What Is the Risk of "Range-Bound" LPs in a Concentrated Liquidity Model? ▴ Learn

What Is the Risk of “Range-Bound” LPs in a Concentrated Liquidity Model?

A range-bound LP faces the risk that the asset price moves entirely outside their chosen narrow range. When this happens, all of their deposited capital converts into the less valuable asset, and they stop earning trading fees.

This state represents 100% impermanent loss for the capital if the price does not return. The LP must then rebalance or wait for the price to return to resume earning fees.

How Does the Halting Problem Affect the Predictability of Transaction Costs?

Does a High Gamma Position Benefit from Large Price Moves or Small Price Moves?

What Are the Trade-Offs between Capital Efficiency and Impermanent Loss in Different AMM Designs?

How Does EIP-1559 Affect Gas Fee Calculation?