What Are Bins?

Think of an asset’s price as a large staircase.Each step represents a price interval.A bin is one of those steps — a range where you deposit liquidity that becomes active when the price moves into it.

• If the token price is within your bin, your liquidity is available for trading.

• If the price moves out of your bin, your liquidity goes inactive (“sleeps”) until the price returns.

You can imagine bins as water tanks placed on different steps:

• If the water level (the price) matches the tank’s level, it fills and is used.

• If the level rises or falls too much, that tank remains unused until the level comes back.

What Is the Bin Step?

The bin step is the size of each step. It defines the price difference between one bin and the next.

• Small bin step (e.g., 0.1%) → shorter steps, higher precision, but requires more bins to cover a wide range.

• Large bin step (e.g., 1%) → wider steps, fewer bins, but lower precision (higher slippage).

**Example:**Let’s say you want to create a pool for SOL/USDC:

• Current SOL price = $200

• You set a bin step of 0.5%

That means each bin is separated by $1 (0.5% of 200).So, you would have bins at $199–$200, $200–$201, $201–$202, etc.

If you add liquidity across 5 bins, covering $197–$202, your capital is distributed across those small price ranges.

• At $200, liquidity in bins $199–$200 and $200–$201 is active.

• If SOL jumps to $210, your liquidity goes inactive until the price re-enters your range.

Difference from Other AMMs

The bins and bin steps system may look more complex at first. But in practice, when you provide concentrated liquidity on Uniswap within a custom range, your liquidity is also split across many micro-ranges.

The difference is that Meteora gives greater flexibility and customization before creating the pool.

Fee Structure in DLMM Pools

Meteora introduces a dynamic fee system that better protects LPs and rewards them during volatility. Here’s how each fee works:

• Base Fee: the guaranteed minimum fee, always charged regardless of volatility.

• Max Fee: the upper limit a fee can reach, even in extreme volatility.

• Protocol Fee: the portion of fees captured by Meteora.

• Dynamic Fee: a variable fee that increases during volatility, protecting LPs. It is recalculated each time the active bin changes.

Example (SOL/USDC Pool):

• Base fee: 0.1%

• Max fee: 1%

• Protocol fee: 10% of total fee (goes to Meteora)

• Dynamic fee: fluctuates between 0.1% and 1%

• Calm market: trade pays 0.1% → protocol takes 0.01%, LPs receive 0.09%.

• Volatile market: dynamic fee rises to 0.8% → protocol takes 0.08%, LPs receive 0.72%.

• Extreme volatility: fee caps at 1% (max fee).

Relationship Between Bin Step and Fees

• Small bin step: liquidity is more concentrated due to smaller price differences between bins. This creates more dynamic fee events, since the price moves between bins more frequently.

• Large bin step: liquidity is spread out across wider ranges. This generates fewer dynamic fees, since bin changes occur less often.

Practical recommendations:

• Large bin step: best for highly volatile pairs, keeping liquidity active longer and maximizing fee collection.

• Small bin step: best for stablecoin pairs, where tight ranges concentrate capital and optimize fee collection.

Liquidity Distribution Options

In addition to bins and bin steps, DLMM also lets LPs choose how to distribute liquidity within the selected range:

• Spot: liquidity is distributed evenly across the range, collecting the same fee percentage along the entire span.

• Curve: liquidity is concentrated at the center of the range, generating higher fee income in the middle and less toward the edges. Ideal for stablecoin pairs (e.g., USDC/USDT).

• Bid/Ask: the opposite of Curve. Liquidity is concentrated on the edges of the range, collecting fewer fees in the middle but more when price swings outward.

Conclusion

Meteora’s DLMM pools combine flexibility and efficiency by allowing liquidity providers to fine-tune bin size, bin step, and distribution strategy according to market conditions and their risk profile. The dynamic fee system balances protection with profitability, ensuring LPs are better compensated during volatility. With these features, Meteora stands out as one of the most advanced AMMs in DeFi, especially for users seeking to optimize market-making strategies across different asset types and volatility environments.

__________________________________________________________________________________________

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Wallet address:

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What Are Bins?

Think of an asset’s price as a large staircase.Each step represents a price interval.A bin is one of those steps — a range where you deposit liquidity that becomes active when the price moves into it.

