> For the complete documentation index, see [llms.txt](https://hyperlynx.gitbook.io/hyperlynx-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hyperlynx.gitbook.io/hyperlynx-docs/liquidity/concentrated-liquidity.md).

# Concentrated Liquidity

Hyperlynx uses Uniswap V3-style **concentrated liquidity**. Instead of spreading your capital across every possible price, you choose a **price range** to provide in. Inside that range, your liquidity is deep and earns fees. Outside it, it earns nothing.

## Why it's powerful

The same capital concentrated in a tight range provides far more depth — and earns far more fees — than the same capital spread thin. You're rewarded for putting liquidity where trading actually happens.

The trade-off: if the price leaves your range, your position stops earning until the price comes back or you re-range.

## Key ideas

| Term             | Meaning                                                                                   |
| ---------------- | ----------------------------------------------------------------------------------------- |
| **Range**        | The price band you provide liquidity in.                                                  |
| **In-range**     | Price is inside your band → you earn fees.                                                |
| **Out-of-range** | Price has left your band → you earn nothing until it returns.                             |
| **Fee tier**     | The pool's fee (0.05% / 0.30% / 1.00%) — your share of it depends on your in-range depth. |

## Impermanent loss

When the price moves, an LP position rebalances between the two tokens. The result can be worth less than simply holding the two tokens — this is **impermanent loss**. Concentrated ranges can earn more fees but also feel IL more sharply. Fees earned can offset it; wide ranges soften it.

{% hint style="warning" %}
Providing liquidity is not risk-free. Understand impermanent loss and choose a range that matches how much you expect the pair to move. Nothing here is financial advice.
{% endhint %}

## Next

Ready to do it? See [Provide liquidity](broken://pages/fe2a42c0f43f76ab203fab13b2b2f6bb710a2649).


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://hyperlynx.gitbook.io/hyperlynx-docs/liquidity/concentrated-liquidity.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.