Choosing a price range
Concentrated liquidity, in range and out, and why narrow is not free money.
Concentrated liquidity
In Uniswap v3 you do not provide liquidity across every possible price. You pick a band, and your capital only sits in that band.
While the pool price is inside your band, your liquidity is being traded against and earning fees. When the price leaves the band, your position stops earning entirely and ends up holding whichever of the two tokens the price moved away from.
In range and out of range
In range
Out of range
Narrow against wide
| Narrow range | Wide range | |
|---|---|---|
| Fees while in range | Higher per dollar deposited | Lower per dollar deposited |
| Time in range | Shorter | Longer |
| Sensitivity to price moves | High | Lower |
| Maintenance | Frequent, and each adjustment costs gas | Less frequent |
A narrower range is not automatically better. It concentrates fee earning into a band the price may leave quickly, and every re-entry is a fresh transaction with fresh gas. The comparison that matters is not fees earned, it is what the position is worth against simply holding the two tokens. Fees are not profit
Ticks and spacing
Ranges are stored on-chain as tick boundaries, not as prices. Each fee tier has a tick spacing, so your bounds are snapped to the nearest allowed tick. The price you see in the interface is derived from those ticks; small differences between what you type and what is stored come from that snapping, not from a fee.