In July last year, we thoroughly analyzed Meteora’s operational strategy, and the highly aligned community philosophy has provided significant insights for managing our own project. (Related reading: How to Build a Powerful LP Army Like Meteora?)
Now, during this bull-bear transition, Meteora still maintains relatively stable liquidity and revenue compared to other products in the same category.
Reviewing Meteora's product iteration philosophy may help us more intuitively understand the qualities a product needs to withstand bull and bear markets.
I. A Revolution in Capital Efficiency: The Structural Problem Meteora Aims to Solve
At the core of Meteora is the optimization of liquidity and capital efficiency. Traditional AMMs suffer from fragmented liquidity, high slippage, and limited yields; Meteora addresses these issues through its DLMM (Dynamic Liquidity Market Maker) and dynamic AMM mechanisms.
For example, DLMM divides liquidity into multiple "bins" based on price and can adjust fee rates in real time: when market volatility increases, fees rise to offset LP losses in volatile markets. This design of dynamic fees and precise liquidity concentration ensures nearly zero slippage for trades within the same bin, significantly improving trading efficiency and LP returns.
Meteora’s Dynamic AMM product also automatically allocates a portion of assets to lending protocols in the background, generating additional yield and addressing sustainability issues caused by reliance solely on mining incentives. Overall, Meteora significantly enhances capital efficiency and LP yield potential through technological upgrades and incentive mechanisms such as fee sharing and MET points.
II. DLMM: How the Dynamic Liquidity Model Is Reshaping Market Making on Solana
DLMM is Meteora’s most core innovation, serving as a “segmented concentrated” liquidity pool. Unlike traditional constant product pools, DLMM allocates liquidity for a trading pair across multiple price ranges and allows LPs to select different volatility distributions based on their own strategies.
When trading within each interval, slippage is nearly zero due to precisely concentrated liquidity, allowing LPs to maintain higher capital efficiency even under high trading volume. Additionally, DLMM dynamically adjusts fee rates based on market volatility: increasing trading fees during periods of high volatility to offset impermanent loss for LPs, and lowering fees during calm periods. LPs in DLMM earn not only base trading fees from providing liquidity, but also volatility fees and liquidity mining rewards.
DLMM has also given rise to the Launch Pool model, specifically designed for new token launches, enabling rapid liquidity aggregation and tradability on routers like Jupiter during the initial token issuance phase. In summary, DLMM creates more earning opportunities for LPs through high capital efficiency, flexible volatility strategies, and dynamic fee mechanisms.
DLMM organizes liquidity into price intervals (Bins), each maintaining sufficient funds to enable “zero slippage” trading within the interval.
The core algorithm includes a base fee and a maximum fee mechanism that automatically increases prices during periods of heightened market volatility and lowers them during calm periods to attract more trading. Slippage control is achieved through discrete interval filling: trades within each price interval occur only at that interval’s price, avoiding the impact caused by dispersed liquidity.
Meteora also designs multiple strategies for different market conditions, such as the "Curve Strategy" to concentrate liquidity near the current price and the "Buy-Sell Range Strategy" to hedge against extreme volatility.
For stable trading pairs like USDC/USDT, most trading activity occurs within a narrow range, causing traditional AMMs to idle large amounts of capital. With the DLMM design, LPs can concentrate more liquidity within this narrow range, earning higher fees and significantly improving capital efficiency.
More importantly, DLMM is not just about price range distribution—it can automatically adjust fees based on actual trading activity and volatility, a “pay-as-you-go” mechanism impossible in traditional fixed-fee AMMs. Since fees are tied to volatility, LPs receive higher fee compensation during periods of high volatility, fundamentally mitigating the risk of impermanent loss and increasing profit potential. On a data level, as DLMM is integrated into aggregators like Jupiter, participation in DLMM pools on Meteora has continued to grow.
As of early 2026, the total value locked in DLMM reached approximately $300 million and generated billions of dollars in trading volume over the past 30 days, establishing a significant position within the Solana DEX ecosystem.
Three: Two Key Transitions from DAMM v1 to v2: The Meteora AMM Mechanism
Meteora's Dynamic AMM (DAMM) product suite resembles traditional constant product pools but incorporates more flexible features.
DAMM v1 is Meteora's first AMM, allowing LPs to earn trading fees plus additional lending yield. In DAMM v1, assets deposited by users are automatically allocated to dynamic vaults in the background and deployed into lending protocols to generate additional interest and rewards.
