Beginner 1DLMM10 min

1. How to Pick Profitable DLMM Pools (Beginner-Friendly Guide)

In this video we break down DLMM pools step-by-step and explain how to identify strong liquidity pool opportunities as a liquidity provider. We cover APR, liquidity, trading volume, auto-compounding vs claimable fees, pool settings, chain filters, and how to evaluate pools on DLMM DEXs like Meteora/Sector 1.

What you'll learn

  • Pool KPIs: APR, Volume, Liquidity, Fees
  • Auto-compounding vs. claimable fees
  • Filter Options for Chains, tokens etc.
  • Fee & Binsteps

Key insights

Whether you're new to DeFi LPing or already exploring concentrated liquidity strategies, this guide will help you better understand how DLMM pools work and what metrics actually matter.

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. To pick a profitable DLMM pool, a liquidity provider reads four core metrics on the DEX front end: APR (annual percentage rate, the projected one-year yield if current volume and liquidity hold), 24-hour fees earned by the pool, trading volume, and total liquidity (TVL) in the pool. On SectorOne you can filter pools by chain (Base, MegaETH, or Ethereum) and by fee type — auto-compounding fees, where earnings are reinvested into the position automatically, or claimable fees, where earnings accumulate separately so they can be harvested to your wallet at any time. A single token pair offers many pools with different settings such as bin step and fee tier, so the LP can choose the exact configuration that fits their strategy. Auto-compounding is more gas-efficient and compounds fees on fees; claimable fees suit LPs who want continuous, separable income.

Transcript

Where to start on the DEX front end

This walkthrough uses SectorOne, a decentralized exchange available on several EVM chains — Base, MegaETH, and Ethereum. The metrics at the very top of the page are general exchange statistics and are not important for choosing a pool. Below them is the first useful field: a search box where you can search for a specific token or pool. Typing "ETH", for example, returns every pool that includes ETH.

Filtering pools by chain

Below the search field are small chain logos. These represent the EVM chains SectorOne supports — Base, MegaETH, and Ethereum Layer 1. Clicking a chain filters the list so you see only pools on that chain, which is useful when you are only interested in opportunities on one network.

Auto-compounding fees vs claimable fees

Two filters separate pools by fee type. With auto-compounding fees, the fees a position earns accumulate inside the position, so you start earning fees on top of fees. The benefits are lower gas (you do not harvest fees separately) and automatic compounding; the drawback is that earnings stay bundled in the position and cannot be withdrawn separately. With claimable fees, earnings accumulate separately from the position, so at any time you can harvest them and the fees go to your wallet — giving a clean separation between your liquidity and your fee income. Claimable fees suit LPs who want continuous income from their liquidity.

Reading the pool metrics: APR, fees, volume, liquidity

On the right side of each pool row are the key numbers. APR stands for annual percentage rate — the yield you could expect over one year if current volume and liquidity stayed the same. The front end also shows the pool's 24-hour fee earnings, its trading volume, and the total liquidity inside the pool. Volume, liquidity, and 24-hour fees are the three main KPIs, and APR is the fourth; together they give a strong indication of how well a pool is performing.

Reading the pool name and settings

On the left side of each row are the two token logos, a small chain logo showing which chain the pool is on, and a short description. The pool name is always the two token names side by side. The description states the pool's settings and shows "auto" for auto-compounding or "claim" for claimable fees. A small arrow unfolds the list of all pools for that exact pair.

Comparing multiple pools for one pair

Unfolding a pair — for example cbBTC/ETH — reveals many pools for the same two tokens, each with different settings: larger or smaller bin steps, higher or lower fee tiers, and claimable or auto-compounding fees. This variety lets an LP choose exactly the settings needed to compete. It can feel overwhelming at first, but being able to pick the perfect pool for a token pair is a major advantage. The top row of the unfolded list is the aggregate: it shows the APR of the best pool plus the combined liquidity, volume, and fee earnings across all pools for that pair, while each pool below has its own separate KPIs.

FAQ

What does APR mean in a DLMM pool?

APR (annual percentage rate) is the projected yield over one year if the pool's current trading volume and liquidity stay the same. It is an estimate based on current conditions, not a guaranteed return, and it changes as volume and liquidity change.

Which metrics matter most when choosing a DLMM pool?

The four core metrics are APR, 24-hour fees, trading volume, and total liquidity (TVL). Volume relative to liquidity is especially important, because high volume on modest liquidity generally means more fees earned per dollar you deposit.

What is the difference between auto-compounding fees and claimable fees?

With auto-compounding fees, earnings are reinvested into your position automatically — more gas-efficient and you earn fees on fees, but earnings stay bundled in the position. With claimable fees, earnings accumulate separately and you can harvest them to your wallet at any time, which suits LPs who want continuous, withdrawable income.

Why are there so many pools for the same token pair?

DLMM lets each pool use different settings — bin step, fee tier, and fee type — so a single pair can have many pools. This gives liquidity providers the flexibility to pick the exact configuration that fits their strategy, which is more variety than a Uniswap-style AMM offers.

Does this apply to Solana or Meteora?

his lesson covers DLMM pools on EVM chains such as Base, using SectorOne. Meteora is a separate DLMM protocol on Solana. The pool-evaluation principles are similar, but DLMM Clan focuses on EVM chains.