM LPs earn fees for liquidity provision, dynamic fees during market volatility, and LM rewards where available.
**DLMM is currently in open beta
Features
1. High capital efficiency and precise liquidity concentration with zero-slippage bins
Higher capital efficiency and fees for LPs. DLMM can support high volume trading with low liquidity requirements through the concentrating of tokens at or around the current market value.
Higher trading volume and fees due to zero slippage within each active bin that greatly reduces price impact
2. Flexibility to choose your preferred volatility strategy
Greater flexibility and control for LPs when it comes to efficient liquidity distribution. LPs can build flexible liquidity distributions according to their volatility strategies.
Unlocks more opportunities to capture higher fees based on market conditions and LP objectives / risk profile
LPs can also provide single-sided liquidity with only one token, unlike typical AMMs. This allows token teams to launch their token and bootstrap liquidity without providing a large amount of USDC or SOL at the start.
3. Dynamic fees that capitalize on volatility
Fees that increase or decrease depending on how volatile the market is, which in turn help offset losses that LPs may experience in volatile markets and enhance LP profitability.
How it works
Users can select token pairs that they wish to provide liquidity for. For each token pair, they can choose a liquidity shape that best suits their strategies.
Generally:
Spot provides a uniform distribution that is versatile and risk adjusted, suitable for any type of market and conditions.
Curve is ideal for a concentrated approach that aims to maximise efficiency while minimizing impact of volatility
Bid-ask is an inverse Curve distribution, typically deployed single sided for a DCA in or out strategy. It can be used to capture volatility in a stable or pegged pair.
Take note that it is important for LPs to closely monitor their positions and adjust accordingly to market conditions to manage the risk of impermanent loss.
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Unlike our Dynamic AMM pools, the DLMM is not connected to our Dynamic Vaults for lending yield. All liquidity is solely used for trading.
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