DLMM Overview

DLMM stands for Dynamic Liquidity Market Maker, is an advanced AMM model where liquidity is distributed across discrete price bins, allowing zero-slippage swaps within each bin. DLMM introduces volatility-aware fee adjustments and bin-based liquidity targeting, making it ideal for volatile markets and active strategies.

It differs from traditional CLMMs by enabling predictable execution, efficient rebalancing, and dynamic fee tuning, all while offering LPs granular control over capital deployment.

DLMM pools operate with the following components:

• Bins: Liquidity is segmented into small price intervals (bins). Each bin represents a fixed exchange rate between two assets. Swaps inside a bin occur with zero slippage.

• Dynamic Fees: The protocol adjusts swap fees based on recent volatility. Higher volatility leads to increased fees to protect LPs and reduce arbitrage leakage.

• Liquidity Distribution: LPs can choose which bins to deploy liquidity into, concentrating around expected price zones or distributing broadly across the range.

• Efficient Routing: When a trade spans multiple bins, Ferra routes the swap through them sequentially, minimizing price impact.

• Bin Migration & Rebalancing: LPs can rebalance liquidity to follow price trends or optimize yield.

• Single-Sided Liquidity: LPs can provide liquidity using just one token (e.g., token A only), especially effective during token launches or low TVL phases.

Key Insight In normal market conditions, swaps within a bin occur with no slippage. During volatile periods, LPs earn higher fees due to the dynamic fee adjustment. This pool type is suitable for both blue-chip tokens and high-volatility assets such as meme coins.