Meteora DLMM explained: bins, bin step, fees and the three liquidity shapes
DLMM is Meteora's concentrated liquidity AMM on Solana. It gives you more control than a classic pool, and more ways to get it wrong. This is the mental model we wish we had on day one.
The short version
- A DLMM pool is a ladder of price bins. Only one bin, the active bin, trades at any moment.
- The pool's bin step decides how far apart the bins are, so it decides how much price movement a given number of bins covers.
- You earn fees only while the active bin is inside your range. The fee has a base part and a part that rises with volatility.
- Spot, Curve and Bid-Ask are three ways to spread your liquidity across the bins you picked.
- As price moves through your range, your position turns into the token that is falling. That, not fees, is what decides most outcomes.
Bins and the active bin
Instead of one curve covering every price, DLMM splits the market into discrete bins. Each bin holds liquidity at one fixed price, and inside a bin the pool behaves like a constant-sum market: a swap that fits in the active bin fills at that bin's price with no price impact.
When a swap uses up the token it is buying from the active bin, the pool moves to the next bin and continues there. Bins below the active bin hold the quote token (for example USDC in SOL-USDC), bins above it hold the base token. That is why a range placed entirely below the price is "single-sided" in the quote token: it holds only USDC or SOL until price walks down into it.
Source: Meteora, What is DLMM? and DLMM Formulas.
Bin step sets how wide your range really is
Bin step is the percentage gap between neighbouring bins, in basis points. Bin price follows (1 + binStep / 10,000)^binId, so with a bin step of 25 each bin is 0.25% above the last. It is set when the pool is created and goes up to 400 basis points.
The same number of bins covers very different price ranges depending on the pool. Here is what 70 bins in one direction (the default position layout) spans:
| Bin step | 70 bins up | 70 bins down | Typical use |
|---|---|---|---|
| 1 | +0.7% | −0.7% | Stablecoin pairs |
| 5 | +3.6% | −3.4% | Pegged and very liquid pairs |
| 10 | +7.2% | −6.8% | Majors on a quiet day |
| 25 | +19.1% | −16.0% | Majors like SOL-USDC |
| 100 | +100.7% | −50.2% | Volatile tokens |
| 250 | +463% | −82.2% | Launches and very volatile tokens |
Two things follow. First, "70 bins" on a bin step 1 stablecoin pool and on a bin step 100 meme pool are completely different bets. Second, ranges are geometric: the same number of bins covers more upside than downside in percentage terms. If you need more room than 70 bins, dynamic positions can be resized up to 1,400 bins (DLMM Dynamic Positions).
Where the fees come from
Every swap pays a base fee. The base fee is derived from the pool's fee parameters and its bin step, which is why higher bin step pools usually charge more: each bin is a bigger price move.
On top of that, a pool can charge a variable fee. DLMM tracks how many bins swaps cross in a short time; when price is moving fast the variable fee rises, and it decays once things calm down. The total fee is capped at 10%.
The fee is shared by the liquidity in the bins the swap actually touched. Liquidity outside the active bin earns nothing for that swap, which is the whole trade-off of concentration: a tight range earns a bigger share while price stays put and nothing once it leaves.
A practical consequence: a pool showing a very high fee-to-TVL ratio over the last hour is often a pool where price is moving hard. High fees and fast moves usually arrive together. Source: DLMM Formulas.
Spot, Curve and Bid-Ask
Once you have picked a range, the shape decides how your liquidity is spread across it:
- Spot puts the same amount in every bin. It is the easiest to reason about and tolerates movement inside the range.
- Curve concentrates liquidity in the middle of the range, near the current price. More of your capital earns while price stays close; it falls out of the useful zone faster when price trends.
- Bid-Ask is the inverse of Curve: more liquidity at the edges. Placed single-sided below the price it buys more the further price dips, which is why it is the usual shape for buying dips or selling rips in steps.
Meteora's own guidance pairs Curve with stable or calm markets, wider Spot or Bid-Ask with volatile ones (Strategies and Use Cases). We wrote up three complete playbooks built on these shapes, with their full rules and risks, on our strategies page.
How DLMM positions lose money
Fees are the visible part. The parts that decide most outcomes are quieter:
- Your position converts into the falling token. As price walks down through a two-sided range, the pool sells your base token for quote on the way up and buys base on the way down. When price ends lower, you hold mostly the token that fell. This is impermanent loss, and on volatile tokens it is usually bigger than the fees.
- Out of range earns nothing. Once the active bin leaves your range, you sit in one token with zero fee income until price comes back.
- Rebalancing makes the loss permanent. Moving the range to the new price locks in whatever conversion already happened. Rebalancing often in a choppy market can cost more than it earns.
- Single-sided dip buying keeps buying. A Bid-Ask range below the price fills layer by layer as a token falls. If the dip does not stop, every layer fills and the fees rarely cover it.
- Stops are market exits. In a fast move, an exit fills where liquidity is, which can be well below the line you set.
A checklist before you open a position
- What is the pool's bin step, and what price range do your bins actually cover?
- Is the volume real and sustained, or one hour of a token moving hard?
- Which token do you want to end up holding if price leaves your range on each side?
- How long will you wait out of range before you move or close the position?
- Where do you exit, and what happens if the exit fills worse than planned?
- Is the token safe: no freeze authority, no transfer tax, no honeypot behaviour, holders not concentrated in a few wallets?
If you would rather write those answers down once and have them executed around the clock, that is what Alokumi does: you describe your playbook in plain words, the platform enforces the hard limits (stop-loss, budget, position count), and an Agent handles the rest within them. Start on paper funds, read Risks and fees first, and see what rules can express.
FAQ
What is bin step in Meteora DLMM?
Bin step is the price gap between neighbouring bins, in basis points. With a bin step of 25, each bin is 0.25% above the one below it. It is fixed per pool and goes up to 400 basis points.
Do I earn fees when my DLMM position is out of range?
No. Fees are paid on swaps in the active bin, so a position only earns while the active bin is inside its range. Out of range it holds one token and earns nothing until price comes back or you move the range.
How many bins can a DLMM position cover?
Positions start from a 70-bin layout, and dynamic positions can be resized up to 1,400 bins for wider ranges.
What is the highest fee a DLMM pool can charge?
The total fee is the base fee plus the variable fee, capped at 10%. The variable fee rises when swaps cross many bins in a short time and decays when the market calms down.
Which shape should I use: Spot, Curve or Bid-Ask?
Curve when you expect price to stay near the current level, Spot for a balanced range that tolerates movement, and Bid-Ask when you expect price to swing to the edges or want to buy dips or sell rips in steps.