When working with concentrated liquidity, a method that lets liquidity providers allocate capital inside a narrow price band instead of the whole market range. Also known as range‑based liquidity, it cuts slippage and makes each dollar work harder. This approach changes the old all‑or‑nothing model of liquidity provision and creates a direct link between capital efficiency and price impact. In practice, a provider picks a start price and an end price; as long as the market trades inside that interval, the pool earns fees. Outside the interval, the capital sits idle, protecting the provider from unnecessary exposure.
Platforms like Uniswap v3, the first AMM to support range‑based positions and Curve Finance, a stablecoin‑focused DEX that uses low‑slippage pools rely on concentrated liquidity to offer tighter spreads and higher fee earnings. Both are types of automated market makers, protocols that price assets algorithmically using pool balances. The shift to range orders means that liquidity providers can target the price range where most trading happens, which reduces impermanent loss and raises overall pool efficiency. In short, concentrated liquidity enables LPs to “focus” their capital where it matters most.
Three core elements shape the experience. First, price ranges let providers set lower and upper bounds; the narrower the band, the higher the potential fee income, but also the higher the risk of going out of range. Second, fee tiers let protocols offer multiple reward levels—typically 0.05%, 0.30% and 1.00% on Uniswap v3—so that risk‑adjusted returns match the chosen range width. Third, the concept of ticks breaks the price curve into discrete steps, letting the smart contract calculate fees with precision. Together these attributes form a semantic chain: concentrated liquidity requires price ranges, offers fee tiers, and relies on tick granularity. When the market price moves inside the selected band, every swap contributes a portion of the fee to the LP’s balance, creating a compounding effect that traditional, evenly spread pools can’t match.
Understanding these pieces helps you evaluate whether a DEX’s pool aligns with your risk appetite and capital goals. Below you’ll find a curated set of articles covering everything from liquidity mining strategies and fee‑tier selection to deep dives on specific platforms like Curve, OolongSwap, Elk Finance, and Wagmi. Whether you’re a seasoned LP looking to fine‑tune your positions or a newcomer curious about the mechanics, the collection provides practical insights you can apply right away.
An in‑depth review of SaucerSwap V2 on Hedera, covering its concentrated liquidity features, fees, security audit, price outlook and how it stacks up against major DEXes.
Learn More