Meteora
  • Meteora: The most dynamic and sustainable liquidity layer on Solana
  • PRODUCT OVERVIEW
    • Meteora Liquidity Pools
      • DLMM Overview
        • What is DLMM?
        • DLMM Program
        • Dynamic Fees
        • Strategies & Use Cases
        • DLMM Farming Rewards
      • DLMM Launch Pool Overview
      • Dynamic AMM Overview
        • What is a Dynamic AMM Pool?
        • Dynamic AMM LP Fee and APY Calculation
        • Creating a Dynamic AMM Pool via the UI
        • Claiming Fees from Permanently Locked Liquidity
        • Dynamic AMM Stable Pools
        • Dynamic LST Pools
        • Additional yield from Dynamic Vaults
        • Dynamic AMM Farm Overview
      • DAMM v2 Overview
      • Memecoin Pool Overview
        • Memecoin Pool v2
          • What is Memecoin Pool v2?
        • Memecoin Pool v1
          • What is Memecoin Pool v1?
          • Permanently Locking Liquidity
      • Stake2Earn Pool Overview
        • What is a Stake2Earn Pool?
        • Stake2Earn for Launchpads
      • Multi-Token Stable Pool Overview
    • Alpha Vault Overview
    • Dynamic Vault Overview
      • What is a Dynamic Vault?
      • Dynamic Vault Program
      • Hermes - Meteora's Keeper
        • Algorithm to find optimal yield allocations
        • Rebalance crank
        • Operation fee calculation
      • Design Goals
      • Security
      • Dynamic Vaults Whitepaper
      • Dynamic Vaults Community Explainers
      • Affiliate Program for Dynamic Vault
        • Become an Affiliate Partner (Dynamic Vaults)
    • Dynamic Bonding Curve (DBC) Overview
      • What is the Dynamic Bonding Curve?
      • Customizable Pool Configuration
      • Bonding Curve Formula
      • DBC Migrator Keeper
  • Meteora's Anti-Sniper Suite (A.S.S.)
    • Meteora’s Anti-Sniper Suite
      • Dynamic Fees
      • Fee Scheduler
      • Alpha Vault
  • INTEGRATION
    • DLMM Integration
      • DLMM SDK
        • DLMM TypeScript SDK
        • CPI Examples
      • DLMM API
      • Fetching information on locked liquidity in a DLMM
    • Dynamic AMM Pool Integration
      • Dynamic AMM SDK
        • Dynamic AMM TypeScript SDK
        • CPI Examples
      • Dynamic AMM API
        • Pool Info
        • Pool State
      • Setting Pool and Fee Config for Dynamic AMM Pools
      • Create Dynamic Pool with Timestamp/Slot Activation
      • Dynamic AMM - Farm Integration
    • DAMM v2 Integration
      • DAMM v2 SDK
        • DAMM v2 TypeScript SDK
        • DAMM v2 Rust SDK
      • Setting Pool and Fee Config for DAMM v2
      • Technical FAQ
    • Memecoin Pool Integration
      • Memecoin Pool v2 Integration
        • Setting Pool and Fee Config for Memecoin Pool v2
      • Memecoin Pool v1 Integration
        • TypeScript Code Examples
        • CPI Examples
        • Setting Pool and Fee Config for Memecoin Pool v1
        • Track permanently-locked liquidity in Memecoin Pool v1
        • Track Protocol Fee from swaps in Memecoin Pool v1
    • Stake2Earn Pool Integration
    • Dynamic Vault Integration
      • Using TypeScript-Client
      • Using Rust-Client
      • Using CPI
      • Vault API
        • Vault Info
        • Vault State
      • Vault Developer Resources
    • Alpha Vault Integration
      • Alpha Vault TypeScript SDK
      • Alpha Vault without Whitelist Setup
      • Alpha Vault with Whitelist Setup
    • Dynamic Bonding Curve (DBC) Integration
      • DBC SDK
        • DBC TypeScript SDK
        • DBC Rust SDK
      • DBC Fee Scheduler Formula
      • DBC Scripts
      • Program Repo
      • Launchpad Template
      • Technical FAQ
  • TOKEN LAUNCH POOLS
    • Steps to Create a Pool for a Token Launch
      • Create: DLMM Launch Pool
      • Create: Dynamic AMM Pool
      • Create: Memecoin Pool v1
      • Create: Stake2Earn Pool
      • Create: Pools with Alpha Vault
        • Create: DLMM Launch Pool with Alpha Vault
        • Create: Dynamic AMM Pool with Alpha Vault
        • Create: Memecoin Pool with Alpha Vault
        • Create: Stake2Earn Pool with Alpha Vault
    • Anti-Sniper Fee Suite for a Token Launch
  • Resources
    • Audits
    • Meteora Program IDs
    • Meteora APIs
    • Devnet Testing
    • Community Data Dashboards & Tools
    • Meteora Brand Assets
    • THE MASSIVE METEORA STIMULUS PACKAGE
      • Overview
      • 1. Dynamic Liquidity Market Maker (DLMM)
      • 2. Formation Of An LP Army DAO
      • 3. The 10% Stimulus Proposal
  • USER FAQ
    • Getting Started LPing
      • Supported Wallets
      • Prepare SOL
      • SOL required for Rent
      • What is Wrapped SOL?
      • What is an AMM?
      • What does it mean to provide liquidity?
      • How to swap to the tokens required for adding liquidity to a pool
      • How to quickly check if a token has any risks
      • Viewing your transaction history
      • My wallet has been compromised. What should I do?
    • Differences between DLMM and Dynamic Pools
    • DLMM FAQ
    • Dynamic AMM FAQ
      • How is the pool price of the token calculated in a Dynamic AMM?
      • What is a Meteora LP token?
      • How do I see fees earned on a Dynamic AMM Pool?
      • How to track your earnings for a Dynamic Pool?
      • What is Virtual Price in a Dynamic Pool?
      • How do LP tokens, fees, and virtual price work for Dynamic Pools?
      • Why must I add liquidity in non-stable Dynamic Pools using a 50:50 value ratio?
      • What is AMP in a Dynamic Pool with stable coins?
      • Why is the USDT-USDC pool not 1:1 in ratio of assets?
      • Can I create an LST, FX, or Multi-token pool using the Dynamic Pool creation tool?
    • Alpha Vault FAQ
    • Why is the token sometimes not picked up and tradable on Jupiter?
    • How do I create a new farm?
    • Video Tutorials to Get Started
      • LP Army Boot Camp
      • DLMM Strategy Sessions / Jam Sessions
  • Security and Risks
    • Risk of Impermanent Loss (IL)
    • Risk of depositing into an imbalanced pool / pool with price out of sync
    • Smart contract risk
    • Risk of a stablecoin depeg
    • Operational risk for dynamic vaults and pools
    • Lending risk for dynamic vaults and pools
  • legal
    • Terms of Service
    • Stake2Earn Terms of Service
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  1. USER FAQ
  2. Dynamic AMM FAQ

