8. How to LP BTC & ETH with DLMM (cbBTC/ETH)
In this tutorial, CryptoCroco allocates liquidity to the cbBTC/ETH pool on Base using SectorOne — a blue-chip pair of the two largest crypto assets. DLMM Clan is an independent DeFi liquidity-provider education community for EVM chains — distinct from Meteora, which is a DLMM protocol on Solana.
What you'll learn
- Why cbBTC/ETH is a blue-chip starter pair
- How to allocate both tokens on SectorOne in Simple Mode
- Why a wider (~51-bin) range suits a non-pegged pair
- How impermanent loss applies to correlated pairs
- Why to keep ETH for gas on Base
Key insights
This video is for educational purposes only and is not financial advice. Always do your own research before investing.
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. This lesson provides liquidity to the cbBTC/ETH pool on Base using the SectorOne DLMM DEX. cbBTC (Coinbase Bitcoin) and ETH are the two largest crypto assets and tend to move together with the broader market, which makes the pair a solid blue-chip starter position — though it still carries impermanent loss because the two tokens are not pegged to each other. To account for that divergence, the position uses a wider range (about 51 bins in Simple mode) so it stays in range longer while earning fees. Always leave some ETH for gas on Base so transactions don't fail.
Transcript
Introduction: the cbBTC/ETH pair
Welcome to the DLMM clan. I'm CryptoCroco, and in this video, I'm going to allocate liquidity to the cbBTC/ETH pair on SectorOne. I consider this pair to be a basic knowledge pair, so it's a good starting point, but you need a basic understanding of crypto, um, before you should enter in this pool.
Bitcoin and Ethereum are the two largest tokens in crypto, and therefore, they move somewhat together with the market. Obviously, there are times where Bitcoin is more, uh... performance is better, and there's time where Ethereum's performance is more better. But overall, they're somewhat moving together.
In that sense, I'm gonna allocate liquidity to earn fees on this pair, and I'm gonna show you now how to do this on SectorOne.
Disclaimer
The material presented in this tutorial and accompanying presentation is intended for informational purposes only and should not be interpreted as financial advice. Any investment decisions or positions you take are solely at your own risk.
Allocating the tokens
So let's get into it. I already have cbBTC token as well as Ethereum tokens in my wallet, so I can now simply allocate here, click Max here, and allocate some Ethereum as well.
Note that you always should leave some Ethereum for gas on Base so you don't run out of gas tokens. I'm in Simple Mode. I'm simply gonna click 51 bins. I think this looks pretty good right now. And as you can see, the price has been ranging in this area. I'm still gonna open a larger area because they're not pegged to each other. The price can move up and down away from each other. And with this, I am a bit more safe that I stay in range for longer.
That already looks good to me.
Deploying and monitoring
I can see an estimated APR here, and with that, I'm gonna start allocating now. Okay, and that's it.
I can already see my active position. I can toggle it on and off here, and my position is there earning fees for me. Now I just need to wait, see, and monitor how the fees compound for me to harvest. I hope you found this video helpful. See you next time.
FAQ
What is the cbBTC/ETH DLMM pool?
The cbBTC/ETH pool pairs Coinbase Bitcoin (cbBTC) with Ethereum (ETH) so a liquidity provider earns trading fees on swaps between the two. On SectorOne (a DLMM DEX on Base), you deposit both tokens across a chosen price range and collect fees whenever the price trades inside that range.
Is cbBTC/ETH a good pair for beginners?
It is a reasonable blue-chip starter pair for anyone who already has a basic understanding of crypto. Bitcoin and Ethereum are the two largest assets and move somewhat together with the market, so the pair tends to diverge less than a volatile altcoin pairing — but it is a step up from a pegged pool and does carry impermanent loss.
Does a cbBTC/ETH pool have impermanent loss?
Yes. cbBTC and ETH are correlated but not pegged, so their relative price can drift, and any divergence produces impermanent loss. It is generally milder than a stablecoin-plus-volatile pair because both assets move with the market, but it is not zero the way a pegged pair is.
How wide should the range be for cbBTC/ETH?
Because the two tokens are not pegged and can move apart, a wider range is safer than a tight one. In this lesson the position uses roughly 51 bins in Simple mode, which keeps the position in range longer as the price ranges up and down, at the cost of slightly lower fee density than a very tight range.
Why do I need to leave ETH for gas on Base?
Transactions on Base are paid for in ETH, so if you allocate all of your ETH into the pool you can be left without gas to open, adjust, or close the position. Always keep a small ETH buffer in your wallet for gas.
Is this the same as Meteora on Solana?
No. DLMM Clan teaches DLMM liquidity provision on EVM chains such as Base, primarily via SectorOne. Meteora is a separate DLMM protocol on Solana. The pool mechanics (bins, ranges, fees) are the same concept, but the chains, wallets, and tools are entirely separate.