This mechanism reduces reliance on single mining incentives, allowing LPs to simultaneously earn trading fees, lending interest, and mining rewards. LPs can also choose to permanently lock their liquidity to enhance community confidence; locked assets continue to generate yields, making this especially suitable for dynamic fee configurations in memecoin pools.
DAMM v2 is a next-generation AMM compatible with Solana Token2022 tokens, offering enhanced features. Its capabilities include optional fixed or dynamic fee mechanisms, higher on-chain dynamic fee caps, built-in anti-sniper functionality, and the ability to concentrate liquidity partially (Position NFT).
DAMM v2 also supports single-asset liquidity pool creation (similar to DLMM's one-sided pools) and integrates the mining mechanism directly into the contract for improved efficiency.
Compared to DLMM, DAMM v2 has a lower creation cost (approximately 0.022 SOL per pool, versus around 0.25 SOL for DLMM) and offers flexible fee collection and locking options. These design improvements enable projects to launch tokens more easily and provide LPs with greater autonomy and enhanced yield tools.
Four: The Evolving Protocol: Strategic Intent Behind Feature Iterations
Since 2024, Meteora has continuously rolled out new features to enhance user experience and protocol activity.
For example, one-click Rebalance and one-click Ape In features enable LPs to quickly adjust or deploy capital during market volatility or new token launches; the PnL analytics dashboard enables real-time tracking of profit and loss; the Pool Discovery page helps users quickly identify high-yield liquidity pools; the Multi-Position Merge feature allows users to consolidate multiple positions in the same pool, reducing management costs; auto-reinvestment automatically reinvests earned rewards back into liquidity; and the LP Points Leaderboard quantifies liquidity provision and contribution activities into points to incentivize long-term participation.
After each feature release, community feedback has been positive, with clear growth in both user numbers and TVL. According to official data, the points incentive system launched in early 2024 directly drove TVL from ~$40 million to ~$160 million. Following the feature launches, discussions in the community have been vibrant, and adoption rates for new features have steadily risen, further solidifying Meteora’s leading position within the Solana ecosystem.
Five: LP Army: How Meteora Turns Liquidity Providers into "Battle Units"
Meteora's community operations are driven by education, cultivating loyal LPs through the "LP Army" system.
At its core is the regular LP Army Bootcamp: a free two-day training camp where participants learn LP fundamentals and engage in hands-on practice. To qualify, participants must contribute at least $100 in liquidity to a designated non-stablecoin trading pair and maintain it for at least one hour on day one, then pass a yield and operations exam on day two to receive an NFT graduation certificate and the “LP Army Private” status.
After completing training and becoming a full member, LPs gain not only protocol airdrop points and community status, but also access to advanced courses, exclusive Discord channels, and a suite of strategy analysis tools (such as profit trackers and Dune dashboards).
Rich community-building tools: Metlex provides DLMM LPs with a professional dashboard for real-time position performance analysis; Ultra LP acts as an LP’s “partner,” aggregating all yields and PnL; GeekLad’s DLMM Profiler helps LPs optimize strategies; and MetEngine enables one-click position opening and replication of top strategies via Telegram and other channels.
In addition, the community implements a one-on-one mentorship program, where experienced LPs guide newcomers on topics such as liquidity strategies and impermanent loss management. On the governance side, user behavior is tightly linked to incentives: Meteora has established a MET points system, allowing LPs to earn points by providing liquidity and inviting friends; these points can be redeemed for future MET token airdrops or community privileges. For example, after the system launched, TVL rapidly increased from $40 million to $160 million, demonstrating a significant incentive effect.
Ultimately, this multi-layered incentive system of “points + tokens + recognition” ensures rewards are allocated to long-term contributors rather than short-term “pump and dump” behavior. The upcoming MET token launch will further integrate with the points system, providing enhanced governance and economic incentives for early community members.
Six: Survival Model in a Bear Market: Analyzing Meteora’s Resilience Mechanisms
Since 2023, the cryptocurrency market as a whole has entered a prolonged bear market, with DeFi protocols generally facing structural pressures such as declining TVL, reduced trading activity, and user attrition.
However, Meteora’s on-chain performance has shown a relatively steady recovery curve; this “resilience” is not a fleeting market advantage, but the result of multiple strategies working in concert across incentive design, product architecture, risk management, and community organization.
