You’ve just clanked a banger… the rewards start rolling in… you can finally focus on your art, building cool mini apps, or just go out and touch grass, all while your wallet continues to accumulate those sweet Clanker trading fees.

But as the days pass… you recalculate what should be a 1% fee on every trade, and it turns out to be closer to 0.9%, or even less…

This disparity is caused by liquidity share dilution, and it is a common side effect of a successful clank.

Upon token launch, Clanker creates and permanently locks a liquidity position on your behalf, depositing the initial token supply into a one-sided liquidity pool on UniSwap.

Rewards are derived solely from this initial liquidity position, with the creator's fee share tied specifically to trades that flow through this position.

If you clank a banger, trading activity around your token grows, and other people start wanting a piece of the fees it is generating.

If/when other people add their own liquidity to the trading pair, this counts as a different position, and all trades that go through this alternative position no longer earn fees for the creator.

Reward flow example:

Day 1 - You're the only LP:

• Your locked LP position represents 100% of the pool's liquidity

• All trades route through your position

• $100k daily volume = $1,000 in LP fees (1%)

Day 30 - External LPs join:

• External LPs add liquidity

• Trades now route through whichever position offers the best price

• If external LPs capture 20% of trades:

  • Your position handles $80K volume = $800 in LP fees

  • External positions handle $20K volume = $200 in LP fees

Your effective earning rate drops from 1% to 0.8% despite the same total trading volume.

This occurs because each LP position independently collects fees from trades that route through it. Your locked position only earns when trades use your liquidity, not the external LPs' liquidity.

Clanker version 0-3.1 deployed tokens with the entire 100 billion token supply deposited as single-position liquidity in a Uniswap V3 pool.

Since Uniswap V3 pools allow for concentrated liquidity, external LPs can allocate capital within specific price ranges in the pool. They can add a large position in an active price range to capture a bigger slice of the trading volume.

When this happens, your position, which spans the entire range, receives a significantly reduced share of trading volume (and rewards).

Clanker V4 upgrades to use Uniswap V4 pools and hooks, allowing for new token launch features and pool dynamics:

Targeted Liquidity Distribution: In previous Clanker versions, all tokens were placed in a single LP position from the starting price to infinity. In V4, you can use Clanker’s recommended pool creation settings to create 5 LP positions that provide targeted liquidity at specified price ranges, optimizing your liquidity distribution curve.

MEV Protection: V4 introduces MEV modules, including a 2-block delay between token/pool deployment and trading activation to prevent snipers from buying in the same block as deployment.

Dynamic Fee Structures: V4 allows you to configure dynamic fees that adjust based on volatility (the more a token's price moves over a short period, the higher the fee), allowing you to capture more value when trading is most active.

High volatility = higher fees = better earnings per trade, even with less volume share.

Fee Conversion: V4 also introduces fee conversion options, which let you automatically swap earned fees to the paired token:

• Earn fees in your token → auto-convert to ETH

• Earn fees in ETH → auto-convert to your token (creates buy pressure)

Swapping your ETH earnings back into your token can (potentially) create a positive flywheel for your token that attracts more buyers. And you can switch back to earning ETH once you have attracted trader interest.

No, Clanker V4 does not prevent dilution from external LPs. However, it ****does protect against it far better than previous Clanker versions and all other decentralized token deployers on the market.

The honest answer is, you can't completely prevent dilution once external LPs join. But you can minimize the impact they have with a few different strategies:

Before external LPs arrive, you can deploy your own capital as new (unlocked) LP positions.

By doing this, you will capture more volume share before others arrive and create flexible liquidity that you can adjust as your token grows.

The video below demonstrates how to add one-sided liquidity to an existing Clanker pool.

You can even use some of your earned Clanker fees to do this and strengthen your personal pool position.

Even if your percentage drops, growing absolute volume compensates. 0.5% on $1M volume ($5,000) beats 1% on $200k ($2,000).

Keep your community engaged, release regular updates and milestones, and focus on marketing to attract new traders.

For new token deployments, using a combination of the recommended liquidity settings, dynamic fees, and fee conversion can help maximize your reward share.

External LP dilution is how decentralized markets work.

When your token attracts external liquidity providers, it means your token has real trading volume, market makers see your token as an opportunity, and your pool has deep liquidity (good for price stability and increased trust).

Clanker's rewards mechanism is designed to incentivize creators who foster trading volume over longer periods.

The goal isn't to prevent dilution; it is to build a token valuable enough that your percentage of a growing pie still generates meaningful rewards.

Your Clanker rewards decrease when external LPs join because you only earn fees from your locked positions, not from the entire pool. This dilution is unavoidable in both V3 and V4.

Clanker V4 presents better protection against LP dilution through strategic liquidity positioning and Uniswap v4 hooks, but does not solve the fundamental impact of external LPs

Your best strategy is to accept dilution as a sign of success and focus on growing the pie, not just your slice.