Concentrated liquidity lets you focus your capital within a specific price range you choose, instead of spreading it from $0 to infinity the way traditional AMMs do.
When the market trades inside your range, you earn fees on every swap. When it doesn't, your capital sits idle. The trade-off is simple: tighter range = more fees per dollar when active, but less time spent active. Wider range = lower fees per dollar, but more reliable activation.
Why this matters
In a traditional constant-product AMM, your capital is spread across every possible price — including prices that may never trade. Most of your liquidity sits unused. On HODLMM, you concentrate it where trades actually happen, and capital efficiency goes up dramatically.
Concrete demonstration on Bitflow today: HODLMM does roughly 99% of the protocol's daily trading volume on roughly 40% of TVL. That's the efficiency claim made tangible.
How concentrated liquidity works on Bitflow
HODLMM uses discrete price bins rather than a continuous curve. Each bin is a fixed price level — when a swap executes inside an active bin, your liquidity earns the fee. Move to the next bin and the price ticks up or down.
Practical implications:
Inside a single active bin, there is zero price impact — every trader gets the same execution price until the bin's liquidity is exhausted.
For larger trades that cross multiple bins, some price impact applies as the trade walks through each bin's price.
As a liquidity provider, you choose how many bins to deploy across (your range) and how to distribute capital within them (your strategy shape).
Read more: What are Bins & Bin Steps?
Strategy shapes
HODLMM offers three preset shapes for distributing your capital across the bins inside your range:
Ready to try it?
Open your first concentrated-liquidity position in under 5 minutes: How to Open a Position (HODLMM).