Solana Memecoin LPing Strategies
Subscribe to Bankless or sign in LPing, aka Liquidity Provisioning, can be a killer way to earn yield on your assets. Yes, it comes with a multitude of risks like impermanent loss and exposure to volatility – though that is kind of the point – but there are plenty of benefits to getting onboarded here.In walks Meteora – a leading liquidity management platform on Solana, offering advanced tools to optimize LP strategies. Knowing how to apply liquidity effectively can make the difference between profits and losses. In this article, we’ll explore three advanced LP strategies that help LPs navigate different market conditions:The Anti-Sawtooth Strategy: designed for volatile assets that tend to mean-revert.The Hot Potato Strategy: focused on maximizing fees during short-term trading spikes.The Ole Bread 'n Butter Strategy: a market-adaptive approach to reducing impermanent loss.p.s. Before diving too deep into these strategies, I recommend checking out these DLMM and DLMM Multiday guides. Do your homework before going degen, and remember, if you’d like less risk putting your tokens to work you can always park your USDC on Coinbase for ~4% APY. With that said, let's get to it! 👇1️⃣ The Anti-Sawtooth StrategyOne of the biggest problems you will face LPing is impermanent loss from choppy, sawtooth price movements. The Anti-Sawtooth Strategy is designed to counteract this by setting liquidity in tight price ranges and frequently rebalancing positions.This strategy is useful for assets that experience frequent but limited price swings, (seemingly every token these days) and often see high volatility despite generally returning to a consistent value over time.Implementation:Identify an asset’s historical trading range. Look for assets that bounce within a band but don’t trend too aggressively in one direction.Set liquidity in a narrow range. Utilize Meteora’s concentrated liquidity tools to place liquidity closer to the mid-price, ensuring higher fee collection.Rebalance when the price moves outside the range. Instead of holding and suffering impermanent loss, exit and re-enter liquidity positions as needed.Automate with Meteora’s liquidity tools. This reduces manual effort and ensures precision in execution.2️⃣ The Hot Potato StrategyThis strategy is designed for short-term fee farming in pools that experience temporary liquidity surges. The goal is to jump into pools when they’re seeing high trading volume and exit before volume normalizes. It works best for meme coins, airdrop farms, and hype-driven assets, where fees temporarily spike before interest fades.Implementation:Monitor high-volume pools using something like gmgn.ai or dexscreener. Look for sudden TVL inflows and rising trade volume.Deploy liquidity during peak volume periods. This ensures higher fee collection per trade.Exit before liquidity stabilizes. The goal is to avoid prolonged exposure to impermanent loss while capturing short-term gains.Cycle funds through multiple pools to maximize efficiency.⚠️ This can be a dangerous strategy as the hot potato gets passed around quite quickly. Be prepared to cut your losses and leave a pool if it seems the hot potato has been passed to the next token.3️⃣ The Ole Bread 'n Butter StrategyThis Strategy is a conservative approach that involves setting a wide liquidity range, typically up to -74% from the current price, using single-sided positions. This method allows for continuous fee-earning while minimizing the need for constant monitoring.Implementation:Establish a liquidity range that extends below the current price in case of a large decline.Provide liquidity using only one asset, like SOL or USDC, to reduce initial exposure to volatile tokens.Choose bin steps (somewhere in the 100-200 bin range typically works) that allow for some fluctuations in price.Pick a token you believe will range and then continue its upward trend, allowing you to buy the token at a cheaper price and capture fees along the way.While less demanding than other strategies, you should still monitor it occasionally and see if prices have swung!⚠️ Tips to Not Get RektChoosing the right token to DLMM is of the utmost importance, most of the time it’s even more important than the pool you choose. Knowing that, here are a few criteria I've often seen recommended by Meteora power users:At least $2K volume moving average on 1-minute candles, preferably $4K.Regular swaps in the pools: no more than ~20 minutes between.Migration from a site like pump.fun at least 6 hours ago – prefer 8 or more.At least $2M market cap.As always, none of the content in this post is financial advice, do your own research! Be careful and no your limits and how much you can afford to lose!ConclusionDLMMs on Meteora provide LPs with versatile strategies to navigate various market conditions. The Anti-Sawtooth Strategy is ideal for volatile, mean-reverting assets, focusing on tight price ranges. The Hot Potato Strategy suits short-term liquidity surges, aiming for quick fee collection. The Bread 'n Butter Strategy offers a unique approach to spot buying, ensuring you collect fees while also buying spot.By understanding and implementing these strategies, you can position yourself to capture fees, upside, protect yourself from the downside, and maybe make yourself eligible for an airdrop along the way. As always, you can get rekt, so be careful, don’t put in more than you’re willing to lose, and ask questions in the Bankless Discord if you’re stuck.👀 BONUS: Bankless just made Meteora’s Airdrop Hunt in the Airdrop Hunter free for everyone. Start hunting.