Concentrated Liquidity vs 50/50 LP: Range Orders Compared
**Classic 50/50 pools** stay in range forever but spread capital wide. **Concentrated liquidity** focuses capital in a price band—higher fee APR when in range, but **out-of-range** earns nothing until rebalanced.
Step by step
1. Pick range width
Narrow range = more fees and more rebalance / IL risk.
2. Model IL at band edges
Price leaving range behaves like holding single-sided exposure.
3. Budget gas for rebalances
L2 helps; active LP is a job, not set-and-forget.
Full range vs concentrated
Concentrated is capital-efficient; classic is simpler for passive LPs.
- 50/50 full range: Always earns fees; IL follows standard AMM formula.
- Concentrated: Higher fees in band; zero fee when out of range.
Use our calculators
Common mistakes
- Setting range too tight on volatile pairs
- Ignoring downtime out of range
FAQ
Is concentrated always better?
Only if you monitor range and fees exceed IL + gas.