FAQ — CLMM LP on Bybit Alpha

What is CLMM LP? 

CLMM LP is a feature on Bybit Alpha that allows liquidity providers (LPs) to participate in Concentrated Liquidity Market Maker (CLMM) pools and allocate their capital within specific price ranges, rather than distributing it evenly across the entire price spectrum as in traditional Automated Market Maker (AMM) systems. This targeted approach enhances capital efficiency and helps maximize potential returns.

What is a liquidity provider (LP)?

A liquidity provider (LP) is an individual or entity that supplies cryptocurrency assets to a liquidity pool on a decentralized exchange (DEX) or other decentralized finance (DeFi) protocol. In return for providing liquidity, LPs typically earn trading fees or other rewards.

How does CLMM work?

In a CLMM system, LPs choose a specific price range in which to provide liquidity. When the market price of the trading pair stays within that range, their liquidity will be actively used to facilitate trades, allowing them to earn fees. If the price moves outside the selected range, their liquidity will become inactive, and they will stop earning fees until the price moves back within the range.

What are the benefits of CLMM?

The main advantage of CLMM is its ability to target active price ranges, which leads to greater capital efficiency and helps maximize returns.

 

In a traditional AMM model, liquidity is distributed evenly across the entire price range, leaving much of it unused, especially in stablecoin pools where prices remain relatively stable.

 

With CLMM, LPs can concentrate their capital within narrower price ranges where trading activity is higher. This not only increases fee-earning potential but also gives LPs more control over their positions and exposure to impermanent loss.

What is Total Value Locked (TVL)?

Total Value Locked (TVL) refers to the total value of assets currently held within a specific DeFi protocol or platform. In the context of liquidity pools, TVL represents the total amount of capital supplied by LPs.

Is there any risk involved in CLMM LP?

Yes. All yield-generating activities carry inherent risk, and CLMM LP is no exception. As a leveraged iteration of the CPMM model, CLMM LP offers the potential for higher returns but also comes with greater exposure to risk.

 

A narrower price range generally means higher risk. If the price of the trading pair moves outside your selected range, you'll stop earning fees, and your position will be fully converted into one of the two assets you initially supplied.

 

For example:

• If the price of SOL/USDC falls below your selected range, you'll be left with SOL.

• If the price of SOL/USDC rises above your selected range, you'll be left with USDC.

 

What protocols does CLMM LP support?

Currently, CLMM LP supports the following protocols: Byreal, Raydium and Orca.

 

 

 

Who can stake in CLMM LP on Bybit Alpha?

CLMM LP is available to users who have completed Standard Identity Verification. Please note that Institutional users and users from restricted countries or regions are not eligible for this feature. To learn more about Identity Verification, please refer to FAQ - Individual KYC.

 

 

 

What account type is supported in CLMM LP?

Only assets from the Unified Trading Account (UTA) are supported. Please make sure your assets are located in the UTA before staking. Upon redemption, your assets and any rewards will also be credited back to the UTA. To learn more about transferring between different account types, please refer to this article.

 

 

 

Are subaccounts and Islamic accounts supported?

Yes. Both subaccounts and Islamic accounts are supported.

What tokens can I stake in CLMM LP?

Currently, SOL, bbSOL, USDC and USDT are supported for staking in CLMM LP.

What network is supported by CLMM LP?

Currently, CLMM LP only supports the Solana (SOL) network.

 

 

 

Why is my position value shown in LP tokens instead of the staked coin types?

When you provide liquidity, your initial deposit of specific coins (e.g., SOL and USDC) will be converted into a representation of your share in the liquidity pool — commonly referred to as LP tokens or your LP position.

 

This position reflects the total value of your contribution to the pool, which fluctuates over time based on trading fees and impermanent loss or gain. The platform displays your position value in LP tokens because they represent your proportional share of the pool's assets, rather than the individual coins you originally deposited.

Where can I find the total value of my liquidity position?

You can view your total liquidity position value under Farm (USD) in the My Assets section on the Bybit Alpha page. 

 

If you're using the Bybit App, simply go to Bybit Alpha homepage → Assets → Farm.

 

Why didn't I receive my yield after removing my liquidity?

This may be because you only removed part of your liquidity. To help reduce on-chain transaction costs, yields are only distributed after you've removed all of your liquidity.

Why did I invest in SOL-USDC but receive other types of tokens as rewards?

By providing liquidity to the SOL-USDC pool, you can earn trading fees paid in either SOL or USDC. In addition, the protocol may occasionally distribute incentive tokens, such as RAY, as extra rewards.

 

What are the possible reasons for staking failure and how can I fix them?

 

Where does the yield come from?

The LP earnings come from two main sources:

1. Trading fees generated within the pool.

2. Incentive token rewards specific to that pool.

How are rewards and APR calculated?

The APR is calculated based on your selected price range and the trading fees generated within that range over a given period, multiplied by your share in the liquidity pool. The estimated APR displayed is for reference only — your actual returns will depend on the amount at the time you remove your liquidity.

Can I redeem my liquidity at any time?  

Yes, you can add or remove liquidity whenever you wish.

I tried to redeem 8% of my liquidity, but the Remove Liquidity option is unavailable. Why?

This can happen if the amount you're redeeming isn't enough to cover the required service and network fees. Please try increasing your redemption amount.

What are the possible reasons for redemption failure and how can I fix them?

 

Why do I need to pay fees for staking and redemption, and what types of fees are charged?

• Service fee: When you add or remove liquidity, a service fee is charged for the token swaps and for adding or withdrawing tokens from the pool.

• Network fee: A network fee applies for processing the on-chain transaction.

 

You can check the exact fees when placing the order.

Does the investment amount include fees?

No, the investment amount does not include any fees.

Is there a calculator for potential earnings?

You can check the estimated APR or the daily yield before submitting the orders.