Why must I add liquidity in non-stable Dynamic Pools using a 50:50 value ratio?

PreviousHow do LP tokens, fees, and virtual price work for Dynamic Pools?NextWhat is AMP in a Dynamic Pool with stable coins?

Last updated 7 months ago

Meteora's Dynamic AMM is based on the Automated Market Maker (AMM) model and is a constant product-type pool that support prices from 0 to infinity.

The Dynamic AMM sets the price of an asset in the pool based on the ratio of the two assets in the pool. You have to add liquidity in a 50:50 value ratio to maintain the balance of assets in the liquidity pool and ensure the Dynamic AMM operates as intended with more accurate market prices.

Most AMMs, like Meteora's Dynamic AMM, use a constant product formula:

x * y = k

Where:

  • x is the amount of one asset in the pair (e.g. SOL)

  • y is the amount of the other asset in the pair (e.g. USDC)

  • k is a constant that stays the same always

To abide by this formula, the two assets in the pool must be provided in a balanced ratio of equal value. If one asset becomes significantly more valuable than the other, the pool would become imbalanced, affecting the token prices and trade volume.

For example, if an LP is able to add SOL and USDC in an imbalanced ratio:

  • If the value of the SOL amount added to the pool is higher than the value of the USDC amount, the pool price of SOL will decrease

  • If the value of the SOL amount added to the pool is lower than the value of the USDC amount, the pool price of SOL will increase

LPs depositing in an imbalanced ratio can also suffer a loss as arbitragers take advantage of the difference between the pool price and market price. For example, if the pool has a lower than market rate for SOL, arbitragers can buy your SOL at a cheaper rate and sell it on another DEX at market rate, profiting from the difference.

As such, to avoid creating a wrong/skewed price, liquidity providers must deposit both assets in equal value (50:50 in value). For example, if 1 SOL = 150 USDC, you must deposit 1 SOL and 150 USDC for the pool to provide accurate prices to traders.

This helps ensure that both assets are available in the correct proportion and this is crucial because the Dynamic AMM pool uses these assets to facilitate trades.

On a related note, read .

Things to note when creating a new Dynamic AMM Pool

The ratio of tokens is how you set the initial pool price. It is important that this is the market price or you will suffer loss due to arbitrage. So if you create a SOL/USDC pool, you would need to add the correct amount of USDC for every 1 SOL you add to the pool. If this is way off you can lose money as arbitragers take advantage of your low price.

It may take a few minutes for your pool to appear on the Meteora pools list, but if the transaction is successful then it will be created on-chain even if you don't see it in the UI.

Higher fee % tier means LPs like yourself make more money per trade. If all the liquidity for your token is in this pool you can start out with a high fee % tier, but, what tends to happen is that eventually others will create pools with a smaller fee to capture more volume. So for popular trading pairs, it mostly trades around 0.3% but can be higher for highly volatile pairs as LPs need to make enough fees to offset IL (impermanent loss).

In order for your pool to be picked up by Jupiter, you need to follow the instructions .

why the USDT-USDC pool is not 1:1 in ratio of assets
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