Leverage Concentrated Liquidity
Concentrated Liquidity
Concentrated liquidity allows liquidity providers to allocate capital within a specific price range instead of across the entire price curve. This approach increases capital efficiency and enhances potential returns, especially when paired with leverage.
How it works
When you open a leveraged LP position on Moar, you select a price range where your liquidity will be active. Your deposit is routed through a credit account and deployed into a concentrated liquidity market maker such as Hyperion.
As long as the market price remains within your selected range, you earn swap fees & rewards. If the price moves outside your range, your liquidity becomes inactive.
In-Range vs Out-of-Range
In-Range: Your liquidity is active and accruing swap fees and incentives. This is the ideal state for earning yield.
Out-of-Range: Your position is not earning fees. If leverage is used, you're still paying borrow fees. This can eat into your collateral and increase risk of liquidation.
Strategy Considerations
A narrow price range results in higher fee yields but also increases the chance of going out-of-range. This setup is better suited to short-term or actively managed positions.
A wider price range lowers fee yield but improves the chances of staying in range longer. This can be a good option for passive LPs.
If you want to avoid managing the position manually, you can use a vault strategy that automates these decisions for you.
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