Concentrated Liquidity

The core idea

In a v2 pool, your liquidity sits across the entire price curve from zero to infinity. Most of it is at prices that will never trade — for a stablecoin pair, the vast majority of capital provides liquidity at $0.10, $5, $100, prices that aren't relevant to the market. That capital earns nothing.

Concentrated liquidity flips that. You specify a price range— a lower and an upper bound — and your capital is deployed only inside that range. The deeper concentration means each dollar earns proportionally more fees while it's in range. The catch: if price exits your range, your position stops earning and converts entirely into one of the two tokens.

Ticks — the discrete price grid

Prices in a Slipstream pool live on a discrete grid called ticks. Each tick represents a 0.01% price step. Tick 0 means token1 / token0 = 1. Tick 100 means a 1.01% higher price, tick −100 means a 1.01% lower price. The exact relationship is price = 1.0001 ^ tick.

When you mint a position, you pick a tickLower and tickUpper. Both must be multiples of the pool's tickSpacing. The tighter the spacing, the more precisely you can place your range — and the more gas is spent crossing ticks during heavy trading.

Tick spacing tiers on Slipstream

Topaz Slipstream supports five tick spacings, each with a recommended default swap fee. Pools are identified by the pair plus the tick spacing — so the same two tokens can have multiple Slipstream pools side-by-side, each with different tightness and fees.

These are the defaults. Every pool's fee can be customized by the protocol fee manager via the CustomSwapFeeModule, and Slipstream also supports a DynamicSwapFeeModule that adds a volatility-based surcharge on top of the base fee. See Pool Fees for the full fee story.

Active vs out-of-range positions

At any moment, a Slipstream pool has a current tick reflecting the latest swap's price. Your position is active when the current tick is between your tickLower and tickUpper. While active, you earn a share of swap fees proportional to your liquidity at that tick range.

When the price moves outside your range, your position goes out of range:

• ✓If price moved above your tickUpper, your position is now 100% the lower-priced token. You earn no fees until price returns to your range.
• ✓If price moved below your tickLower, your position is now 100% the higher-priced token. Same — no fees until price returns.
• ✓Positions can re-enter range any time. Fees resume immediately when the current tick crosses back inside.

Capital efficiency, intuitively

A USDC/USDT v2 pool spreads liquidity from $0 to ∞. Trades essentially only happen between $0.99 and $1.01 — historically something like 0.5% of the curve. Concentrating your liquidity into that 1% slice means a single dollar earns ~200× the fees of the same dollar in v2, while it's in range. That's the capital efficiency multiplier concentrated liquidity advertises.

The number is real, but it's an upper bound. It assumes you stay in range continuously and don't pay for active management. In practice the achievable multiplier is lower — you pay gas to mint and adjust, you sometimes go out of range, and tighter ranges expose you to more impermanent loss. The art is picking ranges that maximize fees minus IL after management overhead.

Position NFTs

When you mint a Slipstream position, the NonfungiblePositionManager contract issues you an ERC-721. The NFT encodes the pool, the tick range, the liquidity amount, and the unclaimed fees. Each position is its own NFT — you can have many concurrent positions in the same pool with different ranges.

• ✓Transfer the NFT and you transfer the position. Sell it, gift it, deposit it into a vault.
• ✓Increase liquidity, decrease liquidity, and collect fees all reference the NFT's tokenId.
• ✓Staking in a gauge: approve the gauge for the NFT and deposit. You still own the position; the gauge holds it on your behalf and you can withdraw any time.
• ✓Once liquidity is zero and all fees collected, you can burn the NFT.

Practical range guidance

As a starting point — not financial advice, just heuristics LPs tend to use:

• ✓Stablecoin pair (USDT/USDC): ±0.1% to ±0.5% around peg, tick spacing 1.
• ✓Pegged pair with depeg risk (e.g. liquid staking derivatives): ±1% to ±3%, tick spacing 1 or 50.
• ✓Major volatile pair (ETH/BNB, ETH/USDT): centered on current price ±10–30%, tick spacing 200.
• ✓Long-tail token: very wide ranges (±50%+) or full-range positions on tick spacing 2000 — your goal is to stay in range without active management.
• ✓Always check current TVL, recent volume, and incentive APR before minting. A 5× concentration on a 0-volume pool is still 0 fees.

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