In Concentrated Liquidity, What Happens to the Capital That Is “Out of Range”?

When the current market price moves outside a concentrated liquidity provider's defined range, the capital effectively converts entirely into one of the two assets. If the price moves above the upper limit, all the capital is converted into the less valuable token (the one being sold).

If the price moves below the lower limit, all the capital is converted into the more valuable token (the one being bought). In both cases, the capital stops earning trading fees until the price returns to the range or the position is rebalanced.