What is DLMM? Meteora's price bins and dynamic fees, explained

DLMM in one paragraph

A liquidity pool is a shared pot of two tokens that traders swap against. People who put tokens in are liquidity providers, or LPs, and they earn part of every trading fee. DLMM is Meteora's pool for LPs who want control: instead of spreading tokens over every possible price, it sorts them into separate price steps called bins, and each LP picks which bins to fill.^[1] It runs as a Solana program at the address LBUZKhRxPF3XUpBCjp4YzTKgLccjZhTSDM9YuVaPwxo.^[2]

Bins and the active bin

Each bin is one price. Only one bin is active at a time: the bin at the current price, where trades happen right now. Inside it, a trade fills at the bin's fixed price, so it has no slippage (the price moving against you while your trade fills). When a trade uses up the tokens in the active bin, the next bin becomes active, and the price moves with it.^[1]

Bins below the price hold one token of the pair; bins above hold the other.^[1] Meteora calls them token X and token Y: token Y waits below the price, ready to buy token X if the price falls, and token X waits above it, ready to be sold if the price rises.^[3]

Bin step: how far apart the bins are

The bin step is the price gap between two neighbouring bins, measured in basis points (bps). One basis point is 0.01%, so a 25 bps step means each bin is 0.25% above the last. The exact rule: a bin's price is (1 + bin step ÷ 10,000) raised to the power of the bin's number.^[4] The program allows steps up to 400 bps.^[1]

Small steps suit steady pairs such as two stablecoins. Big steps suit jumpy tokens, because the same number of bins then covers a much wider price range.^[5] The table shows how fast that adds up:

Positions: the bins you fill

When you add tokens, you get no LP token and no NFT. Instead the program opens a position: an on-chain record of your bins, your share of each bin, and the fees you can claim. A position can cover up to 1,400 bins and can be widened or narrowed later without closing it.^[6] Opening one needs a refundable deposit of about 0.059 SOL, called rent, which you get back when you close the position.^[7]

Your tokens only work while the price is inside your bins. When it leaves them, the position stays open but stops earning until the price returns or you move it.^[6] By then it holds a single token: all token Y if the price rose past your bins, all token X if it fell below them. Impermanent loss on Meteora shows what that can cost.

Dynamic fees

Every trade pays a base fee, set when the pool is created and larger for bigger bin steps. A pool can add a variable fee on top, which grows when trades cross many bins quickly and shrinks again after a calm spell. The two together can never be more than 10% of a trade.^[4]

Only the bins a trade passes through earn its fee.^[8] Fees are not added back into your position automatically: they wait until you claim them.^[6] Depending on the pool's setting, fees are paid in whichever token the trader sends in (InputOnly) or always in token Y (OnlyY).^[8]

Who gets the fee

In a standard DLMM pool, LPs get 90% of each trading fee and the protocol keeps 10%. In a launch pool, the split is 80/20. If a trade comes through a referral partner, the partner's cut comes out of the protocol's share, so the trader pays nothing extra.^[9] Meteora fees explained compares every pool type.

Two pool modes: rewards or limit orders

A DLMM pool runs in one of two modes. In liquidity-mining mode it can pay extra reward tokens to active LPs. In limit-order mode, users can leave buy or sell orders in chosen bins, and an order fills when trades reach its price. A pool cannot do both.^[1][3]

What DLMM is good at, and what it asks of you

• More fees per dollar. Your tokens sit where trading happens, so they can serve more trades than in a pool that covers every price.^[1]
• One-token deposits. You can put in just one token, to buy or sell gradually or to seed a new token.^[10]
• It needs watching. A position stops earning when the price leaves its range, so DLMM needs more attention than a DAMM pool.^[10]
• No permanent lock. DLMM gives no LP tokens, so its liquidity can't be locked forever the way DAMM pools allow.^[10]
• No lending yield. Unlike the older DAMM v1 pools, DLMM doesn't lend out idle tokens for extra interest.^[1]