In the fast-paced world of DeFi on Solana, where meme tokens can skyrocket or crash overnight, smart liquidity providing (LP) strategies can make all the difference. Recently, DeFi enthusiast and HawkFi strategist DeRekt shared an eye-opening experiment on X (formerly Twitter), demonstrating how he turned a dumping meme token into a profitable venture using HawkFi's advanced automation tools. Let's dive into his setup and see what we can learn for our own meme token adventures.

The Experiment: Testing DLMM with HawkFi

DeRekt kicked things off by testing a Dynamic Liquidity Market Maker (DLMM) pool on Solana with HawkFi's Ping Pong auto-rebalance feature combined with auto-claim fees. DLMM is a type of liquidity pool that allows for more efficient capital use by concentrating liquidity in specific price ranges, often seen on DEXs like Orca. His goal? To see if these automations could outperform simply holding the assets during volatile price swings.

He started with the littleguy–SOL pair in a 1% fee tier pool with a 125 binstep (bins are like discrete price levels in DLMM pools, and binstep determines how finely they're divided). The results after risking his LP overnight? A whopping +101.56% performance, even as the token dumped. For comparison, just holding the pair would have lost 5.56%, holding the meme token alone down 40.97%, and holding SOL down 5.37%.

This screenshot from HawkFi's dashboard highlights the side-by-side comparison, with the green line (LP position) soaring while others flatline or dip.

Breaking Down the Winning Config

Curious how he pulled this off? DeRekt shared his exact setup so others can adapt it. Here's the breakdown:

• Pool Details: littleguy–SOL (1% fee tier, 125 binstep).
• HawkFi Configurations:
  • Auto-claim Fees: Automatically claims and converts fees to SOL, acting like a built-in take-profit mechanism.
  • Rebalance Mode: Auto-rebalance (AR) up and down, with a 1-minute cooldown.
  • New Price after Rebalance: Ping Pong with 12 bins and 0 spread.
  • Liquidity Shape: Spot (even distribution around the current price).

The Ping Pong strategy here means the liquidity range bounces back and forth around the price, keeping the position almost always in range to farm fees continuously. With the 12-bin range (roughly covering ±12% price moves based on the binstep), it provided a buffer against short-term swings.

Why This Setup Worked

DeRekt explained his reasoning step by step, making it easy for newcomers to follow:

• Auto-Claim Fees: By claiming fees instantly, he locked in profits before any drawdowns. Fees were converted to SOL at higher prices, cushioning against later rebalances downward.

• AR Up/Down with 1-Min Cooldown and 12 Bins: Observing the pool's price swings (typically ±7% in 1-30 minutes), he chose a buffer that kept him in range. The 125 binstep translated the 12 bins into about 12% coverage, validated by post-trade charts.

• Spot Liquidity Shape: Suited for mean-reverting price action rather than wild trends. The token trended but often reverted, so an even spot distribution outperformed skewed shapes.

This combo turned impermanent loss (IL)—the risk LPs face when asset prices diverge—into an opportunity by maximizing fee accrual and minimizing downtime out of range.

Lessons and Disclaimer for Meme Token LPs

While this sounds like a moneymaker, DeRekt emphasized it's not foolproof. LPing is competitive; you're vying with other providers for fees. HawkFi gives you tools like automations to edge out the competition, but success depends on your market view and thesis alignment.

Key takeaways:

• Tailor strategies to expected volatility and trends.
• Use tools like HawkFi to automate and optimize.
• Always do your own research (DYOR) and test with small amounts.

As DeRekt put it, "This is a strategy, not a guaranteed way to make money. TAYOR & DYOR." In the meme token space, where rugs and pumps are common, such insights from pros like him are gold for building a solid knowledge base.

If you're dipping into Solana meme LPs, check out HawkFi and experiment responsibly. Who knows? Your next position might just ping-pong its way to profits.