Concentrated liquidity lets you provide liquidity within specific price ranges, dramatically increasing capital efficiency and fee earnings compared to traditional LPs.
Setting Your Range
Narrower ranges = higher fees when in range, but risk going out of range. Wider ranges = more stable but lower fee share. Find the balance based on pair volatility.
Range Strategies
- Tight range: ±5% for stablecoins or confident predictions
- Medium range: ±20% for moderate volatility pairs
- Wide range: ±50% for hands-off approach
Active Management
Concentrated positions require monitoring. When price moves out of range, you stop earning fees. Rebalancing costs gas, so factor that into your strategy.