DeFi & Yield

What is concentrated liquidity in an AMM?

Concentrated liquidity is an AMM design that lets a liquidity provider commit funds to a specific price range rather than spreading them across all possible prices. Within that range the capital is used more efficiently, supporting deeper trading and larger fee earnings for the same deposit. For example, a provider expecting an asset to trade between two levels can place liquidity only there. The trade-off is active management: if the price moves outside the chosen range, the position stops earning fees and sits entirely in one asset. It rewards precision over the simpler full-range approach.