In 2025, Solana's Total Value Locked (TVL) surpassed $16 billion, with Meteora emerging as a core engine of a dynamic liquidity layer. The protocol is instrumental in shifting the ecosystem from meme-coin frenzy towards sustainable Decentralized Finance (DeFi) growth. In October, Meteora's total revenue surged to $10.4 million, with non-meme revenue reaching a record $1.38 million, nearly doubling September's $751,000. While meme coins still constituted 87% of revenue, primarily due to a higher fee structure compared to stablecoins, this early sign of diversification suggests significant upside potential beyond current valuations.
This article delves into how Meteora's Dynamic Liquidity Market Maker (DLMM) is reshaping liquidity on Solana, covering its origins, technology, revenue streams, challenges, and future outlook.
Origin: Addressing Solana's Liquidity Pain Points
Meteora was conceived to address inefficiencies in early Solana DeFi protocols. In 2023, former Solana Foundation engineers and DeFi builders identified critical flaws in classic Automated Market Makers (AMMs), such as Uniswap V2. These traditional AMMs were proving inefficient on high-throughput blockchains like Solana, leading to substantial idle capital, estimated at up to 70%, and significant slippage, averaging 5%–10% in meme coin trades. This negatively impacted both Liquidity Provider (LP) returns and the overall trading experience.
To combat these issues, the project was established as an "adaptive liquidity protocol" offering programmable tools. Meteora quickly gained traction, securing a $25 million seed round in 2024, led by Multicoin Capital, positioning it as a Solana-native liquidity abstraction layer.
A pivotal development was the introduction of the Dynamic Liquidity Market Maker (DLMM) in Q2 2024. This innovation was particularly timely, coinciding with the surge in meme coin volume from projects like BONK and WIF, which had previously suffered from fragmented liquidity.
By 2025, Meteora had become a significant player on Solana, handling 26% of the blockchain's daily trading volume and accumulating a cumulative TVL exceeding $5 billion, placing it among the top five Decentralized Exchanges (DEXs). Its technology stack is modular, comprising:
- •Meteora DLMM: The core liquidity engine.
- •Dynamic Bonding Curves (DBC): Designed for fair token launches.
- •Dynamic Vaults: For automated yield generation.
These components are interconnected through the MET governance token, forming a cohesive ecosystem. Meteora is often described as a "liquidity operating system" for Solana's Internet Capital Markets (ICM).
Core Technology: The DLMM and DBC Dual Engine
Meteora's DLMM represents a significant advancement beyond traditional AMMs, functioning as a hybrid "price-range orderbook" system. This model allows LPs to define custom price ranges for their liquidity (e.g., between $0.8 and $1.2). The system dynamically adjusts liquidity curves to minimize impermanent loss, a common issue for LPs in volatile markets.
The mathematical foundation of DLMM utilizes a piecewise linear function. For a given price P within a defined range [A, B], the liquidity L is calculated as:
Liquidity L = k * (P − A) / (B − A), where k is an efficiency factor. This factor is typically 3–5 times higher than in classic AMMs, enabling LPs to earn greater fees in volatile assets like meme coins while reducing risk in stablecoin pools. Consequently, observed Annual Percentage Rates (APRs) in DLMM pools often range from 15% to 30%, significantly higher than the 8%–12% typically seen on platforms like Orca.
Complementing the DLMM, Meteora's Dynamic Bonding Curves (DBC) provide a parameterized bonding curve mechanism for conducting fair token launches. Unlike traditional Initial DEX Offerings (IDOs), which are often susceptible to bot manipulation, DBC employs an exponential decay curve. The price is determined by the formula:
Price = base * (supply / total)^gamma, where gamma is approximately 2.5. This ensures that early buyers pay a fair premium, mitigating risks associated with bot activity and front-running.
In October 2025, the Genesis event utilizing DBC facilitated the launch of over 30 meme projects, raising more than $100 million and reportedly avoiding 95% of potential "rug pull" risks.
Meteora's Dynamic Vaults integrate with Jupiter routing to provide automated rebalancing capabilities. Users can deposit stablecoins like USDC, and the protocol intelligently allocates these funds to higher-yielding pools. In the third quarter, these vaults managed over 15% of Solana's total TVL.
The composability of these components is a key strength:
- •The output from DLMM pools can be used to seed new DBC pools.
- •Vaults share a portion of their fees with MET token holders.
