How liquidity flows
Providing liquidity on Orbit Finance is an ongoing process rather than a single action. A liquidity position moves through several stages, starting with deployment, continuing through monitoring and rebalancing and eventually ending with partial or full removal. Understanding this lifecycle helps you make better decisions and get the most out of your capital.
This section explains how liquidity providers earn returns, when it makes sense to adjust positions, and how to add or remove liquidity using the Orbit Finance interface.
How liquidity providers generate returns
When you provide liquidity to an Orbit Finance DLMM pool, your tokens are placed into price bins and used to facilitate trades. Each time a trader swaps assets and your liquidity is used, you earn a portion of the trading fees.
These fees accrue automatically to your position. There is no need to manually compound or reinvest them. Your earnings are reflected directly in your liquidity balance and can be claimed or withdrawn according to the pool’s rules.
The amount you earn depends on several factors. Your liquidity must be within the active price range, trading volume must be present, and market conditions such as volatility can influence fee levels. Pools with higher activity or higher adaptive fees generally generate more returns, but they may also involve more frequent price movement.
Managing and adjusting your position
Markets do not stand still. As prices move, liquidity that was once active may fall outside the current trading range. When this happens, your liquidity stops being used and no longer earns fees until the price moves back into range.
At that point, you can choose whether to adjust your position. Adjusting usually means removing liquidity from inactive price bins and redeploying it closer to the current market price. This process is known as rebalancing.
Orbit Finance DLMM is designed to make rebalancing flexible. You are not forced to act immediately, and you can adjust only part of your position if that better suits your strategy. Some liquidity providers rebalance frequently to stay close to the market, while others prefer wider ranges and fewer adjustments.
Considerations when rebalancing
Rebalancing involves on-chain transactions, which means gas fees and sometimes swapping between assets. These costs should always be weighed against the potential increase in fee earnings.
Market conditions also play an important role. In calm markets, liquidity ranges may remain active for long periods with little need for adjustment. In volatile markets, prices can move quickly, and tighter ranges may require more frequent rebalancing to stay effective. There is no single correct approach. The right strategy depends on how actively you want to manage your liquidity and how much exposure you are comfortable with.
Deploying liquidity
Deploying liquidity on Orbit Finance is straightforward and can be completed in a few steps. First, you select the pool you want to provide liquidity to. Each pool displays its token pair, fee tier, and whether rewards are available. After selecting a pool, you enter the amount of each token you want to deposit.
Next, you choose a liquidity shape that matches your strategy. This could be ask-heavy, bid-heavy, or balanced, depending on whether you expect more selling, more buying, or two-sided activity. You then define the price range where your liquidity will be active. Once you confirm the transaction, your liquidity position appears on the pool page. You can see your active range visualised on the chart, along with your deposited balances and accumulated rewards.
Batch liquidity deployment
For more advanced strategies, Orbit Finance supports batch liquidity deployment. This allows you to deploy liquidity across multiple price ranges instead of a single continuous range.
Batch deployment is useful if you want broader market coverage or a more passive setup. By spreading liquidity across several ranges, you reduce the need for frequent rebalancing while still participating in trading activity across a wider set of prices.
Each batch is added using the same add liquidity flow, allowing you to build up a layered position over time.
Removing liquidity, locking, and protocol safeguards
IMPORTANT NOTE: Removing e.g. unlocking liquidity is ONLY applicable for DAO governed permissioned pools where the company is publicly verified and whitelisted as an Orbit Finance Permissioned pool.
Permissionless pools can NEVER unlock liquidity. It is either unlocked, or locked and this is shown per pool publicly.
Removing liquidity on Orbit Finance is intentionally flexible, but never unrestricted. The system is designed to allow liquidity providers to adjust positions while protecting traders, investors, and products from sudden or malicious changes. This balance between flexibility and safety is a core design principle of Orbit Finance.
Liquidity removal and locking rules
Depending on the pool configuration, liquidity may be subject to locking rules. These rules are defined at pool creation and are visible on-chain before any liquidity is deposited. Burning liquidity can not be reversed, you can do this from 1% to 100% of liquidity.
A lock means that liquidity cannot be removed until certain conditions are met. These conditions can include:
A minimum time period
A predefined product milestone
A scheduled unlock date
A governance-approved action
Locked liquidity remains fully visible on-chain and continues to earn fees while locked, unless otherwise specified by the pool rules.
