How to compare Meteora DLMM and DAMM v2 pools

How does a DLMM pool hold liquidity?

DLMM splits the price range into bins. Each bin holds liquidity at one price, and only the active bin, where the current price sits, trades. A swap inside the active bin fills at that bin's price with no slippage. The price moves to the next bin once the active bin runs out of one token. The bin step is the price gap between neighbouring bins, up to 400 basis points. Small steps suit stable or very liquid pairs, large steps suit volatile tokens.

When you add liquidity you pick a range of bins and a shape. Meteora's docs describe three: Spot spreads liquidity evenly, Curve puts more of it near the current price, and Bid-Ask puts more of it near the edges of the range.

How does a DAMM v2 pool hold liquidity?

DAMM v2 is a constant-product pool that runs in one of two modes. In compounding mode it works like a classic full-range pool. In concentrated mode the pool has a fixed minimum and maximum price, and swaps that would push the price past them fail.

Each DAMM v2 position is a Token 2022 NFT. Whoever holds the NFT controls the position.

How do the fees differ?

In DLMM every swap pays a base fee set by the pool's base factor and bin step. A variable fee comes on top. It rises with volatility, measured by how many bins recent swaps crossed, and falls back as trading calms down.

In DAMM v2 the base fee can follow a schedule: it can fall over time after launch, or change with the token's market cap. An optional dynamic fee rises with volatility. Depending on the pool's fee mode, fees may be collected only in the quote token, often SOL or USDC.

A new DAMM v2 pool on a launch schedule can start with a very high fee that drops over the following minutes or hours. Its fee/TVL in that period can look far better than what the pool will earn once the schedule ends.

What should you compare between two pools?

• Fees net of the protocol share and scaled to your deposit. This is what Est. fees per hour shows. The fee/TVL guide explains why the raw ratio can mislead.
• TVL. A small pool reports high ratios, but your deposit dilutes it more.
• Pool age. A pool younger than 4 hours has only short fee windows, and a fee schedule may still be running.
• The current fee and where it is heading. For DAMM v2, check whether a schedule is still lowering it. For DLMM, check the bin step and how much of the fee is the variable part.
• How much attention the position needs. A DLMM range or a concentrated DAMM v2 range stops earning when the price leaves it. A full-range position keeps earning but earns less per dollar.

What are the risks in each?

In both pool types, when the token's price falls, traders sell the token into the pool and take out the other side. You end up holding more of a token that is worth less, and the fees may not cover the difference. This is impermanent loss, and with new Solana tokens it is often the largest cost.

DLMM positions stop earning fees once the price moves outside your bin range, so they need more active management. Concentrated DAMM v2 pools stop trading at their price limits. Full-range DAMM v2 positions stay active but spread liquidity thinly.

Meteora's safety guide also covers scam tokens and fake pools. Check the token's mint address and the pool address before you deposit.

Sources

• Meteora docs: What is DLMM
• Meteora docs: DLMM formulas
• Meteora docs: DLMM strategies and use cases
• Meteora docs: What is DAMM v2
• Meteora docs: DAMM v2 time scheduler
• Meteora docs: DAMM v2 dynamic fees
• Meteora docs: Staying safe on Meteora

Is this financial advice?

No. This guide explains how the numbers work. Past fees do not predict future fees, and new tokens can lose most of their value quickly. Check a pool yourself before you deposit.