Concentrated liquidity revolutionized LP economics by allowing you to focus capital in specific price ranges, dramatically improving capital efficiency and potential returns.
How It Works
Instead of spreading liquidity across all prices, you select a range. Your capital works only within that range, achieving up to 4000x better efficiency for tight ranges. But if price moves outside, you earn nothing.
Range Strategies
Narrow (±1-5%): Maximum efficiency, requires active management, best for stable pairs or strong conviction.
Medium (±10-25%): Balanced approach, less frequent rebalancing, reasonable IL amplification.
Wide (±50%+): Set-and-forget, lower efficiency, survives most conditions.
Management Tools
Automated managers like Gamma, Arrakis, and Bunni handle rebalancing for passive LPs, charging fees but removing active management burden.
Start wide, learn the mechanics, then optimize as you gain experience.