Title: Solana: How to Charge LP if 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 may have been approached by users looking for help minting their own tokens or participating in Raydium pools. However, not all token creators have the same number of LP (liquidity provider) votes to influence pool management. In this article, we’ll explore how a proxy producer can charge LP if they’re the only LP in a Raydium Pool with minimal influence.
Situation
Let’s say you’re a platform that has created 10,000 SOL tokens and placed them in two Raydium pools: A and B. Each pool is owned by one of your users, who provides an LP of $1,000 for each pool. As the creator of these platforms, you’ve created an 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 in LP per pool.
- Since there are two pools with the same voting structures, you will have a total of 4 votes from the original LP contributors.
Problem
If all token creators contributed equally and the same number of tokens were minted, the success of your platform would be increased. However, in this scenario, User A is the only one investing in pool B, while the other two users (X and Y) continue to invest their SOL liquidity in VP in both pools.
Solution:
To charge LP fees to a single user who has minimally influenced the management of the pool, you need to take a different approach. Here’s what you can do.
- Create a token that encourages 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 group’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 the 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. users X and Y) have a disproportionate role in the decision-making process.
Example:
Assume that the current pool governance structure has 10,000 T tokens with equal weights for all investors. 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 forged separately.
- Award 1000 T tokens to user X who deposits $100,000 in SOL.
- Allot another 5,000 T tokens to user Y, who also deposits $500,000 in 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 impact can be difficult, there are ways to do it effectively. By introducing a new token that encourages participation and using a weighted voting system, you can ensure that the success of your platform does not depend on the contribution of just one user. This approach will encourage more users to participate in the governance process, resulting in increased liquidity and better decision-making regarding your Raydium funds.
