Overview
To achieve concentrated liquidity, the continuous spectrum of price space has been partitioned with price bins. Price bins are the boundaries between discrete areas in price space.
Bin Mechanics
Price bins function as boundaries for liquidity positions. When a position is created, the provider must choose the bins that will represent their position's borders.
Bins are spaced such that each bin represents a specific price point. Unlike continuous curves, trades execute at the exact bin price when liquidity is available.
Zero Slippage Within Bins
While each bin has the same price point, in practice only a portion of available liquidity may be consumed during a swap. Due to the discrete nature of bins, swaps that occur entirely within a single bin experience zero slippage - the trade executes at the bin's exact price.
Bin Distribution
The spacing and distribution of bins depends on the selected strategy:
SPOT Strategy: Bins distributed uniformly across the selected range
CURVE Strategy: Bins concentrated near the current price with decreasing density at range edges
BID-ASK Strategy: Bins placed primarily at range boundaries
Custom Bin Layouts
Beyond the three pre-configured strategies, LPs can define custom bin layouts to implement specific market-making strategies. This allows for precise control over liquidity distribution.
Crossing Bins
When a swap size exceeds the liquidity in a single bin, the trade will consume liquidity from multiple bins sequentially. Each bin crossed may have a different price, resulting in slippage only when crossing bin boundaries.
Bin State
Each bin maintains:
Total liquidity available
Current price level
Number of active positions
Fee tier applicable