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Raydium LP Guide on Solana

Raydium is Solana's leading AMM and hybrid DEX, offering ultra-fast trades, permissionless pool creation, and strong LP yields-all powered by the Solana blockchain's high throughput and low fees.

🚀 Why Provide Liquidity on Raydium?​

  • High performance & low cost: Swaps settle in seconds with negligible fees (<$0.01)
  • Hybrid AMM + Serum/OpenBook orderbook: Deep liquidity and reduced slippage for larger trades
  • Permissionless farming: Any pool can offer token rewards-yielding lucrative APRs in new or niche pairs

🧱 How to Provide Liquidity​

1. Pick Your Pool​

  • Standard AMM Pools: Simple XY=K pools with constant pricing curves.
  • CLMM Pools: Concentrated liquidity pools where you choose a price range-higher returns, more granular control.
  • Consider pairs like SOL/USDC, RAY/USDC, or trending token pairs with farming incentives.

2. Connect Wallet​

Use Phantom, Solflare, or Trust Wallet on Solana.

3. Deposit Assets​

  • For AMM pools: deposit equal parts of two tokens.
  • For CLMM: specify a price range to concentrate liquidity.
  • Receive LP tokens (or an NFT for CLMM), representing your position.

4. Stake for Extra Yield​

If the pool is part of a farm, stake your LP tokens to earn RAY or other project incentives.

5. Monitor & Manage​

Track LP returns, reclaim and reinvest yields, or adjust ranges in CLMM as price moves.

💸 Fee Structure & Earning Composition​

  • 0.25% swap fee per trade:
  • ~0.22% goes to LPs
  • ~0.03% to Raydium treasury/stakers
  • High APRs:
  • Regular pools: 10–30% APR depending on volume
  • CLMM & new pools: can temporarily spike to 100%+ APR
  • Farming incentives: Additional RAY emissions boost yields.

⚠️ Risks & Tips​

Impermanent Loss (IL)​

  • Larger in volatile or CLMM pools.
  • CLMM reduces IL vs constant pools but weight your range carefully.

APR Volatility​

  • High APRs often reflect recent volume spikes-not guaranteed returns.
  • Community warnings: "APR estimations can lead to inflated expectations."

Low Liquidity or Meme Pairs​

  • Pools with low TVL but high APR are risky-they may collapse or be manipulated.

Smart Contract & Governance Risk​

  • Audits are ongoing; pseudonymous development adds risk.

🧠 Real-World Use Cases​

Example 1: SOL/USDC CLMM Mid-Range​

  • Moderate APR (~25–40%) with liquidity concentrated around current SOL prices (e.g., $100–$150).
  • Good balance of yield and risk, with easy range adjustments.

Example 2: Meme/Microcap Farming​

  • Temporary APRs as high as 5,000% seen in launch pools-excessive risk
  • Ideal only for capital you're willing to lose; unsustainable in most cases.

Example 3: Stable Farming (USDC/USDT)​

  • Offers steady, low-risk returns (2–5% APR).
  • Using stable swaps can be a passive entry point.

🛠 Tools & Monitoring​

  • Raydium App: UI for pools, farms, staking, and range management
  • Portfolio trackers like DeBank or Zapper for performance overview.
  • On-chain dashboards (e.g. Solana Compass) for volume and LP stats
  • Rust SDKs & bots: Community-built utilities for automation and deeper analytics

🔥 Pro Tip​

🔥 Hot Tip: Reclaim Lost SOL with Sol Incinerator

When you add and remove liquidity on Solana DEXes like Orca and Raydium, your wallet can accumulate old token accounts and LP remnants. These clutter your wallet and lock up small amounts of SOL as rent.

👉 Use Sol Incinerator to burn unused token accounts, reclaim SOL, and tidy up your wallet.

It's safe, fast, and can recover 0.01-0.2 SOL or more depending on your DeFi history.

✅ Summary​

Raydium offers a powerful LP ecosystem:

  • Standard pools for passive earning
  • CLMM pools for active, capital-efficient strategies
  • Farming incentives to layer yield But remember:
  • Keep an eye on impermanent loss and APR volatility
  • Watch out for low-liquidity traps and high-risk pools
  • Use governance and community signals to assess trust

👉 Next: Learn about Orca concentrated liquidity → (/docs/protocols/orca)
👉 Prefer stable strategies? Check our Curve guide → (/docs/protocols/curve)