# Concentrated Liquidity

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<summary>What is concentrated liquidity?</summary>

Concentrated liquidity is liquidity that has a set price range. This allows users to "concentrate" their liquidity into ranges for more *capital efficiency and* fees. Unlike most liquidity platforms, Gamma focuses on concentrated liquidity.&#x20;

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<summary>Why does concentrated liquidity require active management?</summary>

Concentrated liquidity requires a liquidity provider to constantly monitor and adjust their liquidity ranges and depths. Active management of liquidity positions is crucial to success.&#x20;

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<summary>What are the benefits and risks associated with concentrated liquidity?</summary>

By concentrating liquidity into specific ranges, the liquidity provider can earn more fees. Traders experience less slippage on trades in concentrated liquidity markets.&#x20;

Concentrated liquidity can also amplify the effects of price changes, called impermanent loss. Concentrated liquidity requires users to be extremely vigilant or rely upon a concentrated liquidity manager for providing liquidity.&#x20;

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<summary>Are concentrated liquidity pools 50-50?</summary>

Rarely. Concentrated liquidity pools vary in their asset ratios. The asset pair can swing from 100-0 to 0-100, sometimes aggressively. Users must understand that before entering Gamma's vaults, they must deposit at the current pair ratio. Users will also withdraw at the current pair ratios.

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<summary>What platforms are using concentrated liquidity?</summary>

Uniswap V3/V4, Algebra Finance, Balancer V2, and more

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