Glossary
Concentrated Liquidity
A pool design where providers choose a price range for their funds and earn more inside it.
Concentrated liquidity lets a provider choose the price range their capital serves, instead of spreading it across all prices. Inside that range the capital is used more efficiently, so fees per unit of liquidity are higher.
The trade-off is active management. When price leaves the range your position stops earning entirely and sits in one token, so a provider who is not paying attention holds an unexpected exposure.
A strategy based on narrow ranges around the current price can look like free yield and behaves like a leveraged position in the meantime. The returns are real, and so is the repositioning risk.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.