How to Use Concentrated Liquidity
Concentrated liquidity lets you provide liquidity in a specific price range, earning more fees but with higher complexity.
CL vs Full Range
| Type | Capital Efficiency | Management |
|---|---|---|
| . . . | . . . . . . . . . - | . . . . . . |
| Full Range | 1x | Passive |
| Concentrated | 4-100x | Active |
Key Concepts
Price Range: The bounds where your liquidity is active Tick: Price increment in CL pools In Range: Earning fees Out of Range: Earning nothing. -
Track your CL positions with Fensory. Monitor ranges and fees.[Start Tracking →](https://www.fensory.com)
Step-by-Step Instructions
1
Understand Price Ranges
CL only earns when price is in your range. Narrower = more fees, more risk.
Tips
- ✓Start with wider ranges
2
Analyze Historical Price
Check price history to set appropriate range.
Tips
- ✓Cover at least recent volatility
3
Set Your Range
On Uniswap V3, set lower and upper price bounds.
Warnings
- ⚠Too narrow = goes out of range quickly
4
Deposit Tokens
Add liquidity. Token ratio depends on current price vs your range.
Tips
- ✓UI shows required ratios
5
Monitor Position
Check regularly if price is in range. Rebalance if needed.
Tips
- ✓Use alerts for out of range
6
Manage Actively
Remove and reposition if price moves out of range.
Tips
- ✓Gas costs add up - factor into returns