Concentrated Liquidity Launched By Cosmos-based Osmosis Gives LP Price Control


Concentrated liquidity, introduced by Cosmos-based Osmosis allows LPs that supply liquidity within narrower price ranges to make more money, but it also prevents them from receiving fees if the price gets out of bounds. Osmosis Lab, the company that developed the decentralized exchange osmosis program announced on July 12 that the implementation of the “concentrated liquidity” and its functionality enabled the liquid providers (LPs) to set the upper and lower price limit while buying or selling crypto. 

Crypto Exchange Made Easier By Concentrated Liquidity Introduced By Osmosis

It is a series of Blockchain networks known as Cosmos that use the Cosmos Software Development kit. DefiLlama states that Osmosis is the biggest centralized exchange (DEXs) in the industry, working with $120 million in volume every day. Osmosis LPs can now offer liquidity at the highest and the lowest price thanks to the implementation of the new software. They won’t get paid if the price is less than the minimum or more than the maximum price range. Also, they will get more fees when the price remains within the stipulated range than they would if they hadn’t chosen the specific price range. 

It claims that the “concentrated liquidity” will boost the status of the capital from 100x to 300x, which means that it might have less liquidity for some amount of money, but it won’t cause loss for the investors. The function was first made available to DEXs in Uniswap v3 and has since been circulated throughout the Web3 world.

The Osmosis team, however, informed Cointelegraph that it has previously been rather uncommon in the Cosmos community. Recently, Osmosis Lab engineer Alpin Yukeseloglu said that the new program will surpass Uniswap’s authentic version in terms of functionality. This upgraded version has also added the feature of resolving users’ issues such as their inability to determine the exact place to put the price points.

It makes the whole exchange process more subtle yet satisfying by keeping a nuanced price range and more options for the users to explore. The engineer also hinted at the company’s plan of bringing in a complete “on-chain order book” in the future. He stated that both the plans of “concentrated liquidity” and “order book” will fulfill the company’s larger goal of providing more choices to investors.