Concentrated Liquidity (Uniswap v3)

Uniswap v3 introduced concentrated liquidity: LPs can provide liquidity within a specific price range instead of across the entire curve. This dramatically improves capital efficiency — an LP providing liquidity in a narrow range earns more fees per dollar than in v2. The tradeoff: positions must be actively managed, and impermanent loss is amplified within the range. If price moves outside your range, your position becomes 100% of the less valuable token. This has spawned a new ecosystem of active LP management protocols.