Concentrated Pools

Definition ∞ Concentrated pools denote liquidity pools in decentralized finance where liquidity providers allocate capital within specific, narrow price ranges. This strategy allows for more efficient use of deposited assets compared to traditional full-range liquidity provisions. Participants aim to maximize fee generation by focusing capital where most trading activity occurs. Such pools are a notable feature in advanced automated market maker designs.
Context ∞ The emergence of concentrated pools has altered liquidity provision dynamics within DeFi, leading to debates about capital efficiency versus impermanent loss risk. Their popularity in news often relates to platform upgrades or discussions on optimizing returns for liquidity providers. Future analysis often considers their role in market stability and the accessibility of advanced strategies for various users.