Part 4/7:
This concentrated liquidity strategy narrows the range in which a liquidity provider places their funds, focusing on specific trading pairs rather than spreading thinly across the entire market. The result? Higher fees and a more effective use of capital with less price exposure.
The Market Dynamics: Why It Matters
The DEX sector has experienced incredible growth recently, with decentralized trading platforms managing approximately $26 billion in liquidity. Notably, exchanges like Uniswap and Radium have built bustling ecosystems that fuel the trading needs of investors looking for emerging tokens before they hit centralized platforms.