• If the token price is within your bin, your liquidity is available for trading.

• If the price moves out of your bin, your liquidity goes inactive (“sleeps”) until the price returns.

You can imagine bins as water tanks placed on different steps:

• If the water level (the price) matches the tank’s level, it fills and is used.

• If the level rises or falls too much, that tank remains unused until the level comes back.

What Is the Bin Step?

The bin step is the size of each step. It defines the price difference between one bin and the next.

• Small bin step (e.g., 0.1%) → shorter steps, higher precision, but requires more bins to cover a wide range.

• Large bin step (e.g., 1%) → wider steps, fewer bins, but lower precision (higher slippage).

**Example:**Let’s say you want to create a pool for SOL/USDC:

• Current SOL price = $200

• You set a bin step of 0.5%

That means each bin is separated by $1 (0.5% of 200).So, you would have bins at $199–$200, $200–$201, $201–$202, etc.

If you add liquidity across 5 bins, covering $197–$202, your capital is distributed across those small price ranges.

• At $200, liquidity in bins $199–$200 and $200–$201 is active.

• If SOL jumps to $210, your liquidity goes inactive until the price re-enters your range.

Difference from Other AMMs

The bins and bin steps system may look more complex at first. But in practice, when you provide concentrated liquidity on Uniswap within a custom range, your liquidity is also split across many micro-ranges.

The difference is that Meteora gives greater flexibility and customization before creating the pool.

Fee Structure in DLMM Pools

Meteora introduces a dynamic fee system that better protects LPs and rewards them during volatility. Here’s how each fee works:

• Base Fee: the guaranteed minimum fee, always charged regardless of volatility.

• Max Fee: the upper limit a fee can reach, even in extreme volatility.

• Protocol Fee: the portion of fees captured by Meteora.

• Dynamic Fee: a variable fee that increases during volatility, protecting LPs. It is recalculated each time the active bin changes.

Example (SOL/USDC Pool):

• Base fee: 0.1%

• Max fee: 1%

• Protocol fee: 10% of total fee (goes to Meteora)

• Dynamic fee: fluctuates between 0.1% and 1%

• Calm market: trade pays 0.1% → protocol takes 0.01%, LPs receive 0.09%.

• Volatile market: dynamic fee rises to 0.8% → protocol takes 0.08%, LPs receive 0.72%.

• Extreme volatility: fee caps at 1% (max fee).

Relationship Between Bin Step and Fees

• Small bin step: liquidity is more concentrated due to smaller price differences between bins. This creates more dynamic fee events, since the price moves between bins more frequently.

• Large bin step: liquidity is spread out across wider ranges. This generates fewer dynamic fees, since bin changes occur less often.

Practical recommendations:

• Large bin step: best for highly volatile pairs, keeping liquidity active longer and maximizing fee collection.

• Small bin step: best for stablecoin pairs, where tight ranges concentrate capital and optimize fee collection.

Liquidity Distribution Options

In addition to bins and bin steps, DLMM also lets LPs choose how to distribute liquidity within the selected range:

• Spot: liquidity is distributed evenly across the range, collecting the same fee percentage along the entire span.

• Curve: liquidity is concentrated at the center of the range, generating higher fee income in the middle and less toward the edges. Ideal for stablecoin pairs (e.g., USDC/USDT).

• Bid/Ask: the opposite of Curve. Liquidity is concentrated on the edges of the range, collecting fewer fees in the middle but more when price swings outward.

Conclusion

Meteora’s DLMM pools combine flexibility and efficiency by allowing liquidity providers to fine-tune bin size, bin step, and distribution strategy according to market conditions and their risk profile. The dynamic fee system balances protection with profitability, ensuring LPs are better compensated during volatility. With these features, Meteora stands out as one of the most advanced AMMs in DeFi, especially for users seeking to optimize market-making strategies across different asset types and volatility environments.

__________________________________________________________________________________________

Did this content help you make better analyses? Help us improve and develop more by making a donation.

My goal is to take a course to become fluent in English and pursue a bachelor's degree in economics to bring even more knowledge to you. I need an average of $6.000 for this.

Wallet address:

0x3C410D81059bbadf663Bb69C4c7dF60362c546c9