Previously, Meteora developed the most dynamic protocols in DeFi by leveraging the power of Solana. These include dynamic vaults, which rebalance every minute across 10 lending protocols in search of safe, optimum yield, as well as dynamic AMMs tailored for a variety of use cases, including LM-free LST markets, forex, stablecoins, and more.
Today, after intense development, collaboration with the ecosystem, and weekly community calls for over a year, we are delighted to announce the most comprehensive plan to drive liquidity and TVL for Solana ever conceived — the Meteora Stimulus Package!
- DLMM: A sparking new dynamic liquidity market maker with dynamic fees and precise liquidity concentration for the best LPing possible
- Expert DAO: An expert DAO with the best DeFi minds in Solana
- The 10% Proposal: A proposal for 10% of MET to be set aside for LPs to massively encourage TVL growth in Solana in early 2024
This strategy encompasses the concurrent execution of a novel product, a dedicated community, and a robust incentive structure. Close collaboration with all key stakeholders is essential to bring this vision to fruition, and we look forward to working with everyone towards making Solana the best trading ecosystem in crypto!
1. Dynamic Liquidity Market Maker
Our newest dynamic liquidity protocol is our DLMM, a new form of concentrated liquidity AMM on Solana, developed to make it easier and more sustainable for users and project teams to provide broader, deeper liquidity on Solana. We aim to improve LP profitability with dynamic fees, allow new tokens to bootstrap their liquidity in new creative ways, and allow LPs a broader array of LP strategies and more precise liquidity concentration.
The DLMM consists of discrete zero-slippage price bins, each of which holds liquidity for a specific price range. Reserves deposited in a liquidity bin are made available for exchange at the price defined for that bin. Swaps that happen within the same price bin do not suffer from slippage. The market for the asset pair is established by aggregating all the discrete liquidity bins.
Zero-slippage bins offer even greater concentration than a uniswap v3 model by allowing LPs to provide deep levels of liquidity at a precise price point. Additionally, LPs can create richer LP strategies by creating liquidity shapes.
Additionally, the bin-based model opens the door for dynamic fees where the fees increase during high market volatility which is tracked when trading changes the active price bin. This increases LP profitability for volatile trading pairs where overcoming IL has always been challenging for LPs, especially without farming rewards.
Differences Over Other Models
Over AMMs
DLMMs offer a number of benefits over traditional automated market makers (AMMs):
- Reduced slippage: By concentrating liquidity in a specific price range, DLMMs reduce the amount of slippage that traders experience.
- Improved capital efficiency: DLMMs allow liquidity providers to deposit their assets into specific price bins, which makes better use of their capital.
- Deeper liquidity: DLMMs can provide deeper liquidity for asset pairs, even those with low trading volume.
- Improved LP profitability: Dynamic fees allow LPs to make more money on market volatility
Over CLMMs
Benefits For Users
For LPs
- High Capital Efficiency: DLMM allows LPs to precisely concentrate their liquidity beyond just a price range by creating liquidity shapes that can better map their liquidity to the price movement, which makes greater use of their capital. This is because DLMM can support high-volume trading with low liquidity requirements. In the future, LPs can earn lending yield on capital in unused bins, further increasing capital efficiency.
- Zero Slippage: Trading within an active bin has zero slippage or price impact. This makes it easier for LPs to concentrate their liquidity even further and capture more volume and fees than they could before.
- Dynamic Fees: LPs earn dynamic swap fees during high market volatility to compensate for impermanent loss. This is because the fees charged on swaps increase with volatility, which helps to offset the losses that LPs can experience in volatile markets.
- Flexible Liquidity: LPs can build flexible liquidity distributions according to their strategies. For example, an LP could concentrate their liquidity in a narrow price range around the current market price to minimize slippage, or they could spread their liquidity across a wider price range to reduce effects of impermanent loss.
For Project Teams
- New Creative Ways to Launch Tokens: DLMM opens up new creative ways for project teams to launch their tokens. For example, a project team could use DLMM to implement a bonding curve, which is a type of token sale mechanism that rewards early buyers.
- Flexible Token Design: Project teams can design their own bonding curves depending on how they plan to sell their tokens. For example, a project team could use a bonding curve to sell tokens and use the funds there to support a minimum token buyback price guaranteeing a token floor price.
- Organic Liquidity Growth: DLMM can help project teams organically grow liquidity for their tokens. For example, a project team could use DLMM to create a liquidity incentive program that rewards LPs for providing liquidity to their token pair.
Overall, DLMM offers several benefits to both LPs and project teams. For LPs, DLMM can improve capital efficiency, reduce slippage, and improve profitability. For project teams, DLMM opens up new creative ways to launch tokens, allows for flexible token design, and can help to organically grow liquidity for their tokens.