Revenue Streams: Shifting from Meme Dependence to Diversification
Meteora employs a tiered fee structure for its services. The DLMM protocol dynamically charges fees ranging from 0.01% to 0.3%, with higher rates applied to more volatile assets. Of these fees, 20% is allocated as protocol revenue for DAMM (Dynamic AMM) and 5% for DLMM.
In October, the protocol generated $10.4 million in revenue:
- •Meme coins accounted for 87% of this revenue ($9.02 million), primarily driven by the 0.16% fee.
- •Non-meme assets, including stablecoins and Real World Assets (RWAs), contributed $1.38 million, showing an 84% increase.
This growth in non-meme revenue reflects the increasing adoption of RWAs, particularly after positive developments such as a Solana ETF approval, which led to a doubling of volume in USDC pools. The current annualized revenue run-rate is estimated between $75 million and $115 million, representing approximately 7.59% of total Solana DeFi fees.
Quarterly revenue figures show a steady increase, with Q3 revenue reaching $8.2 million, a 26% rise from Q2's $6.5 million. During the same period, TVL saw a significant surge of 252%, reaching $804 million. Compared to its peers, Meteora exhibits a higher dependence on meme coins (75% versus Jupiter's 60%), but leads in non-meme growth with a 45% increase, surpassing Orca.
Token Economics: MET Token Generation Event and Valuation Adjustments
Meteora conducted its Token Generation Event (TGE) for the MET token on October 23, 2025. The total supply is set at 1 billion MET, with 48% circulating at launch. This distribution included 15% allocated to an LP airdrop and 3% to Jupiter stakers, emphasizing community ownership. The initial price at launch was $0.68, resulting in a market capitalization of $287 million. Within a week, the price experienced a 40% decline, settling at $0.51, and by November 11, it had further decreased to $0.39, with a market cap of $187 million.
This selling pressure was attributed to several factors, including the release of 47% of tokens to the community and concerns regarding allocation. The team's allocation was reportedly limited to 10%, and unverified rumors circulated about potential indirect ties to the Trump family, contributing to market uncertainty.
Despite the price pullback, the utility of the MET token is evident. LPs reported daily earnings exceeding $70, demonstrating its role in governance, fee discounts, and LP boosts. Holders receive a 20% APR boost in Vaults. The protocol has seen over 50 governance proposals, including discussions on adjusting fees for RWA pools. Analysts project that if the non-meme revenue share increases to 40%, the MET token price could reach $1.2–$1.5 by 2026.
Future Outlook and Challenges: Navigating Volatility Towards Sustainability
Meteora's trajectory has not been without its challenges. Its significant reliance on meme coins has amplified market volatility, with TVL experiencing a 300% fluctuation in the first half of 2025 and Q2 revenue seeing a 15% decline. Technical risks, such as Miner Extractable Value (MEV), pose a threat. While DLMM is highly efficient, it requires robust gas optimization and may eventually necessitate Zero-Knowledge (ZK) proof methods to mitigate front-running attacks. Market-related issues, including allegations of insider trading and subsequent price drops, have fueled market FUD. Analysts caution that the transition from speculative trading to sustainable cash flow generation must be carefully managed, especially in light of evolving regulations. Post-TGE, regulatory scrutiny, such as potential SEC reviews of Solana ETFs, could impact the growth trajectory of RWA initiatives.
Industry projections suggest significant growth in on-chain fees for 2025, with 1kx estimating $19.8 billion. Meteora is positioned to capture a substantial share, potentially reaching 10% of this market. Future integrations, such as the anticipated collaboration with bitdealer.net, could introduce iGaming revenue into DLMM pools, potentially creating "asset-backed memes." The upcoming $BIT TGE on November 27 is expected to serve as a catalyst for this integration.
Meteora is evolving beyond its role as a mere DEX; it represents Solana's broader shift from speculative hype to practical DeFi applications. The DLMM technology serves as a crucial bridge between speculative markets and sustainable financial practices. Revenue diversification is key to mitigating cyclical risks inherent in the crypto market. Despite the initial turbulence surrounding its TGE, Meteora's strong community support and advanced technological infrastructure suggest a potential for recovery and sustained growth. As the narrative around Solana intensifies in the latter half of the year, MET could emerge as a significant performer. Ultimately, as the meme coin bubble eventually subsides, the true value will be derived from Meteora's robust liquidity engine.