5. How to DCA Into ETH While Earning Fees (ETH/USDC)
In this tutorial, Crypto Croco shows how to set up an ETH/USDC liquidity position on DLMM when expecting Ethereum to move lower.
What you'll learn
- How ETH/USDC liquidity works
- Impermanent loss and divergence considerations
- Setting up a downtrend-focused position
- Advanced mode range allocation
- Using DLMM as a DCA tool for Ethereum
Key insights
Instead of buying ETH immediately, this strategy uses USDC liquidity to gradually accumulate ETH while earning trading fees along the way. The position is configured with a wider range and a strong USDC allocation to benefit from a potential correction in Ethereum.
Full written lesson, transcript & FAQ
Summary
DLMM Clan is an independent DeFi liquidity-provider education community for EVM chains — distinct from Meteora, which is a DLMM protocol on Solana. ETH/USDC pairs one volatile asset (ETH) with a stablecoin (USDC), so unlike pegged pairs they carry impermanent loss (also called divergence loss). This lesson treats that exposure as intentional: expecting a downtrend, the liquidity provider deposits mostly USDC across a wide range of bins extending below the current price, with only a minimal ETH allocation. As ETH falls, the USDC bins convert into ETH step by step, so the LP buys ETH cheaply — a dollar-cost average into ETH — while earning trading fees the whole way down. Spreading liquidity across many bins (more than ~84) causes it to deploy in batches. Once ETH has dropped to the lower bound, the accumulated ETH can be removed and redeployed, potentially earning impermanent profit on top of the fees.
Transcript
Why ETH/USDC is a step up from pegged pairs
This lesson allocates liquidity to the ETH/USDC pair on SectorOne. It is a more advanced pair than a pegged pool or a correlated pair like cbBTC/ETH. Pegged pools have no impermanent loss, and two large correlated tokens move somewhat together. ETH/USDC, by contrast, pairs the second-largest token with a stablecoin, so it can move significantly in price and therefore carries impermanent loss, or divergence loss. Because ETH is well understood and widely analyzed, it is a reasonable starting point for anyone already in crypto who has a hypothesis about where ETH is heading.
Setting up the position around a downtrend
The chart shows ETH in a downtrend, and the allocation is built to take advantage of that. Rather than depositing a balanced amount, the LP allocates only a very small amount of ETH and puts the larger amount in USDC. The intent is to buy ETH cheaply while earning fees as price falls.
Configuring bins in Advanced mode
Starting in Simple mode and switching to Advanced gives much more control. The ETH bins are reduced to a minimum, and the USDC bins are extended downward. How far down depends on the LP's hypothesis for the correction — here, targeting roughly the 1,700 down to 1,600 dollar range. Bins are added with the button. Spreading liquidity across more than about 84 bins causes it to be allocated in batches, so the position deploys in more than one transaction.
Deploying and what happens next
After enabling USDC and providing liquidity, the first batch deploys and automatically triggers the second batch to allocate the remaining bins. The result is a very wide active position. From here, the LP earns fees while the position converts step by step from USDC into ETH. If ETH drops to the lower bound, the converted ETH can be removed and reallocated, potentially earning impermanent profit on top of the fees — dollar-cost averaging into ETH while being paid to wait.
Step-by-step: how to DCA into ETH with an ETH
FAQ
How do I DCA into ETH while earning fees?
Open an ETH/USDC DLMM position weighted mostly in USDC across bins extending below the current price. As ETH falls, each USDC bin converts into ETH, so you accumulate ETH at progressively lower prices while collecting trading fees — a dollar-cost average that pays you to wait.
Does an ETH/USDC pool have impermanent loss?
Yes. ETH/USDC pairs a volatile token with a stablecoin, so it carries impermanent loss (divergence loss), unlike pegged pairs that have none. In this strategy the exposure is intentional, because the goal is to accumulate ETH on the way down.
Why deposit mostly USDC instead of a balanced amount?
Depositing mostly USDC with minimal ETH expresses a downtrend view: you want your USDC to convert into ETH as price falls, buying ETH cheaply. A balanced deposit would not target accumulation the same way.
Why does my position deploy in batches?
Spreading liquidity across more than about 84 bins causes the DEX to allocate it in multiple batches, which means more than one transaction. The first batch automatically triggers the next until all bins are funded.
What is impermanent profit in this strategy?
If ETH reaches your lower bound, you can remove the ETH you accumulated cheaply and redeploy or sell it higher later, earning profit on top of the fees collected. It is the favorable inverse of impermanent loss.