Concentrated liquidity changed everything about providing liquidity. Master range selection, rebalancing, and maximizing capital efficiency.
Capital Efficiency Explained
A narrow range can provide up to 4000x the capital efficiency of full-range liquidity. For ETH at $2,000: Full range LP provides $1,000 of liquidity. A ±5% range ($1,900-$2,100) provides ~$10,000 of effective liquidity with the same capital.
Range Selection Strategies
- Volatility-Based: Set ranges based on expected price movement
- Support/Resistance: Use technical analysis for meaningful levels
- Asymmetric: Skew range based on directional bias