On the incentive level, Meteora not only attracts long-term user participation through traditional staking rewards and fee sharing, but also innovatively introduces the Stake2Earn model—a mechanism designed to transform the memecoin ecosystem, which might otherwise lead to rapid selling, into a yield system based on "staking competition."
In traditional token economies, memecoin projects often face strong selling pressure early on, as holders tend to quickly sell after short-term arbitrage—behavior that intensifies during the later stages of bull markets or in bear markets. In contrast, Stake2Earn is built on an entirely opposite logic: it allows token holders to stake their MEME tokens into a designated Stake2Earn contract to earn a share of trading fees. The core value of this mechanism lies not in short-term speculation, but in incentivizing holders to lock their tokens in the protocol long-term to earn fees generated by liquidity pool trades.
Participation in Stake2Earn does not require holding LP tokens; it only requires users to stake the native memecoin. This design has two significant implications: first, users are not exposed to the impermanent loss risk inherent in LPs, since they are staking a single token rather than an LP token; second, stakers have the opportunity to directly participate in protocol fee revenues, aligning individual incentives with protocol growth and mechanically encouraging users to become long-term supporters rather than short-term arbitrageurs.
Specifically, the Stake2Earn mechanism assigns leaderboard rankings to users based on the amount staked; only those among the top-ranked stakers (e.g., Top 5 to Top 100, with the exact range configurable) are eligible for fee-sharing rewards. The higher the ranking and the larger the staked amount, the greater the fee share users receive from liquidity pool trades. The system updates the leaderboard in real time and dynamically allocates earnings based on current rankings. This “real-time earnings growth” design not only incentivizes users to increase their staking amounts but also encourages participants to continuously compete to maintain their eligibility for rewards.
The reward structure of Stake2Earn is also uniquely designed, featuring a dual-reward system: users who meet ranking criteria can claim fee earnings in quote tokens such as SOL or USDC, while memecoin stakers receive additional memecoin rewards that are automatically added back to their total staked amount, enabling automatic compounding. This compounding mechanism not only enhances long-term returns but also reduces selling pressure on memecoins, thereby increasing overall market stability during bear markets.
In addition, to prevent malicious rapid withdrawal behavior, Stake2Earn implements a cooldown period for unstaking. When a staker submits an unstake request, their memecoin enters a predefined waiting period (e.g., a minimum of 6 hours), during which these tokens are excluded from yield calculations. If the staker cancels the unstake request before the cooldown ends, the tokens are immediately reinstated as eligible for rewards. This design ensures fairness in reward distribution while maintaining liquidity stability and preventing short-term gaming of the system’s yield allocation.
While the incentive system locks in user behavior, the continuous evolution of the product architecture ensures the efficiency and security of funds. Between 2023 and 2024, the team launched key modules such as Dynamic Vaults and Dynamic AMM, further enhancing the protocol’s capital appeal during bear markets. The Dynamic Vaults system employs a minute-by-minute automated rebalancing mechanism to allocate funds in real time across multiple lending protocols, seeking optimal yield paths. When utilization rates on a lending platform become too high or risk indicators deviate abnormally, the system automatically withdraws funds and reallocates assets to protect LP capital. This structure is not merely a yield aggregator—it introduces risk parameter analysis and asset diversification logic to build a dynamic risk buffer layer. These mechanisms have been audited by institutions such as Quantstamp and Halborn, and have proven resilient under market volatility, strengthening user trust.
Dynamic AMM automatically channels LP-provided funds into a dynamic treasury system, enabling liquidity to generate not only trading fees but also lending interest and liquidity mining rewards, creating a layered income structure. Capital no longer remains static within pools but achieves maximum yield under controlled risk conditions. Meanwhile, Meteora continues and enhances the multi-asset stable pool technology from its predecessor, Mercurial, allowing non-fungible assets to be efficiently aggregated within the same pool—for example, combining liquidity from Allbridge or Wormhole bridge assets with SOL/USDC. This design improves liquidity efficiency for cross-chain stable assets and maintains high capital turnover even in market environments with overall reduced trading volume.
On-chain data shows that this dual structure of product and incentives has indeed produced tangible results. After the points system launched in early 2024, TVL surged from approximately $40 million to $160 million in a short time, subsequently stabilizing in the hundreds of millions of dollars range. During the same period, Meteora’s TVL experienced a smaller decline and recovered faster compared to Raydium, a leading DEX on Solana. In terms of trading activity, its 30-day trading volume has remained in the billions of dollars, indicating that liquidity has not significantly drained during the bear market. The lock-up structure and auto-compounding mechanism have slowed capital outflows, while dynamic fees and optimized capital efficiency have strengthened incentives for capital retention.
