Concentrated liquidity, in plain language

Skip the math. Here's what actually changes for you.

The classic AMM

Every liquidity provider in a classic pool owns a share of a single global pot. The pot automatically prices every possible trade from "infinitely cheap" to "infinitely expensive" — even prices that will never happen. Most of your money sits there permanently, unused, collecting dust.

It's simple. It's safe. It's inefficient.

The concentrated-liquidity AMM

Instead of one global pot, each LP picks a price range to cover. Your capital only works inside that range. The narrower your range, the more fees your capital earns per dollar — but the more carefully you have to pick where the price is likely to spend time.

You don't have to pick perfectly. Dojo gives you four presets so you don't stare at a tick chart:

• Passive — a very wide range. Nearly always active. Comparable to classic-AMM behavior but cheaper for traders.
• Balanced — moderate range. A reasonable default for most tokens.
• Active — tight range for stable or slow-moving pairs. Highest fees per dollar when the price stays put.
• Custom — you pick the exact ticks. For people who know what they're doing.

What the trader experiences

A swap that stays inside a dense range pays less slippage than the same swap against a classic pool with the same total TVL. Liquidity is in the right place.

What the LP experiences

You still deposit two tokens, but the ratio depends on where the current price sits relative to your range. At the center of your range you deposit roughly equal value; near the edges you deposit almost all of one side. Dojo's UI shows the mix live.

Fees earned by your position are tracked per-tick and attributed to you proportionally. You claim them whenever — see the next page.

The catch

Concentrated liquidity requires more attention than a "deposit and forget" pool. If the price drifts out of your range, you earn nothing until it comes back (or you rebalance). Passive presets reduce that risk; Active presets amplify the upside and the management cost.

Pick the preset that matches how much time you plan to spend on it.