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Lesson 3 of 8

Should I use concentrated liquidity or a traditional liquidity pool?

This decision should be coordinated directly with your liquidity providers.

Concentrated liquidity (e.g., range-based AMM positioning) allows capital to be deployed more efficiently around expected trading ranges, tightening spreads and improving depth where it matters most. However, it requires active management and can become ineffective if price moves outside the configured bands.

Traditional, full-range liquidity pools are simpler and more passive but typically less capital-efficient.

The right structure depends on volatility expectations, capital allocation, and whether liquidity will be actively managed post-launch. Your market maker should model this alongside your broader exchange and liquidity plan before deployment.

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