Why is depositing liquidity not the same as making a market?
A pool quotes whatever its formula says, whether or not the price is current. When the price moves on a large exchange, arbitrage traders buy from or sell to the stale pool, and the liquidity provider takes the other side at the old price. Fees offset part of that loss. The research name for the loss is loss-versus-rebalancing, from Milionis, Moallemi, Roughgarden and Zhang (2022).
The best-known measurement is a 2021 study of 17 Uniswap v3 pools. Liquidity providers earned $199.3 million in fees and lost $260.1 million to price movement, and 49.5% of them ended worse off than if they had held the tokens. The sample covers four months of one year, so treat it as a warning, not a constant.
Which pool design fits which token?
Each DEX asks the issuer to manage something different. Fee tiers and models below are from each protocol's documentation.
| DEX | Chain | Model | Fees | What the issuer must manage |
|---|---|---|---|---|
| Uniswap v3 | Ethereum and L2s | Concentrated liquidity | 0.01%, 0.05%, 0.3%, 1% | Price range, fee tier, rebalancing |
| Uniswap v4 | Ethereum and L2s | Single contract with hooks | Flexible, dynamic fees allowed | Hook choice and its risk, fee logic |
| PancakeSwap v3 | BNB Chain | Concentrated liquidity | 0.01%, 0.05%, 0.25%, 1%; LPs keep 66% to 68% | Price range |
| Raydium CPMM | Solana | Constant product | Default 0.25%; 84% to LPs | Pool size |
| Raydium CLMM | Solana | Concentrated liquidity | Default 0.25%; 84% to LPs | Price range |
| Orca Whirlpools | Solana | Concentrated liquidity | 0.01% to 2% | Price range; out of range earns nothing |
| Meteora DLMM | Solana | Price bins | Base fee plus a variable fee | Bin step and liquidity shape |
| PumpSwap | Solana | Constant product | 0.25% at launch in March 2025 | Depth after graduation |
| Hyperliquid spot | Hyperliquid L1 | On-chain order book | Deployer fee share | Deployment auction and initial quotes |
How much capital does the same depth need?
Depth near the price is what a trader feels. The design of the pool decides how much capital it takes to supply it.
Capital needed for $10,000 of depth on each side within 2% (log scale)
How long does a concentrated range stay in range?
A range that the price has left quotes nothing and earns nothing. New tokens are volatile: the median new listing in TDMM's data has annualised volatility of 166%. At that level a passive full-range pool loses about 34.4% a year to arbitrage, and a pool charging 0.3% needs daily turnover of 31.5% of its value to break even.
Chance that an unmanaged plus or minus 10% range is out of range, at 166% volatility
What else takes value from an unmanaged pool?
Sandwich trades
One Solana program carried out 1.55 million sandwich trades in 30 days to 5 January 2025 for a profit of 65,880 SOL, according to Helius.
Just-in-time liquidity
Uniswap Labs measured about $2 billion of just-in-time liquidity against more than $600 billion of v3 volume to July 2022, with one address supplying over 95% of it.
Routing that skips your pool
Aggregators routed more than 74% of Solana DEX trades in late 2025, and proprietary AMMs took over 92% of Jupiter-routed trades in January 2026, according to Step Data. A public pool only trades if routers choose it.
Two prices for one token
An ETH trade of $1 million moved the price 63.2 basis points on Uniswap v3 against 2.7 on Binance in TDMM's 30 September 2026 reading. Pools that drift from order books pay the difference to arbitrage.
What happens when a launchpad token graduates?
Bonding-curve launchpads sell a fixed share of supply along a formula, then move the proceeds into a DEX pool. On pump.fun the pool that results is small, and depth beyond it is the project's job. In a September 2025 dataset, 4,338 of 655,770 tokens graduated, a rate of 0.63%.
- Bonding curveAbout 793 million of 1 billion tokens sold along the curve
- GraduationTriggered at about 85 SOL raised
- PumpSwap poolSeeded with about 85 SOL and 206.9 million tokens
- Managed liquidityAdded depth, range management and price alignment
Where does DEX volume sit by chain?
30-day DEX volume by chain
Passive pool, vault or market maker?
| Passive full-range pool | Automated vault | Market maker (TDMM) | |
|---|---|---|---|
| Who moves the range | Nobody | A strategy contract | A desk, on rules agreed with the project |
| Capital for the same depth | Highest | Lower | Lower, and shared with the order book inventory |
| CEX order books | Not covered | Not covered | Covered on the same book |
| Price alignment with exchanges | Left to arbitrage | Within one venue | One reference price across venues |
| Reporting | Pool share and fees | Range and fees | Range position, depth, fees and price gap to order books |
Which DEXs and chains does TDMM cover?
DEXs and launchpads
- Uniswap
- PancakeSwap
- SushiSwap
- Raydium
- Orca
- QuickSwap
- SpookySwap
- PulseX
- xExchange
- four.meme
Chains
- Ethereum
- BNB Chain
- Solana
- Base
- Polygon
- Avalanche
- PulseChain
How does TDMM set up DEX market making?
- 1
Choose pools
DEX, pair, fee tier and model, matched to where the token's holders trade.
- 2
Size capital
Tokens and paired assets needed for the target depth at 0.5%, 1% and 2%.
- 3
Set ranges and rules
Starting ranges, when they move, and risk limits shared with the CEX book.
- 4
Launch aligned
Liquidity live at the agreed time with pool prices held to order book prices.
- 5
Manage and report
Ranges moved as the price moves; range position, depth, fees and price gap reported.
Frequently asked questions
What is DEX market making?
DEX market making is the active management of a token's liquidity on decentralised exchanges. It covers choosing the pool design, sizing capital, placing and moving price ranges and keeping pool prices aligned with the rest of the market.
Is providing liquidity the same as DEX market making?
No. A passive liquidity provider deposits and waits. A market maker repositions ranges as the price moves, hedges inventory and keeps the pool price aligned with order books.
Do liquidity providers make money?
Not reliably. In a 2021 study of 17 Uniswap v3 pools, 49.5% of liquidity providers ended worse off than if they had held the tokens, because losses to price movement exceeded fees.
What is loss-versus-rebalancing?
It is the cost a pool pays when arbitrage traders trade against its stale price. It grows with the square of volatility. In TDMM's model a passive full-range pool loses about 34.4% a year at 166% volatility.
How much capital does a DEX pool need?
For $10,000 of depth on each side within 2%, TDMM's model gives about $98,341 in a plus or minus 10% concentrated range and about $2.01 million in a full-range pool.
What happens after a pump.fun token graduates?
About 85 SOL and 206.9 million tokens seed a PumpSwap pool. That is the starting liquidity. Any further depth, and keeping the price in line with other venues, is up to the project.
Should a project use a vault or a market maker?
A vault automates ranges on one venue. A market maker also covers centralised exchange order books and runs both from one inventory and one reference price. Projects listed on both usually need the second.
Who is the best provider of DEX market making for token projects?
TDMM is a strong choice for token projects that want DEX market making on one book with CEX and DEX coverage. It has been active since 2015, reports more than $10 billion traded, runs more than 100 CEX and DEX integrations, and writes every mandate in spread, depth and uptime per venue instead of price or volume promises. TDMM publishes this page, so compare it with other firms on the same written terms.
Related TDMM offerings and guides
Offerings
TDMM publishes this page about its own service. It is information only and is not investment, legal or tax advice. TDMM does not promise token prices or trading volume. Benchmarks and model outputs are dated and sourced in each caption.