Concentrated Liquidity Position

The Concentrated Liquidity Position on Hyperswap follows the Uniswap V3 model.

Unlike standard AMMs, liquidity providers can specify a custom price range within which they want to provide liquidity.

This design offers much higher capital efficiency: LPs can concentrate their liquidity around the most active trading prices and earn more fees with less total capital deployed.

Core Concepts

• Price Range: LPs define a lower and upper price bound. Their liquidity is only active within this range.

• Ticks: The price range is divided into discrete steps called ticks. Liquidity positions are tracked relative to these ticks.

• NFT Representation: Each liquidity position is represented as an NFT (Non-Fungible Token), since every position can be unique in range and liquidity amount.

Providing Liquidity

When adding a LP, liquidity providers choose:

• The token pair

• The lower and upper price bounds

• The amount of each token they want to deposit

If the current market price moves outside of the specified range, the liquidity is no longer active (i.e., it won’t earn trading fees) until the price returns inside the range.