Title: Solana: How to Charge LP Fees When You’re the Only LP in a Raydium Pool with Minimal Influence
Introduction
As a platform that creates new tokens, mints them, and manages Raydium pools on Solana, you’ve probably been approached by users looking for help minting their tokens or participating in Raydium pools. However, not all token creators have the same number of LP (liquidity provider) votes to influence the management of the pool. In this article, we’ll explore how a token creator can charge LP fees when they’re the only LP in a Raydium Pool with minimal influence.
Scenario
Let’s say you’re a platform that has minted 10,000 SOL tokens and has them in two Raydium pools: A and B. Each pool is owned by one of your users, who contributes LP of $1,000 per pool. As the creator of these platforms, you have created the initial voting structure for both pools with an equal number of votes for each user.
The scenario goes like this:
- User A has 10,000 SOL tokens minted and decides to participate in pool B.
- You have 2 users (user X and user Y) who contribute $1,000 LP to each pool.
- Since there are two pools with the same voting structures, you will have a total of 4 votes from the initial LP contributors.
Problem
If all token creators contributed equally and had the same number of tokens minted, your platform would be in a better position to succeed. 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 both pools in VP.
Solution:
To charge a single user LP fee for minimally influencing the pool’s governance, 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.
- Use a 51% voting system: Create a voting system where VP members vote on whether to approve or reject proposals that affect the pool’s governance structure. In this scenario, you can allow user X and Y (the two participating users) to use their T tokens as part of a voting pool, and their votes are 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 more active contributors (e.g., user X and Y) have a disproportionate role in the decision-making process.
Example:
Let’s say 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.
- Allocate 1,000 T tokens to user X, who deposits $100,000 SOL.
- Allocate another 5,000 T tokens to user Y, who also deposits $500,000 SOL.
In this scenario, user X has 6,500 T tokens (1,000 + 5,000) out of a total of 11,500 T tokens. As a result, they will own 55.6% of the voting rights, while User Y only owns 44.4%.
Conclusion
While charging LP fees to users with minimal influence 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 on just one user’s contribution. This approach will encourage more users to participate in the governance process, resulting in increased liquidity and better decision-making for your Raydium funds.