VI. Understanding Non-Sol LP
LP PRICING & MARKET MOVEMENT – WHY EVERYTHING GOES GREEN WHEN SOL PUMPS
To fully understand why everything on Solana seems to go up when SOL pumps, you have to understand how decentralized liquidity pools work. At the core of it all is the simple but powerful constant product formula used by most AMMs (Automated Market Makers):
x * y = k
Where:
x = reserve of Token A
y = reserve of Token B
k = constant product This equation governs how prices are set based on the ratio of assets in a pool. If one token increases in price or is bought heavily, the pool must adjust the other side to keep the product k constant.
BASIC EXAMPLE
Let’s say we have two pools in play:
dTOS/USDC pool:
$400 of TOS
Represents 30% of liquidity
Effective Market Cap = $1,200
dTOS/SOL pool:
$150 of SOL
Represents 10% of liquidity
Effective Market Cap = $1,500
Now let’s say SOL pumps from $150 to $180. That adds a lot more dollar value to the SOL side of the pool, without touching the crypto side.
New SOL value = $180 * existing quantity = Market Cap jumps to $3,000
But here's the thing: the pool doesn’t care about dollar values. It just sees that there’s now a disproportionate amount of value on the SOL side, and it needs to rebalance to maintain the x*y=k equation. HOWEVER, TOS price is based on the value of Sol, increasing the value in that pool as well.
BOT ARBITRAGE & PRICE UPLIFT
So what happens?
Arbitrage bots step in.
They buy underpriced TOS in the TOS/DTOS pool.
They swap it for DTOS, then swap DTOS for SOL in the now-inflated DTOS/SOL pool.
This drains SOL, adds DTOS, and pulls TOS upward in value.
The process continues until price equilibrium is restored between the pools. This means TOS goes up in price, even though nothing happened to it directly — just because SOL went up.
MULTIPLIER EFFECT
Now imagine every token has an LP paired with SOL. When SOL rises, all those pools become unbalanced in the same direction.
Every arbitrage bot on Solana starts executing swaps to restore the balance. As they buy undervalued tokens with overvalued SOL, they force token prices up across the board.
That’s why the entire market turns green when SOL rallies. Not because of narrative. Not because of news. Because of math.
Why This Matters for Delta Plays
Tokens like Delta Launches, such as BabySPX, that have embedded, multi-token LP dynamics are incredibly sensitive to these shifts:
Delta tokens don’t need SOL to pump directly — they just need exposure via LP mechanics.
Well-structured Delta ecosystems with interconnected tokens (like Rock → Stickman → SOL) amplify price movement in both directions.
These setups allow for compoundable reflexivity: as one leg of the triangle grows, bots rebalance by buying the others.
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