Key Concepts

Understand the fundamental concepts of the DLMM protocol.

Bins

Bins are the core building blocks of DLMM. Each bin represents a discrete price level where liquidity can be deposited.

Key Properties

  • Discrete Prices: Each bin has one specific price

  • Fixed Width: Price increment determined by bin step

  • Liquidity Container: Holds reserves of both tokens

  • Zero Slippage: Trades within a bin have no price impact

Bin IDs

Every bin has a unique ID that determines its price.

ID System

  • Base ID: 8388608 represents price = 1.0

  • Lower IDs: Below 8388608 = price < 1.0

  • Higher IDs: Above 8388608 = price > 1.0

ID to Price Formula

price = (1 + binStep/10000) ^ (binId - 8388608)

Examples

import { BinMath } from '@ferra-labs/dlmm'

// Bin 8388608 = price 1.0
const price1 = BinMath.getPriceFromId(8388608, 10, 9, 6)
// Result: 1.0

// Bin 8388618 = higher price
const price2 = BinMath.getPriceFromId(8388618, 10, 9, 6)
// Result: ~1.01 (10 bins × 0.1% = 1% higher)

Bin Steps

The bin step defines the price increment between adjacent bins.

Common Bin Steps

Bin Step
Percentage
Use Case

1

0.01%

Stablecoins

5

0.05%

Low volatility

10

0.10%

Medium volatility

20

0.20%

Medium volatility

50

0.50%

High volatility

100

1.00%

very high volatility

200

2.00%

very high volatility

500

5.00%

very high volatility

Bin Step Impact

// Smaller bin step = tighter price ranges
binStep = 1  // 0.01% increments
// Bins: [..., 0.9999, 1.0000, 1.0001, ...]

// Larger bin step = wider price ranges  
binStep = 100 // 1% increments
// Bins: [..., 0.99, 1.00, 1.01, ...]

Active Bin

The active bin is where the current market price resides.

Properties

  • Current Trading Price: All swaps start here

  • Mixed Reserves: Contains both tokens

  • Price Discovery: Moves as liquidity is consumed

Active Bin Behavior

// Get current active bin
const pair = await sdk.Pair.getPair(pairId)
const activeId = pair.parameters.active_id

// Calculate current price
const currentPrice = BinMath.getPriceFromId(
  activeId,
  Number(pair.binStep),
  9, // tokenX decimals
  6  // tokenY decimals
)

Bin Transitions

When active bin liquidity is exhausted:

  1. Buy (X→Y): Active bin moves up (higher ID)

  2. Sell (Y→X): Active bin moves down (lower ID)

Price Calculation

Price from Bin ID

const price = BinMath.getPriceFromId(
  binId,      // Bin ID
  binStep,    // Bin step (basis points)
  decimalsX,  // Token X decimals
  decimalsY   // Token Y decimals
)

Bin ID from Price

const binId = BinMath.getIdFromPrice(
  price,      // Target price
  binStep,    // Bin step
  decimalsX,  // Token X decimals
  decimalsY   // Token Y decimals
)

Price Impact

// Calculate bins needed for swap
const currentBin = 8388608
const targetPrice = 1.05 // 5% higher
const targetBin = BinMath.getIdFromPrice(targetPrice, 10, 9, 6)
const binsToMove = targetBin - currentBin

Practical Example

// Understanding a position across bins
const activeId = 8388608
const binStep = 20 // 0.2%

// Create position ±10 bins from active
const minBin = activeId - 10
const maxBin = activeId + 10

// Calculate price range
const minPrice = BinMath.getPriceFromId(minBin, binStep, 9, 6)
const maxPrice = BinMath.getPriceFromId(maxBin, binStep, 9, 6)

console.log(`Position range: ${minPrice} - ${maxPrice}`)
// Result: ~0.98 - 1.02 (±2% from center)

Key Takeaways

  1. Bins = Price Levels: Each bin is a discrete price point

  2. Bin ID = Price: Higher ID means higher price

  3. Bin Step = Precision: Smaller steps mean finer price control

  4. Active Bin = Market: Current trading happens here

  5. No Continuous Prices: Everything is discretized

Next Steps

Now that you understand the concepts:

PreviousSDK InitializationNextTrading Pairs

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