Concentrated Liquidity Pools

Concentrated Liquidity (CL) pools are the newest addition to the DeepSwap suite and provide the best possible chances for ROI if they are created and managed correctly. CL works by “concentrating” an LP’s position around a pre-defined price range that the LP themself sets, essentially providing liquidity for only this range of prices (as opposed to a CP or Stable pool, where liquidity is applied equally across 100% of the price curve); if the price of the pair is within the range, the LP is making fees, and potentially more of them with less capital; if the price of the pair is out of range, the LP’s liquidity goes unused and generates zero fees for them. CL is far more capital-efficient than its colleagues due to the way liquidity is utilized within the position - as mentioned, CL positions are concentrated around a single price range, and not the entire price curve (which runs from zero to infinity), allowing the savvy user to earn more yield than they might in one of the other pool types, with less liquidity to play with.

Concentrated Liquidity pools do require a more hands-on approach and management than the other pool types, and as such are recommened for users with a more active investment style.