Understanding Concentrated Liquidity Risks
Impermanent loss can significantly impact your returns in Concentrated Liquidity Market Maker (CLMM) pools. We cannot guarantee profits—always assess the risks before providing liquidity.
👉 Learn more about impermanent loss risks
Step-by-Step Guide to Adding Liquidity
1. Access the CLMM Interface
- Navigate to the "Concentrated" tab in the platform’s left sidebar.
2. Connect Your Wallet
- Ensure your wallet is connected, then locate your desired pool.
- Click "Create Position" from the pool’s dropdown menu or the top banner.
3. Set Your Price Range
Adjust the price range using:
- Interactive chart sliders.
- Manual entry for min/max prices.
- "+/-" buttons for incremental changes.
Pro Tip: Toggle the price quote basis (e.g., USDC/SOL or SOL/USDC) in the top-right corner for flexibility.
4. Deposit Tokens
- Enter amounts for both tokens. The system auto-balances deposits based on your selected price range.
5. Review & Confirm
- Click "Preview" to verify position details, then "Confirm Deposit".
6. Receive Your Position NFT
- A unique NFT representing your liquidity position will mint to your wallet.
⚠️ Warning: Losing, selling, or burning this NFT permanently removes the associated liquidity.
7. Manage Existing Positions
Visit "My Pools" to:
- View basic stats in the pool dropdown.
- Click "Manage" for advanced options (e.g., adding/removing liquidity).
Note: Adjusting price ranges requires creating a new position.
Key Considerations
- Impermanent Loss: Volatility widens loss potential—monitor markets regularly.
- NFT Security: Backup your liquidity NFT like any high-value asset.
- Gas Fees: Factor in transaction costs when depositing or adjusting positions.
FAQs
What is concentrated liquidity?
CLMM pools allow liquidity providers to allocate funds within custom price ranges, maximizing capital efficiency compared to traditional AMMs.
How do I minimize impermanent loss?
- Narrower price ranges yield higher fees but increase IL risk. Diversify across multiple ranges or stablecoin pairs.
Can I change my position’s price range later?
No. Existing ranges are fixed; you must create a new position for adjustments.