Title: Solana: How to Collect LP Fee if You’re the Sole LP for a Minimal-Impact Raydium Pool
Introduction
As a platform that creates new tokens, mints them, and manages Raydium pools on Solana, you’ve likely been approached by users seeking assistance with minting their own tokens or participating in Raydium pools. However, not all token creators have an equal number of LP (Liquidity Provider) votes to influence pool governance. In this article, we’ll explore how a token creator can collect their LP fee if they’re the sole LP for a minimal-impact Raydium pool.
Situation
Let’s say you’re a platform that has created 10,000 SOL tokens and minted them in two Raydium pools: Pool A and Pool B. Each pool is owned by one of your users, who contributes $1,000 worth of SOL to each pool’s LP. As the creator of these platforms, you have established the initial voting structure for both pools, with an equal number of votes for each user.
The scenario plays out as follows:
- User A has 10,000 SOL tokens minted and decides to participate in Pool B.
- You have 2 users (User X and User Y) contributing $1,000 worth of SOL to the LP for each pool.
- Since there are two pools with equal voting structures, you will have a total of 4 votes from the initial LP contributors.
The Problem
If all token creators contributed equally and had an equal number of tokens minted, the success of your platform would be boosted. However, in this scenario, User A is the only contributor to Pool B, while the other two users (X and Y) are still contributing their SOL liquidity to the LP for both pools.
The Solution:
To collect the LP fee from a single user who contributed with minimal impact on the governance of the pool, you need to take a different approach. Here’s what you can do:
- Create a token that incentivizes participation: Introduce a new token (e.g. T) that is created and minted separately from the existing SOL tokens. This token will be used for voting purposes.
- Use a 51% voting system
: Establish a voting system where LP contributors vote to approve or reject proposals that affect the governance structure of the pool. In this scenario, you could allow User X and Y (the two contributing users) to have their T tokens as part of the voting pool, with their votes weighted based on their SOL contribution.
- Weighted voting: Assign different weights to each user’s votes based on their SOL contribution. This will ensure that the most active contributors (e.g. User X and Y) have a disproportionate amount of weight in the decision-making process.
Example:
Suppose the current pool governance structure has 10,000 T tokens with equal weighting for all contributors. Let’s say you want to increase the voting threshold from 50% to 60%. To do this:
- Create a new token (T) that is created and minted separately.
- Assign 1,000 T tokens to User X, who contributes $100,000 in SOL.
- Assign another 5,000 T tokens to User Y, who also contributes $500,000 in SOL.
In this scenario, User X holds 6,500 T tokens (1,000 + 5,000) out of the total 11,500 T tokens. As a result, they will hold 55.6% of the voting power, while User Y holds only 44.4%.
Conclusion
While collecting LP fees from users with minimal impact can be challenging, there are ways to do it effectively. By introducing a new token that incentivizes participation and using a weighted voting system, you can ensure that the success of your platform does not depend solely on the contributions of a single user. This approach will encourage more users to participate in the governance process, leading to increased liquidity and better decision-making for your Raydium pools.