New trends in Liquidity are quietly changing the game rules of Solana Decentralized Finance.

Perhaps in the future, DLMM will become the "standard configuration" for all Decentralized Finance projects, just like Uniswap V3 did back in the day.

Written by: 0xResearcher

Recently, after attending the TOKEN2049 conference in Singapore, I had a particularly strong feeling: the topic of "liquidity," which has always been a common discussion in the DeFi circle, is undergoing a new technological upgrade. Many projects in the Solana ecosystem are clearly putting a lot of effort into liquidity management, especially when dynamic liquidity management (DLMM) is mentioned, everyone's eyes light up.

It's actually quite understandable. Over the past six months, the activity of DeFi on the Solana chain has skyrocketed, with meme coins emerging one after another and the TVL rebounding, making it seem like everything is going well. However, a closer look reveals that new problems have arisen: with more projects, liquidity has become dispersed, many trading pairs have insufficient depth, and high slippage has lowered the user experience, while the earnings for LPs (Liquidity Providers) have become increasingly competitive.

And this provides a stage for new technologies like DLMM.

Dynamic Liquidity: DeFi's New Weapon

In simple terms, DLMM (Dynamic Liquidity Market Making) is a step forward based on the concentrated liquidity of Uniswap V3.

In the past, LPs had to manually adjust their ranges to provide liquidity, which was cumbersome; however, DLMM has achieved dynamic automatic adjustments that intelligently allocate funds based on market conditions, making it easier and more reassuring for LPs.

Its advantages are actually quite intuitive:

• Automatically counteracts market fluctuations, not afraid of drastic price surges or crashes.
• Improve the utilization rate of funds, so that every penny is "online work"
• Reduce trading slippage for a smoother user experience

At the TOKEN2049 event, many project teams were discussing DLMM, and some even joked, "In the future Solana DeFi, it would be embarrassing to launch a token without DLMM."

Why does the Solana ecosystem urgently need this upgrade?

In simple terms, there are more people using Solana now, and there's not enough money.

Although the on-chain TVL has rebounded, the explosive growth of projects has led to dispersed liquidity; especially for new projects, they are often criticized for "high slippage and shallow depth" as soon as they go live. For established DeFi projects, when capital efficiency cannot be improved, the returns for LPs cannot 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 positions", always concentrating in active market areas, not wasting or idling, helping the overall DeFi ecosystem to "recover".

How does DLMM change the trading experience?

Taking the well-known project Saros on the Solana chain as an example, they recently launched the DLMM mechanism, and the results have been quite impressive.

From what I understand, Saros has achieved a few things through DLMM:

• User trading slippage has decreased, especially experiencing smoother transactions on certain Meme pairs.
• LP earnings have increased due to a significant rise in capital utilization.
• Liquidity concentration has increased, and new projects can quickly provide depth upon launch.

During TOKEN2049, the Saros team also mentioned that they plan to open the DLMM model to more projects, providing "Liquidity as a Service" (LaaS) to help solve the liquidity fragmentation issue in the Solana ecosystem.

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

The next trend in Decentralized Finance may be hidden in "liquidity".

From the trends of the conference, on-chain data to actual user experience, it can be seen that:

• Dynamic Liquidity Management
• Liquidity as a Service (LaaS)
• Improvement of capital efficiency

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

Perhaps in the future, DLMM will become the "standard configuration" for all DeFi projects, just like Uniswap V3 did back in the day. And whoever can make the best use of this new weapon first may also gain the upper hand in this recovery cycle.