Concentrated liquidity: how do ranges, ticks and positions work?

Concentrated liquidity is the model in which the liquidity provider chooses a price band — the range — for their capital. Inside that band, the position earns far more fees per dollar than a traditional pool. Outside it, the position sits idle, 100% in one of the tokens. It's the model used by Uniswap V3, Uniswap V4 and Aerodrome Slipstream.

What a position's range is

The range is the interval between the minimum and maximum prices chosen for the position. Example: in ETH/USDC, with ETH at $2,000, a range from $1,800 to $2,200. As long as ETH trades between those two values, your liquidity takes part in swaps and accumulates fees.

What ticks are

The protocol doesn't work with arbitrary prices, but with fixed points called ticks. Each tick corresponds to a price through the formula:

price = 1.0001 ^ tick

In other words, each tick sits 0.01% above the previous one. Tick 0 corresponds to a price of 1; tick 6,932 to a price of roughly 2 (adjusted for the tokens' decimals). A position's boundaries are two ticks: the tick lower and the tick upper.

Not every tick can be used as a boundary. Each pool has a spacing (tick spacing). On Uniswap V3, for example, 0.05% pools use a spacing of 10 ticks (about 0.1% between possible boundaries) and 0.3% pools use 60 ticks (about 0.6%). That's why the exact price you type in gets rounded to the nearest valid tick.

Narrow range vs. wide range: how much more it earns

The narrower the band, the more your capital is concentrated near the current price. Compared with the same liquidity spread across all prices, the efficiency gain is roughly:

• ±5% range: about 40x
• ±10% range: about 20x
• ±25% range: about 8x
• ±50% range: about 4x

In practice, this means a ±5% position, while in range, generates the same fees as a traditional position 40 times larger. The flip side: a move of just over 5% is enough to push the position out of range.

What happens when the price leaves the range

As the price rises, the pool sells the token that's gaining value; as it falls, the pool buys it. When the price crosses one of the boundaries, the conversion is complete:

• Price above the upper boundary: the position is 100% in the quote token. In the example, all in USDC — you "sold" your ETH on the way up.
• Price below the lower boundary: the position is 100% in the volatile token. In the example, all in ETH — you "bought" ETH on the way down.

Out of range, the position earns no fees. It starts earning again if the price returns to the band, or you can withdraw and open a new position in a different range — paying network fees and, often, realizing the Impermanent Loss.

How to choose and monitor a range

• Pair volatility: stable pairs can handle narrow ranges; volatile pairs call for wider bands.
• Distance to the boundaries: how far the price has to move to leave the band.
• Time in range: a narrow band that's out of range half the time may earn less than a wide one.
• Cost of repositioning: network fees and losses from each adjustment.
• Actual result: fees earned versus the change in the position's value.

Keeping track of all this across several positions takes constant attention. The SafeVault Performance Tracker shows all your ranges in a horizontal bar chart against the current price — with each position's distance to the edge and capital in plain view — and the app sends an alert when a position goes out of range.

Frequently asked questions

What's the best range for ETH/USDC?
There's no single answer: it depends on how often you're willing to reposition. Narrow ranges earn more per dollar but require frequent adjustments.

Do I lose money when I go out of range?
Not automatically, but the position stops earning and ends up entirely in one token. If you withdraw at that point, the accumulated Impermanent Loss becomes a realized loss.

Can I change the range of an existing position?
No. The range is fixed; to change it, you have to close the position and open a new one.

Conclusion

Concentrated liquidity gives you control over where your capital works: narrow ranges multiply your returns but slip out of range more easily. Ticks are simply how the protocol organizes those prices.

The right range is the one that balances yield, time in range and the cost of repositioning — and the only way to find it is by tracking the position's actual results.