> For the complete documentation index, see [llms.txt](https://docs.pangolin.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pangolin.exchange/pangolin-overview/introduction-to-pangolin/pangolin-v3/concentrated-liquidity.md). # 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.\ \ 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. --- # 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://docs.pangolin.exchange/pangolin-overview/introduction-to-pangolin/pangolin-v3/concentrated-liquidity.md?ask=&goal= ``` `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.