Locking is commonly used for:
Company-issued products
Token launches
Revenue distribution pools
Investor-facing markets where predictability matters
Unlocking liquidity
When the lock conditions are satisfied, liquidity becomes eligible for removal. Unlocking can happen automatically based on time or milestones, or it can require an explicit action such as a governance approval or issuer-triggered unlock that follows predefined rules. Once unlocked, liquidity can be removed using the standard removal options. Partial removal, full removal, or range-based removal all follow the same permissions once a lock is lifted.
Unlock events are recorded on-chain and are publicly auditable.
Unlocking and removing liquidity is not inherently malicious. In well-designed markets, it is a normal and sometimes necessary part of a product’s lifecycle. The key difference between responsible liquidity management and a rug is intent, structure, and transparency. Orbit Finance is built around the idea that liquidity can change over time without breaking trust.
Liquidity is not always meant to be permanent
Not every pool is designed to exist forever. Some pools support early-stage launches. Others support fixed-term products, revenue periods, or time-bound incentives. In these cases, liquidity removal is expected and planned from the start.
Unlocking liquidity allows capital to move to its next purpose once a phase is complete. What matters is that this behaviour is defined in advance and visible to everyone interacting with the pool.
Read this case where the legitimate removal of liquidity is shown:
Use case: tokenised real estate development via Orbit FinanceCommon legitimate reasons to unlock liquidity
One common reason is product lifecycle completion. A pool may be created to support a token launch, a funding phase, or a distribution period. Once that phase ends, liquidity can be responsibly withdrawn or redeployed into a new pool designed for the next stage.
Another reason is market evolution. Early markets often need directional or tightly managed liquidity. As usage grows, a more balanced or broader pool may be more appropriate. Unlocking allows liquidity providers or issuers to migrate capital into a healthier long-term structure.
Liquidity may also be unlocked for capital efficiency. Funds tied up in inactive or outdated pools can be moved into areas where they are actually needed, such as deeper markets, new products or ecosystem support.
Finally, unlocking can occur due to governance decisions. The DAO may approve liquidity changes that align with protocol upgrades, risk mitigation, or broader ecosystem goals.
Responsible liquidity removal protects markets
When liquidity is unlocked responsibly it does not destabilise markets. Gradual removals, range-based adjustments and partial exits allow prices to adjust naturally. In many cases, liquidity is not removed at once. It is migrated, rebalanced, or replaced with a new structure that better reflects current conditions. This keeps markets functional while allowing capital to move.
Burning liquidity positions
Pools support liquidity burning. Burning permanently removes liquidity tokens from circulation and ensures that the underlying assets can never be withdrawn. Burning is irreversible. This mechanism is used to signal long-term commitment or to permanently align liquidity with a product or protocol. Once liquidity is burned, it can no longer be removed, transferred or reused.
Burning is typically used for:
Protocol-owned liquidity
Long-term ecosystem commitments
Anti-rug guarantees
Pools designed to exist indefinitely
Preventing rugs and sudden liquidity withdrawals
Orbit Finance is designed to prevent common DeFi failure modes, including sudden liquidity pulls that damage users.
This is achieved through a combination of:
Explicit lock rules defined at pool creation
Permissioned pool controls for sensitive products
Optional liquidity burning
Time-based or milestone-based unlocks
Transparent on-chain visibility of all liquidity states
There are no hidden controls. If liquidity can be removed, that fact is visible in advance. If it is locked, the unlock conditions are visible in advance. This allows traders and investors to make informed decisions rather than relying on trust.
Role of the Cipher DAO
The Cipher DAO plays a governance and oversight role in how sensitive pools are managed.
Depending on the pool type, the DAO may:
Approve or deny unlock requests
Enforce minimum lock durations for certain categories of pools
Set global safety standards for permissioned markets
Pause or intervene in exceptional cases where predefined rules are violated
The DAO does not have arbitrary power to seize or move user liquidity. Its role is constrained to governance actions defined by protocol rules and on-chain logic.
What this means for users
For liquidity providers these mechanisms provide clarity. You know exactly when and how liquidity can be removed, locked or burned before you commit capital. For traders and investors they provide protection. Markets cannot disappear overnight and liquidity behaviour is predictable and auditable.
For companies and product issuers they provide credibility. Locking, burning and governance-backed rules allow real financial products to exist on-chain without relying on blind trust.
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