Concentrated Liquidity
An AMM upgrade letting providers focus their capital in a chosen price range for far higher fee efficiency — at the cost of active management.
Introduced by Uniswap v3, concentrated liquidity lets a provider deploy capital within a specific price band rather than spreading it across all prices from zero to infinity. Inside that band, the same capital earns dramatically more fees, because it isn’t wasted on prices that rarely trade.
The trade-off is active management: if price exits your chosen range, your position stops earning fees and sits entirely in the weaker asset — a concentrated form of impermanent loss. It rewards sophisticated LPs and punishes set-and-forget ones, which is why many retail providers now use managed vaults that rebalance ranges automatically.