Overall, Meteora’s survival and growth during the bear market did not rely on a single “traffic dividend” or short-term subsidies, but instead built a sustainable flywheel model through product mechanism innovation, incentive structure reconfiguration, real yield generation, and community-driven governance. For other projects in a bear market cycle, the key lesson is: rather than exchanging high-emission tokens for temporary TVL, focus on building cash flow capabilities around genuine trading demand; instead of amplifying market sentiment, optimize internal protocol value capture pathways; rather than worrying about user churn, use long-term locking, revenue sharing, and behavioral binding mechanisms to transform users from “liquidity mercenaries” into “stakeholders in a shared interest community.”
In a bear market, what is truly tested is not fundraising ability, but whether the product and mechanisms can generate self-sustaining growth. Meteora’s approach demonstrates that only when protocol revenue, user returns, and token value form a closed-loop synergy does a project gain the structural resilience to weather market cycles. This strategy—centered on efficiency, genuine yields, and sustainable incentives—provides a clear path forward for all DeFi projects in a bear market: reduce reliance on external funding, strengthen internal circulation, and win time through mechanisms rather than subsidies.
Seven: The Liquidity Battle: Divergent Strategies of DeFiTuna and HumidiFi
Competition over liquidity and order flow in the Solana ecosystem continues to intensify. Beyond Meteora, DeFiTuna and HumidiFi are vying for market share through distinctly different approaches. The former emphasizes product structure and functional innovation, aiming to attract professional users with more sophisticated on-chain trading tools; the latter adopts a “Prop AMM” model, building advantages in execution quality and trading efficiency through efficient internal capital turnover and deep routing integration.
DeFiTuna (TUNA) is positioned as an advanced concentrated liquidity DEX on Solana, featuring a hybrid AMM architecture that integrates on-chain lending capabilities within the same protocol framework. Its mechanism supports dual-path liquidity through both Orca AMM and native DeFiTuna AMM, and it is the first in the Solana ecosystem to introduce on-chain limit orders, enabling users to execute more sophisticated trading strategies without custody.
In addition, DeFiTuna deeply integrates leveraged trading with its lending system, enabling leveraged position management within a single protocol to provide LPs and lenders with an integrated capital efficiency solution. This structural innovation makes it somewhat attractive to professional traders and high-frequency strategy users. However, in terms of scale, its liquidity is still in development. According to DefiLlama data, DeFiTuna’s current TVL is approximately $4.1 million, with a 30-day trading volume of around $115 million. Compared to leading protocols, it still has room to improve in market depth and brand recognition, and the long-term user retention of its new features remains to be validated over time.
In contrast, HumidiFi (WET) takes a completely different approach. As a proprietary automated market maker (Prop AMM) on Solana, all of HumidiFi’s liquidity is provided internally by professional market-making teams and is not open to the public; there are no traditional external LPs. The protocol has no official frontend interface and is primarily accessed through routing aggregators, with deep integration into Jupiter being particularly critical. Thanks to its private liquidity pool structure, HumidiFi achieves tighter spreads and lower slippage, making it especially suitable for large-volume trades. Since its launch in mid-June 2025, its trading volume has surged rapidly, with a 30-day trading volume exceeding $15 billion and at one point accounting for 35%–40% of all trading volume on Solana. In terms of metrics, since there are no publicly locked assets, its TVL is typically counted as $0—but this does not diminish its actual liquidity depth at the execution level.
At its core, HumidiFi resembles a dark pool trading model, sacrificing openness and visible liquidity for improved execution efficiency and capital turnover; whereas DeFiTuna represents an extension of open DeFi architecture, aiming to enhance on-chain transaction complexity and capital efficiency through structural innovation. Both approach the market from distinct dimensions—product capability and capital efficiency—intensifying competition for liquidity and order flow on Solana, and presenting Meteora with more diverse and targeted challenges.
Conclusion
Looking across the entire experience, Meteora embodies both technological ambition and community cohesion. From DLMM and DAMM to dynamic vaults and liquidity locking, each product iteration feels like witnessing a leap in capital efficiency; “Meteora distinguishes itself from traditional AMMs through dynamically adjusted fees and liquidity allocation, along with mechanisms designed for fair launches.” From liquidity tools to an ecosystem hub, becoming indispensable within its own ecosystem may be the key to its sustainable profitability.