DLMM Liquidity Provision Strategy

When to Use

• Opening new DLMM positions
• Rebalancing existing LP positions
• Analyzing bin distribution
• Evaluating pool APR opportunities

Key Principles

1. Bin Width Selection

• Majors (SOL, ETH, BTC): Concentrate within 2-5% of current price
• Stablecoins: Tight bins, 0.1-0.5% range
• Volatile memecoins: Wider bins, 5-15% range
• New tokens: Start wide (10%+), tighten as volatility stabilizes

2. Entry Criteria

• Volume/TVL ratio > 0.3 (indicates active trading)
• 24h fees > $1000 (ensures meaningful yield)
• APR between 50-500% (too high = red flag)
• Bin step appropriate for asset volatility

3. Warning Signs

• APR > 1000% usually means low liquidity or high IL risk
• Volume/TVL ratio < 0.1 = dead pool
• Large price gaps between bins = manipulation risk
• Single-sided liquidity = impending dump

4. Position Sizing

• Max 20% of domain balance per position
• Split across 2-3 pools for diversification
• Never more than 3 active DLMM positions

Rebalancing Rules

When to Rebalance

• Price moves >50% outside your concentrated range
• APR drops below 30% of entry APR
• Better opportunities emerge in same pair

When NOT to Rebalance

• Price temporarily spikes (wait for stability)
• Gas costs exceed expected gains
• Within 24h of opening (let position settle)

Checklist Before Adding Liquidity

• [ ] Pool TVL > $100k
• [ ] 24h volume > $50k
• [ ] APR realistic (50-500%)
• [ ] Bin step matches volatility
• [ ] No recent rug signs on token
• [ ] Position size < 20% of balance