Hey there, DeFi enthusiasts! If you’re into liquidity provision on Solana, you’ll want to check out the latest strategy update from Tuuxx (@Tuuxxdotsol) on MeteoraAG's Dynamic Liquidity Market Maker (DLMM). Posted on March 22, 2025, this thread dives deep into a refined approach for providing liquidity, especially after some hard lessons from the crypto space—like the recent EraLabs rug pull. Let’s break it down in a way that’s easy to follow, even if you’re new to DeFi!

What’s DLMM, and Why Does It Matter?

DLMM, or Dynamic Liquidity Market Maker, is a protocol on Solana designed to help liquidity providers (LPs) earn higher fees by optimizing how they provide liquidity in pools. Unlike traditional automated market makers (AMMs), DLMM gives LPs more control over their strategies, allowing them to adjust for volatility and maximize profits. According to a Medium post by Meteora, it’s all about building a “secure, sustainable, and composable yield layer” for Solana and DeFi. Pretty cool, right?

Tuuxx’s thread starts with a quick “Goose Morning 🪿” and jumps into their updated strategy for using DLMM on MeteoraAG. The focus? Three key improvements: better tooling, updated criteria for safer token selection, and a smarter approach to picking pools based on fee/TVL ratios.

Improved Tooling: Enter Tokleo

First up, Tuuxx highlights a game-changer in their workflow: the Tokleo tool by @KalindroDB. They call it “even better than cross-checking both GMGN and GeekLad’s DLMM scanner.” Tokleo helps LPs spot the best DLMM opportunities by providing detailed analytics on pools—like market cap, liquidity, and bin steps (more on that later). Here’s a screenshot of the Tokleo interface shared in the thread:

This tool lets Tuuxx filter pools with specific criteria, making it easier to find opportunities that align with their risk tolerance and profit goals. If you’re an LP, having a tool like this can save you hours of manual research!

Updated Criteria: Staying Safe After the EraLabs Rug

The crypto world can be a wild ride, and Tuuxx learned that the hard way with the EraLabs rug pull—a scam where developers abandoned the project, leaving investors high and dry. Rug pulls are a real risk in DeFi, especially with low market cap tokens, as explained in this Medium article on Solana meme coin rug pulls. To avoid getting burned again, Tuuxx revamped their criteria for selecting tokens and pools, shifting to a lower-risk (and lower-reward) approach. Here’s what they now focus on using Tokleo filters:

• Min Market Cap: 10M—Rugs are more common below this threshold.
• Min Liquidity: 50K—Pools with less than 50K often lack serious LPs, so they’re skipped.
• Min Bin Steps: 80—Lower bin steps mean you might get “outranged” (your liquidity becomes unusable) too quickly in volatile pools.
• Quote Token: SOL—Tuuxx is bullish on Solana, so they stick to memecoin/SOL pairs.
• Show Single Best Fee/TVL Pool per Token: Yes—This keeps results clean and prioritizes the most efficient pools.

These changes make sense for anyone who, like Tuuxx, can’t spend all day monitoring charts or crypto Twitter sentiment. It’s all about playing it safe while still earning fees.

Fee/TVL Ratio: Picking the Most Profitable Pools

Once Tuuxx has a shortlist of pools using Tokleo, they evaluate each pool’s fee/TVL ratio—a metric that shows how much fees a pool generates relative to its locked value. This is crucial for finding capital-efficient pools, as highlighted in a Reddit post on Uniswap fee tiers. Tuuxx applies these thresholds:

• 24h Fee/TVL > 2%—Ensures the pool is profitable enough.
• 1h Fee/TVL > 0.1%—Confirms the pool is still active and generating fees recently.

Here’s a table from the thread showing fee/TVL ratios for different time frames:

At the time of the post, tokens meeting these criteria included $JELLYJELLY, $PWEASE, and $PVS. Tuuxx then allocates their capital based on market cap to manage risk, never putting more than 30% of their bankroll into a single pool. For example, a token with a 20–25M market cap gets 2.5x their base allocation (10% of their bankroll).

Managing DLMM Pools and Taking Profits

Tuuxx also shares their process for creating and managing DLMM pools. They stick to SOL bid-ask pools, which they set up with an automatic range based on the pool’s bin step (e.g., a 100 bin step pool might range from 0% to -49.17%). This approach helps minimize impermanent loss—a risk where the value of your tokens in a pool drops compared to holding them outside, as explained in this Alchemy list of DeFi tools.

Every few hours, Tuuxx checks their pools to see if they still meet their criteria or if they’re out of range. If a pool no longer fits or is out of range, they close it, sell the tokens for SOL, and reassess. They also take profits daily on profitable pools, reopening them with an updated range if the criteria still hold. Here’s a screenshot of their active pools:

Why SOL Bid-Ask? And a Shoutout to Meteora Bootcamps

Tuuxx explains that SOL bid-ask pools are less risky than spot liquidity curves, especially in the current market. With spot curves, high volume is needed to offset impermanent loss during token dumps, but bid-ask pools are more resilient. They rarely fall out of range, and the fees often outweigh any losses. For those new to DLMM or impermanent loss, Tuuxx recommends joining a MeteoraAG bootcamp hosted by @Heavymetalcook6. Here’s an image from the thread promoting the bootcamp:

What About Idle SOL?

If there aren’t enough tokens meeting their criteria, Tuuxx doesn’t let their SOL sit idle. They either deposit it into Kamino Finance for 3–7% APY (plus $KMNO airdrop eligibility) or swap it to Sanctum’s $INF LST for 6–12% APY. The choice depends on how long they plan to park their funds—Kamino has no deposit/withdrawal fees, while Sanctum charges a fee when switching back to SOL.

Degen Mode: High Risk, High Reward

Tuuxx admits they sometimes can’t resist the allure of new memecoins, which can offer “insane returns” through DLMM. But they only go “degen” under strict conditions, like having time to monitor closely and seeing signals from big players—like top traders on Cielo Finance, oracles from The Goose DAO, or whale alerts on AssetDash. They allocate just 1–5% of their bankroll, use SOL bid-ask pools, and close positions within a few minutes to 2 hours to avoid being “exit liquidity” (the last one holding the bag when others sell).

Final Thoughts and a Call for Feedback

Tuuxx wraps up by noting this strategy works for them, balancing effort, time, risk, and reward. They emphasize that this isn’t financial advice—always do your own research! They also invite feedback on their approach and ask if followers are interested in their other wallet strategies (outside of DLMM). Here’s a playful “Not Financial Advice” graphic they shared:

Why This Matters for DeFi on Solana

Tuuxx’s thread is a goldmine for anyone looking to provide liquidity on Solana using MeteoraAG’s DLMM. It shows how to balance risk and reward in a space where rug pulls and volatility are real threats. By using tools like Tokleo, focusing on fee/TVL ratios, and managing pools actively, LPs can earn consistent fees while staying safe. Plus, their approach to idle SOL and “degen mode” shows how to stay flexible in a fast-moving market. What do you think of their strategy? Let’s chat about it in the comments! 🚀