Glossary
Concentrated Liquidity
An AMM design (Uniswap v3) where LPs allocate liquidity within a price range instead of the entire curve, dramatically improving capital efficiency.
In Uniswap v2, LPs spread their liquidity across the full 0-to-infinity price curve — meaning most of the capital is unused at any given moment. Uniswap v3 lets LPs choose a price range (e.g. "100–200 USDC per ETH") and concentrate their liquidity inside it.
When the price is in range, the LP earns trading fees at a much higher rate per dollar deposited. When it moves out, they earn nothing. The model rewards active management (or strategy vaults that handle the rebalancing).