Price Range

The price range in the context of concentrated liquidity defines the specific interval within which a liquidity provider's assets are active and earning fees. If the market price of the asset stays within this range, the provider collects fees proportional to their contribution.

If the price moves outside this range, the provider's liquidity becomes inactive, and they stop earning fees, effectively holding only the less valuable asset of the pair. Selecting an appropriate price range is a critical decision that balances the potential for higher returns against the risk of the position becoming inactive.

This requires careful analysis of historical price volatility and future market expectations to ensure the liquidity remains relevant and productive.