GGlossary · 2 min read

What is concentrated liquidity?

Concentrated liquidity puts funds inside a chosen price range instead of across all prices. What that changes about reading a Robinhood Chain pool.

322 words · about 2 minutes·Article updated 20 August 2026
Definition

Concentrated liquidity is a liquidity pool design where funds sit inside a chosen price range, not across every price. Robinhood Chain pools work this way: a position is an NFT holding a range, not a share of one pot.

Its nearest neighbour is the older constant-product design, where every deposit sits at every price and each is interchangeable. The discriminating difference: two positions of identical value can offer wildly different depth, because one may sit where nobody trades.

Three assumptions it breaks

Headline value overstates reachable depth. Funds outside the current price do nothing for the next trade — why sell-side depth sits beside liquidity, and why one-sided vs dual-sided liquidity is a choice.

Its contents change as price moves. Every trade in the range swaps one asset for the other, so as a token falls the quote asset drains out — escrow holds the position, not its contents.

"Burning" means something else. With no fungible LP tokens to send to a dead address, the equivalent gesture surrenders the fee income permanently. Lock versus burn →

As of pending, pending of indexed positions sit entirely outside the current price, per Locksley's contract reads.

Worked example. A position covers 0.0141–0.0605 RHC per token; spot is 0.0147, 4% off the floor. In range every day since creation, it holds just 218.9 RHC — price spent that time falling through it.

Where you'll see it. Token pages draw each escrowed position's range against the current price, as does tokens escrowed at birth. Where the chain's liquidity lives maps the pools; to escrow one, lock liquidity through Team Finance, our sister product.

Frequently asked questions

Can a locked position lose all its quote asset?

Yes. A lock stops withdrawal, not trading. If price falls through the range, buyers have taken the quote asset and left the project's token behind. The escrow is as strong as ever; what it holds has changed shape.

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Who wrote thisWritten and maintained by the Locksley editorial team. Locksley is built by TrustSwap, which also owns Team Finance — the tool linked above.