CLMM

Concentrated liquidity for LPs who want to allocate capital within a chosen price range.

Overview

Concentrated liquidity allows liquidity providers (LPs) to allocate capital within a specific price range rather than across the entire curve. This can significantly increase capital efficiency, but it also introduces active management requirements and additional risk.

Impermanent loss can be significant in CLMM pools. A positive return is not guaranteed. Make sure you understand the risks before providing concentrated liquidity.

Best for

CLMM is best for:

• Stable pairs

• Pegged assets

• Advanced LPs who want precise control over their position

Key features

• Custom price ranges, including asymmetric liquidity

• Fee tiers from 1bps to 400bps

• Token-2022 support

• Anchor compatibility

• Integrations with automated managers like Kamino and Krystal

Full-range positions are possible, but they are generally more expensive because of tick array initialization costs. If you want passive full-range exposure, a constant product pool is often a better fit.

Fee tiers and tick spacing

Lower fee tiers generally suit stable or pegged assets, where tighter spreads attract more volume. Higher fee tiers compensate LPs for the added risk of volatile or exotic pairs.

Each fee tier has a corresponding tick spacing:

• Lower fee tiers use smaller tick spacing for more granular price points

• Higher fee tiers use larger tick spacing with coarser price points

How price ranges work

LPs earn fees in proportion to their share of liquidity at the current price. If the price moves outside your selected range, your position stops earning fees and may experience significant impermanent loss.

When price moves:

• Below your min price: your position becomes 100% base token

• Above your max price: your position becomes 100% quote token

This is similar to standard AMM behavior but accelerated within your chosen range. CLMM offers higher capital efficiency, but it also magnifies impermanent loss compared to full-range positions.

Fee split

Liquidity providers earn 84% of trading fees. The remaining 16% is allocated to:

• 12% to RAY buybacks

• 4% to treasury

Positions

Each CLMM position is represented by an NFT minted to your wallet. This NFT controls ownership of:

• the liquidity in the position

• any uncollected fees and rewards

Position NFT behavior

If a position NFT is lost, sold, or burned, the liquidity it represents is also lost.

Multiple positions

There is no limit on the number of positions per wallet. You can open multiple positions in the same pool with overlapping or different ranges. Each position is independent.

Out-of-range positions

When the pool price moves outside your position's configured range:

• you stop earning fees and farm rewards

• your position becomes 100% one-sided (entirely token A or entirely token B)

• the position remains open (there is no auto-close mechanism)

• earnings resume automatically if the price returns to your range

Earning fees and rewards

Trading fees accrue to your position, but they are not auto-compounded. They accumulate inside the position until you trigger a collection event.

Collecting fees

Fees are accounted for whenever you modify liquidity, but they are only transferred to your wallet when you:

• remove any amount of liquidity from the position, or

• call decrease_liquidity with 0 liquidity (claim fees only)

There is no separate "claim fees" instruction. Fee collection is handled through decrease_liquidity.

Increasing liquidity updates fee accounting but does not transfer fees to you.

Earning rewards

Farming rewards (if enabled) behave similarly to fees.

Earning requirements

• your position must be in-range to earn rewards

• rewards are proportional to your liquidity within the active range

• out-of-range positions earn nothing until the price returns in-range

Collecting rewards

Rewards are collected automatically when you modify your position's liquidity, including a decrease_liquidity of 0.

Key concepts

• Price range: the minimum and maximum prices where your liquidity is active. Tighter ranges can earn more when in-range, but go out-of-range more easily.

• Quote token convention: the quote token represents how many quote tokens are needed to purchase 1 base token. Common quote tokens include SOL and USDC.

• Starting price: set during pool creation and defines the initial exchange rate, quote per base.

• Pool creation and position costs: covered in CLMM fees.