Modulis 4 · Concentrated liquidity

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Meteora DLMM — the exchange with dynamic fees

Video · 2 min.

Meteora DLMM on Solana

In a panic, the fee on Lily's Meteora pool jumps from 0.20% to 1.00%. Meteora DLMM splits prices into bins and adapts its fee to the market, but the fee shown is not what an LP keeps (95%, or 80% in launch pools), and a higher fee does not cancel impermanent loss.

Narrated, with light music

The full lesson with numbers and rules is below.

Watch on YouTube

SOL Meteora

Meteora DLMM — newer technology, growing fast

What is Meteora DLMM?

Meteora DLMM (Dynamic Liquidity Market Maker) is an exchange on Solana that uses a bin-based model. Instead of one continuous price line (like Orca), Meteora splits prices into separate "boxes" (bins).

DLMM = "Smart" fees

"Dynamic" means Meteora's fees automatically adapt to conditions:

Calm market → low fee
Choppy market → higher fee

It's like insurance pricing: when risk is higher, the premium is higher. And as an LP, you're the one collecting that bigger fee.

Bin model vs tick model

Tick model (Orca/Uniswap)

Liquidity is spread across one continuous price line. You pick a start and an end — everything between them is spread out evenly.

Bin model (Meteora)

The price space is split into separate "boxes." Each one has its own price and its own amount of liquidity. You can allocate each box differently.

The boxes analogy

Picture 8 shelves in a store. Orca: every shelf is stocked equally. Meteora: you can stack more product where the shoppers actually are, and less on the empty shelves.

	Tick-based (Orca/Uniswap)	Bin-based (Meteora)
Allocation	Even across the whole range	Individual per "box"
Fees	Fixed	Dynamic (adapts)
Management	Simpler	More flexible
IL protection	None	Partial (higher fees when IL is highest)

Dynamic fees — how they work

2026-09 update. Dynamic fees are no longer Meteora-only — since 2026-05 Orca has Adaptive Fee Pools, where the effective fee also rises with price movement. Orca's own docs stress that adaptive fees do not guarantee higher LP returns. What matters when picking a pool is whether the fee is fixed or adaptive — not the protocol's name.

Meteora automatically adjusts fees based on how jumpy the market is:

Market state	Base	Add-on	Total
Calm	0.20%	+0.00%	0.20%
Somewhat choppy	0.20%	+0.15%	0.35%
Choppy	0.20%	+0.40%	0.60%
Very choppy	0.20%	+0.80%	1.00%

Important: 'Total' is not what you receive

The "Total" column is what the swapper pays, not what reaches you. As an LP you keep less, because the protocol takes its own cut:

Standard DLMM pools → the protocol takes 5% of the fee, the LP keeps 95%
Bootstrapping / Launch pools (freshly launched tokens) → the protocol's share is 20%, the LP keeps 80%

When you work out your own APR, always multiply by the LP share. Otherwise the number comes out too high — especially in launch pools, where the gap is a fifth of the fee. Source: docs.meteora.ag, 2026-09; fee structures change, so check the specific pool's parameters before opening a position.

Why is this good for LPs?

When the market moves a lot, LPs take on more IL. The dynamic fee goes up exactly when LPs need it most — during a choppy market. It's like automatic insurance.

Meteora strategies — how to spread your liquidity

1. Spot (even)

Bin: $85 | ████████ (12.5%)
Bin: $86 | ████████ (12.5%)
Bin: $87 | ████████ (12.5%)
Bin: $88 | ████████ (12.5%) ← current price
Bin: $89 | ████████ (12.5%)
Bin: $90 | ████████ (12.5%)
Bin: $91 | ████████ (12.5%)
Bin: $92 | ████████ (12.5%)

When to use it: you don't know which direction the price will move.

2. Curve (concentrated)

Bin: $85 | ██ (3%)
Bin: $86 | ████ (8%)
Bin: $87 | ████████ (18%)
Bin: $88 | ████████████ (42%) ← most of it here
Bin: $89 | ████████ (18%)
Bin: $90 | ████ (8%)
Bin: $91 | ██ (3%)

When to use it: you expect the price to stay near where it is now. Maximum fees.

3. Bid-Ask (two-sided)

Bin: $85 | ████████████ (25%)
Bin: $86 | ████████ (15%)
Bin: $87 | ████ (8%)
Bin: $88 | ██ (4%) ← least in the center
Bin: $89 | ████ (8%)
Bin: $90 | ████████ (15%)
Bin: $91 | ████████████ (25%)

When to use it: you expect a big price move. Protection against IL.

