TECHNICAL CONCEPTS
Concentrated Liquidity
Definition
Concentrated liquidity allows liquidity providers to allocate capital within custom price ranges rather than across the entire price curve, increasing capital efficiency and potential returns.
Example
Example
In Uniswap V3, you can provide USDC/USDT liquidity only between $0.99-$1.01, earning more fees per dollar with concentrated exposure.
Risks to Consider
Risks
- Out-of-range positions
- Impermanent loss
- Active management needed
