The starting point of the Trump team’s token, this article explains what is so special about the sudden rise of Meteora? How to participate in the token airdrop?

After Trump launched his own cryptocurrency, the decentralized exchange Meteora also sparked a lot of discussion. This is because the Trump coin team did not add liquidity to Raydium, the main DEX on Solana, but instead established a liquidity pool on Meteora. Subsequently, Meteora's liquidity for Melania Trump's coin was on par with Raydium. Meteora is a DEX launched by Ben Chow, the co-founder of Jupiter. Apart from the Trump team's apparent choice of this exchange, it is also possible that the Jupiter team intentionally supports their own DEX, dominating the industry from DEX to aggregator.

Meteora and Jupiter are closely related

Meteora, formerly known as Mercurial Finance, has been operating since 2021. Its backers include the Solana Foundation and Alliance DAO, which has invested in Pump.fun. The platform's main mechanisms include DLMM (Dynamic Liquidity Market Maker), dynamic AMM pools, dynamic LST pools, and multi-coin stable pools. This article will focus on introducing the trading mechanisms related to meme coins and the participation methods for airdrops.

Meteora's four key features help boost meme coin liquidity

Why is Meteora suitable for meme coins?

• Permanent locking of liquidity and ability to earn fees: The liquidity added by the coin issuer during the creation of the liquidity pool will be permanently locked, but the issuer can still earn fees from the locked liquidity.
• Dynamic transaction fees: The dynamic transaction fees set by the protocol range from 0.15% to 15%. The protocol may adjust these fees to optimize for different market conditions. Additionally, liquidity providers can also earn lending income from the locked SOL and USDC in the pool.
• Protocol fees: 20% of the dynamic fees are allocated as protocol fees. These protocol fees will be paid to the protocol or to the market makers and trading bots providing liquidity.
• Providing an exposure platform for meme coins: Meteora's meme coin pool information can be tracked by platforms like Birdeye, DEXScreener, DEXTools, and Jupiter, increasing the discoverability of meme coins for traders, bots, and limited partners.

The first point is actually similar to Raydium's Burn & Earn feature, allowing the creators of liquidity pools to earn income while giving up their tokens, increasing their willingness to burn.

(Messari: Trading volume increased 100-fold annually, what's driving the surge of Solana's largest DEX Raydium?)

The 20% of dynamic transaction fees used to bribe market makers or trading bots is a more direct way to increase on-chain liquidity.

M3M3's reward mechanism aims to extend the lifespan of meme coins

M3M3 mechanism tries to solve the problem of meme coins becoming purely PVP by providing fee rewards to stakers, in an attempt to create a sustainable mechanism that gives holders a reason to hold, allowing meme coins to survive longer and reach higher market caps.

The M3M3 mechanism is that only the top stakers (e.g. the top 100 stakers) are eligible to earn fee rewards from the liquidity pool, making staking meme coins a dynamic competition - if you fall out of the top 100, you stop earning rewards. The more meme coins staked, the higher the share of rewards. Participants need to actually stake the meme coins, not LP tokens, so there is no impermanent loss like in regular liquidity pools.

M3M3's flywheel drives a meme coin staking race

M3M3's flywheel mechanism is composed of stakers, transaction fees, and rewards.

• Stakers: Users buy and stake the tokens. As more people want to participate in staking, it creates demand for the tokens, driving token price or trading volume growth. More competing stakers will buy more tokens.
• Transaction fees: As more people buy or swap the tokens, more transaction fees are generated. A portion of these transaction fees are recycled back into the protocol or ecosystem as future rewards.
• Rewards: The protocol distributes a portion of the transaction fees as staking rewards. Higher rewards attract more stakers to enjoy these earnings.

This forms the following flywheel effect:

1. More stakers -> Buy tokens -> Increase transaction fees
2. Increase transaction fees -> Increase rewards
3. Increase rewards -> Attract more stakers
4. More stakers -> Buy more tokens -> Continue driving the flywheel

Meteora even launched the first meme coin on the M3M3 platform, $M3M3 (M3M3pSFptfpZYnWNUgAbyWzKKgPo5d1eWmX6tbiSF2K), which surged over 1.5x in a short time after the Trump coin hype, before retracting.

Intending to boost Meteora? 10% tokens airdropped to liquidity providers

As for the airdrop, a previous governance proposal mentioned that 10% of the tokens will be provided to liquidity providers. Specifically:

• 1 point for every $1 of TVL per day
• 1,000 points can be earned for every $1 in fees earned

The following content is more speculative. We previously mentioned that the transaction fees for Trump's token were flowing out from exchanges like Binance and Gate. The selected Meteora also has close ties with Jupiter, perhaps with shared connections. Additionally, for Jupiter, while being a trading aggregator is very profitable, if they cultivate the same line of DEXes, they can dominate the entire industry chain. As the Solana and Trump token-related ecosystem develops, this may be an exciting prospect.