What's new in Meteora in 2026

The three distribution strategies and the dynamic fee are the core of DLMM. In Q1 2026 Meteora added three things that change how you work with a position day to day:

Quote-only fees — you can choose to have all your earned fees accumulate in a single coin (e.g. SOL or USDC) instead of two. That makes bookkeeping and tax reporting far simpler, especially when the other side of the pair is a speculative token.
On-chain limit orders — in DLMM you can place a limit order as a single-bin liquidity position that keeps earning fees while it waits. This is exactly the idea we called a "paid limit order" in lesson 4-2, only implemented natively in the protocol.
Zap-in — you enter a position from a single token in one click, with no need to balance the token ratio yourself beforehand.

Figures as of 2026-09. Protocol features change — check app.meteora.ag before you use them.

Orca vs Meteora — a detailed comparison

	Orca Whirlpool	Meteora DLMM
Network	Solana	Solana
Model	Tick-based	Bin-based
Fees	Fixed	Dynamic
TVL	Bigger (~$200M+)	Smaller, but growing
Strategy flexibility	Medium	High
IL protection	None	Partial (dynamic fee)
Maturity	Mature	Newer
Planned DeFi Risk OS support	Phase 1	Phase 2

When to pick Meteora vs Orca?

Situation	Better fit	Why
Long-term "set and forget"	Orca	Simpler, more mature
Choppy market	Meteora	Dynamic fee offsets IL
Active management	Meteora	More flexible bin allocation
Biggest liquidity	Orca	More TVL
Our strategies (for now)	Orca	Better-tested integration

Meteora and our strategies

Right now we use Orca Whirlpool as our main LP venue. Meteora will be added as an alternative later.

Why do we start with Orca?

Maturity — Orca has been running longer, more battle-tested
Documentation — the Orca SDK is better documented
Liquidity — the SOL/USDC pool on Orca has bigger TVL
Simplicity — the tick model is easier to integrate

Meteora will be added later — dynamic fees can improve returns in a choppy market.

Once you get both the tick and the bin model, you can decide for yourself which exchange fits which pair and which market state — that's a call you make, not one the platform makes for you.

Risks and how to manage them

Risk	Level	Explanation
Program bug	Medium	Newer than Orca, less time in market
Low liquidity	Medium	Some pools are small
Dynamic fee risk	Low	Fee can be too low in a calm market
Governance and reputational risk	Medium	A US class action was filed against a co-founder over memecoins; the MET airdrop distribution was disputed
Solana downtime	Low	A general network-level question

Program bug (newer than Orca) → for now you keep your main position on Orca and test Meteora with a smaller amount, until it builds up a track record
Low pool liquidity → you only pick pools with high TVL and 24h volume, not just the first one on the list
Dynamic fee can be too low in a calm market → that's exactly when IL is also low — no downside here, the fee opens up once the market actually moves
Governance / reputational risk → the protocol's code can be sound while the team is a separate thing to assess. A US class action was filed in 2025 against Meteora co-founder Benjamin Chow over roughly $57M of investor losses in memecoins, and the October 2025 MET airdrop drew criticism because 4 addresses received 28.5% of the entire distribution while 60,000+ smaller participants got just 7%. Meteora has had no protocol-level exploit — but before you trust it with capital you check not only the audit, but also who runs the protocol.
Solana network downtime → the same question applies to every Solana protocol; you manage it by diversifying across networks

Every risk has a fix. Being new isn't a reason to avoid Meteora — it's a reason to start with a smaller size while you build up a track record.

Meteora DLMM is an innovative protocol. Dynamic fees are a real advantage for LPs. Like with any newer technology, there's less history behind it — so you size your position deliberately, starting small and growing it as you get familiar.

Coming up: now that we understand all three protocols, let's dig into the biggest LP risk — Impermanent Loss.

Quick check

How does Meteora DLMM's bin model differ from Orca's tick model?

Practice task

0 / 5

Compare Meteora DLMM with Orca

You only really understand Meteora once you see its bin chart live. Takes about 10 minutes, no wallet connection needed.

Just exploring — don't open a position and there's no need to connect a wallet. Meteora runs ONLY on the Solana network. For now our strategies start with Orca — Meteora is just for getting familiar.

This is learning, not investing — use only small amounts you treat as tuition.

You just did a live comparison of a Meteora bin chart against an Orca pool and picked a strategy for today's market — that's how people who actually run their own LP positions read protocols.

Mark as read