Concentrated liquidity
AMM DEX model in which an LP deploys capital into a narrow price range instead of `0 → ∞`. Boosts capital efficiency by 5-50x but requires active management and amplifies impermanent loss.
Aliases: cl, uniswap v3, concentrated liquidity ton
Concentrated liquidity (CL) is an AMM DEX model in which the liquidity provider (LP) places capital not across the full x * y = k curve from 0 to ∞, but inside a narrow price range (e.g. USDT/USDC from $0.999 to $1.001). Inside that range, the position works as a full LP; outside it, the position goes dormant (the liquidity sits in one of the two assets and earns no fees).
Why it exists
In a classic AMM (STON.fi v1, DeDust), most of the capital “lies dead” on the curve’s tails, where trades happen once a year. In CL, the same $1000 in a narrow range earns the same fees as $10-50K in a classic AMM — hence the 5-50x capital efficiency multiplier for market-makers.
What the provider pays
- Active management: when price exits the range, liquidity stops working. Rebalancing required.
- Amplified impermanent loss: narrower ranges magnify the hit when price moves.
- NFT positions instead of fungible LP tokens: every position is a separate NFT with unique ticks, which complicates secondary markets and staking-based farming.
When CL wins over classic AMM
- Stable-to-stable pairs (USDT/USDC) with a narrow range around the peg — nearly all capital is active, minimal IL.
- Active strategies by market-makers with daily/weekly rebalancing.
For passive “deposit and forget” liquidity, classic AMM is simpler. On TON, the CL model is implemented in TONCO.