2. Formation Of An Expert DAO
We envision a Solana ecosystem buoyed by deep, expansive liquidity. To realize this, we’re launching the Meteora DAO with these 3 principles:
- To Leverage Expertise: We’re seeking community experts who understand Solana’s unique needs and can help guide and advocate for the MET DAO mission.
- To Empower LPs: Allowing LPs to own a significant stake in Meteora, ensuring alignment and stakeholder involvement.
- Promote Transparency & Confidence: Decentralized decision-making and 100% transparent MET tokenomics to bolster trust and openness.
In the short term, our focus is on utilizing MET effectively to bolster Meteora’s DLMM growth, energize participation in the DAO, and drive liquidity growth on Solana.
In the longer term, we want the MET DAO to become a major governing body for the ecosystem to come together to improve the long-term sustainability of liquidity protocol and providers.
DAO Formation
To kick off the DAO, 20% of MET will soon be distributed as ve-locked MET to MER stakeholders as per the Feb 2022 snapshot and calculations to give our stakeholders governance voting power.
The remaining 80% will remain under DAO governance. We will suggest early guidelines for how we believe the 80% can be leveraged for maximum benefit over the long run, but the DAO will have technical control of the tokens from day one. The only portion of the DAO that will be set aside from day 1 will be 10% for individual MER holders who have assets in FTX. This will be gradually released when there is a confirmed verifiable way of validating the MER holdings of individuals.
In addition, the DAO’s primary role will be to decide on key MET tokenomics, distributions, team incentives, and certain risk parameters for Meteora protocols, such as lending pool utilization thresholds for dynamic vaults.
Bringing Expertise Into The DAO
One of the most important (and oft neglected aspects of DAO formations) is to ensure that the people who are the most connected to the actual state of liquidity and ecosystem have the necessary incentives to participate.
We intend to propose allocating 2% of MET for DAO contributors when we kick things off to build a strong foundation for the DAO when it launches. For our DAO to be effective, we need experts who understand not only how Meteora works, but understand what Solana needs and how other projects and protocols work.
The DAO will need experts to review and strengthen proposals, to help the DAO make good decisions, and advocate for Meteora in the ecosystem. In many cases, the best DAO contributors are core community members in many protocols in the ecosystem and it will be important to bring the right incentives to align these great people to work together to grow liquidity for Solana.
3. The 10% Stimulus Proposal
For the 3rd major part of the plan, we are proposing that 10% of MET be allocated to liquidity providers before the token goes liquid. Here are the key reasons why:
- Liquidity providers are the core users of Meteora and it is essential for them to be key stakeholders in MET so that the protocol will continue to build the right services for our users.
- Additionally, projects that are looking to grow liquidity for their token will also be an important voice as stakeholders to help Meteora understand the types of features and incentives projects are looking for to launch and grow their liquidity in Solana.
- Lastly, we think this will help MET become the leading AMM in Solana
Because both DLMM and our dynamic pools have the ability to do so well for LPs we are confident that liquidity will remain in Meteora in the long run and we don’t believe in the need to utilize mechanics to hold liquidity captive. Instead, we will continue to focus on improving the sustainable yield for LPs.
A proposal will be submitted soon after the DAO formation for this purpose!
In Summary
The Massive Meteora Stimulus Package is:
- DLMM
- LPs can now access dynamic fees and precise liquidity concentration
- For LPs, this allows greater fee capture during market swings and opens up all-new AMM LP strategies
- For projects, new creative ways to launch your token with more flexible token designs - Expert DAO
- To leverage experts to guide the DAO on its mission
- To empower LPs to align the DAO with its core userbase
- To promote transparency and confidence in MET - 10% LP Stimulus Proposal
- 10% of MET to be allocated to LPs before the token is liquid
- LPs as stakeholders will ensure we continue to build the right things for our users
- This stimulus will bring Meteora to a great start at the point of token liquidity, creating TVL and volume, decentralizing the DAO with the right stakeholders, and creating inflow not only from Solana, but, from elsewhere as well
Sequence Of Events
We believe that the combination of this 3 aspects — product, community, incentives will be the key to a holistic plan that will supercharge Solana TVL in 2024 and beyond.
We expect the timeline to be as follows:
- Early Dec: DLMM capped beta, MET dao formation, proposal discussions
- Mid Dec: Open beta, MET DAO proposal voting for community and LPs
- 1st Jan 2024: MET stimulus package for LP starts
- Early 2024: MET liquidity event.
With LPs to represent our user base, community as our base for DAO governance, and projects representing the needs for new token liquidity, Meteora will have a strong diverse base that will balance all the considerations necessary to grow long-lasting sustainable liquidity for Solana.
Let’s go!
