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Concentrated liquidity
Concentrated liquidity is a way of supplying tokens to a decentralized exchange pool within a price range you choose, instead of across all possible prices. Your tokens earn trading fees only while the market price stays inside that range.
What it means for you. If the price leaves your range, the position stops earning fees and ends up entirely in one of the two tokens. Narrow ranges earn more while in range but fall out sooner, and the position does not follow the price: moving it means withdrawing and adding again, paying gas each time.
Source: Uniswap v3 Core design paper (Adams, Zinsmeister, Salem, Keefer, Robinson, 2021) · checked 4 October 2026
Liquidity pool
A liquidity pool is a smart contract holding a reserve of two tokens that people can trade against. Users called liquidity providers deposit the tokens, traders swap in and out of the reserve, and the trading fees are shared among the depositors.
What it means for you. How much is in a pool decides how much you can sell before the price slides. A thin pool can turn a modest sale into a large loss of value, and a pool's creator can sometimes withdraw the reserve. Check the pool's depth before relying on it to sell a token.
Source: Uniswap docs: Pools (v2) · checked 4 October 2026