# Concentrated Liquidity

Liquidity providers can allocate funds to a **custom price range** for a trading pair instead of the entire price spectrum. This concentrated liquidity model (inspired by Uniswap V3) means your capital is used where it’s most needed, resulting in greater depth within your chosen range and less wasted liquidity outside that range. By focusing liquidity in narrower price intervals, LPs achieve enhanced capital efficiency and can earn higher fee returns on their funds.\
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It also helps reduce **impermanent loss** by limiting exposure to prices outside the chosen range. In short, concentrated liquidity allows deeper liquidity and lower slippage for traders, while giving LPs more control and potentially higher rewards.