Berlin.

Lets Talk DLMM LP Farming with @MeteoraAG For those that know me know that I am a holder at heart, which is a great thing for a project but at the same time can be a challenging thing for an investor. You need to go through the highs and the lows of a project and roll with the punches. Having said that there are things that we can do and that I have done in the past using my investment to make me more money along the way. Today’s topic is going to revolve around general LP farming, but more specifically looking into Dynamic Liquidity Market Maker (DLMM) farming on app.meteora.ag I first started digging into this when I meant a dope developer @SoupyS0L on the project @DoopOnSol as I found he was doing some different stuff. At the end of the day Sol is a platform where devs often struggle to maintain focus as there are no fees for them to earn. His solution was to structure his project in Meteora so that he could incorporate taxes and earn money through his LP while also grinding on his project. As I started to dig in more, I found DLMM LP which gives the investor a fantastic opportunity to have their bags work for them. And it boils down to three primary areas: 1. Spot LP- Think of this as standard Automatic Market Maker (AMM) LP where it uniformly buys and sells your LP investment as price goes up or down. Price goes up x% the AMM will sell your token proportionately and provide you with Solana (in this example). Price goes back down, and you will then sell your Solana to buy more of token x. Along the way there are fees that are generated and depending on how much LP you provide will dictate how much of the fees you get. 2. Curve LP- This is something of a quick exit from a project where the buy/sell function of the DLMM is not linear and will scale you out very quickly or conversely if you think there will be a small dump in the project will scale you in much quicker as well. This will be a more aggressive way to earn fees but puts you at more of a risk of selling or buying to quickly if there is high price volatility 3. Bid Ask LP- So we have one that scales you out linearly over time, one that is heavy front loaded and now Bid Ask which is more of a linearly scaled buy/sell at the back end of your target range. This means that you are looking for a way to scale into a project slowly and at big lows and then sell a little bit at the front of a pump, but heavily at the top of your desired range. Makes sense, but what kind of strategies can you use? This will be the age-old question that only you can answer for yourself; however here are a few things to consider. Start by understanding if you are in the project for the long term, short term or how you like to hold. Long Term Holder If you are in the game for the long run and don’t care as much about price action and just want to rake up fees, I would recommend you look at the standard SPOT DLMM as it will be linear the entire way and if the project see saws for a while you will just make fees while your bag ultimately doesn’t change. However, keep in mind that if the project keeps mooning you will slowly be selling your bag the entire way up (while also earning fees) or if the project keeps dumping you will be buying more and more and more and impermanent loss will become real loss that you don’t recover from and fees likely won’t cover the spread. Short Term Flipper/Quick Exit In this scenario you are likely wanting to maximize your bags and don’t necessarily care if you have anything left in your bag after a short period of time, but at the same time don’t want to crush the chart. In this scenario you would want to consider using a CURVE DLMM and set your parameters to whatever growth you want (ie. 20% from current price) this will start to sell large amounts at very small growth “bins” and will essentially make the DLMM prioritize your buys or sells as opposed to the other LP providers that are running the other two options Maximize Earnings Kudos to nitter.gq/imthebhattman for this suggestion as I hadn’t fully considered it before! His belief from his experience would be to split your LP 50/50 with a Spot and Bid-Ask. The reason behind this is that you slowly exit or enter the project with the Spot DLMM while conversely using a higher amount of capital in the bid-ask option which essentially hedges your bet in the LP and covers the higher gains/losses with the slower Spot option. I personally haven’t tried this yet but in theory it makes a lot of sense. So do I add in my LP and just set it and forget it? Another great question that you need to answer yourself. In the past I have done it a few different ways. I usually only play the LP on projects I believe in long term and has consistent volume, so I like to add my LP into the project typically when I believe we are in an accumulation phase as I like to collect my fees while not really impacting my bags Other ways to consider doing it is adding the LP at the High and slowly DCA into the project as it dips and collect a large amount of fees and grow your position in the project on the way down. You would then remove the LP when you believe its at the bottom as you have not slowly DCA’d into the project all the way down and have a larger number of tokens to go with your fees. A third option is the exit approach like we talked about above where you slowly exit the project along the way. Why would I use the DLMM as opposed to standard LP in say Raydium? The short answer is that there are more fees in the Meteora side of things, and the fees generated will be much higher depending on the pool you select (it is dynamic not static so fees can range from 1-2% up to 5+). The downside to this is Meteora typically will have less volume, so it is a bit of a balance. The other primary reason is that Raydium is not a DLMM, so you don’t have any option on how you want your LP to work for you Using the DLMM do I need to balance my tokens with Sol? The quick answer is no, you have the ability to add LP like normal with both Sol and the token of choice; however, you do have the ability to do single sided LP which is great as this will ultimately lower the risk side of things and worrying about as much impermanent losses which is nice. One thing to keep in mind on single sided LP is that you are doing 1 of 2 things 1. Adding only Token X- If this is your approach you are realistically DCA’ing out of a project as you wont be able to buy any more of the token as you will have no pairing LP in there. You will still have the ability to gain fees however 2. Adding only Sol- If this is your approach you are only DCA’ing into the project as you have no tokens to sell if the project only goes up. Again you will still have the ability to gain fees AHHHHHH It shows impermanent loss on my screen, wtf is that? You better know WTF this is before you enter into LP pools. If a project keeps going up and you are slowly exiting the project you are going to not only gain the fees, but you will be making $$$$$ which is great. On the flip side of the coin if the project just continues to plummet you will show what is called an impermanent loss, this ultimately means that your LP is worth less than what it was worth when you put the money into the project. Does this mean that you have lost the money? The answer is yes but no, firstly yes if you were to exit the LP pool and then sell your tokens you are going to be eating Raman forever as you will have locked in your losses. If you continue to keep your money in the LP pool or remove LP and DON’T sell your tokens, then just like when you are a normal investor….you only lose money when you sell the bottom! So with impermanent losses it is just like the word suggests, its impermanent and things can change. As the project starts to grow you will start to see less and less losses until you cross the threshold of when you are back in the green. This is a relatively easy concept, but something the new folks to this game need to understand. Summary Ultimately, I have found that DLMM is a great way to have a multi faceted approach to your holdings with different options for the “holder” the “flipper” and “in betweener” · Whether you want your bags to work for you during the ride · Removing emotion of exiting a project and taking profits · DCA’ing over time without paying attention All the while earning insane fees! At the end of the Day @MeteoraAG doing some really really awesome things when it comes to defi and specifically Solana and DLMM is another one of those great things. I also recommend you have a look at $M3M3 as this could be an absolute game changer! nitter.gq/MeteoraAG/status/18643… Important Links app.meteora.ag/ (DLMM Goat) app.kamino.finance/ (good for providing traditional LP on select larger DeFi projects)