New liquidity trends are quietly changing the rules of Solana DeFi's game

Perhaps in the future, DLMM will become the "standard" of all DeFi projects like Uniswap V3 back then.

Written by: 0xResearcher

After attending the TOKEN2049 conference in Singapore recently, I had a particularly strong feeling: In the DeFi circle, the cliché topic of "liquidity" is ushering in a new technological upgrade. Many Solana ecological projects have obviously put a lot of effort into liquidity management, especially when it comes to dynamic liquidity management (DLMM), everyone's eyes will light up.

Actually, it's easy to understand. In the past six months, the activity of DeFi on Solana's chain has soared, with Meme coins emerging on the chain emerging one after another, and TVL has also rebounded all the way, looking prosperous. But if you look closely, you will find that new problems have also come: there are more projects, liquidity is dispersed, many trading pairs are insufficient in depth, have high slippage, user experience is discounted, and the returns of LP (liquidity providers) are becoming more and more popular.

And this just provides a stage for new technologies like DLMM.

Dynamic liquidity: DeFi's new weapon

Simply put, DLMM (Dynamic Liquidity Market Making) is a step forward based on the centralized liquidity of Uniswap V3.

In the past, when LPs provided liquidity, they needed to manually adjust the range by themselves, which was very troublesome; while DLMM achieved dynamic and automatic adjustment, and intelligently allocated funds according to market conditions, helping LPs save trouble and worry.

Its advantages are actually very intuitive:

• Automatically fight against market fluctuations, and do not worry about the sharp price pulling the market and smashing the market
• Improve capital utilization rate and make every penny "work online"
• Reduce transaction slippage and make the user experience smoother

At the TOKEN2049 site, many project parties were talking about DLMM, and some even joked: "In the future, Solana DeFi, I feel embarrassed to issue coins without DLMM."

Why does the Solana ecosystem urgently need this wave of upgrades?

To put it bluntly, Solana has too many people now and has not enough money.

Although on-chain TVL has rebounded, the explosive growth of projects has led to dispersed liquidity; especially new projects, which are often criticized as "high slippage and shallow depth" as soon as they are launched. For old DeFi, if the capital efficiency cannot be improved, the LP's income will not attract new users.

At this time, the dynamic adjustment mechanism of DLMM is like adding "AI driving" to the liquidity market.

It allows funds to automatically "run" and always concentrate in active market areas, without wasting or idleness, helping the DeFi ecosystem to "recover" as a whole.

How does DLMM change the trading experience?

Take Saros, a well-known project on the Solana chain, as an example. They recently launched the DLMM mechanism, and the effect is quite outstanding.

As far as I understand, Saros implements several things through DLMM:

• User transaction slippage has dropped, especially on some Meme pairs, experience is smoother
• LP earnings have increased because capital utilization has significantly increased
• Liquidity concentration is enhanced, and new projects can quickly provide depth

During TOKEN2049, the Saros team also mentioned that they plan to open the DLMM model to more projects and provide "liquidity as a service" (LaaS) to help the Solana ecosystem solve the problem of liquidity dispersion.

From a soft perspective, this is actually a DeFi infrastructure upgrade solution, and DLMM is its core engine.

The next outlet of DeFi may be hidden in "liquidity"

From conference trends, on-chain data to actual user experience, we can see:

• Dynamic liquidity management
• Liquidity Service (LaaS)
• Improved funding efficiency

These are quietly becoming the key engines for the next round of growth of Solana and the entire DeFi market.

Perhaps in the future, DLMM will become the "standard" of all DeFi projects like Uniswap V3 back then. Whoever can use this new weapon first may be the first to gain the lead in this recovery cycle.