SHILL Issue 79
Solana ecosystem magazine.
Solana ecosystem magazine.
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Distributing LP assets evenly across the whole price curve has two main disadvantages: 1- Most of the liquidity in the<br />
price curve is unused and won’t earn fees for liquidity providers. 2- Spreading the liquidity out causes less depth so<br />
trades have higher slippage.<br />
CLMMs (Concentrated liquidity market makers) allow liquidity providers to select where to place liquidity within the<br />
price curve instead of distributing it evenly. This means LPs can provide liquidity in tighter price ranges where more of<br />
the price action / volume is happening:<br />
CLMMs allow the liquidity to become more efficient, this means that LPs can earn more fees and the liquidity creates<br />
more depth for trades (less slippage) However, CLMMs do have some drawbacks as manually managing and setting price<br />
ranges can be complex and time-consuming.<br />
This is where Kamino comes in. Kamino’s vaults are built on top of existing concentrated liquidity pools to vastly improve<br />
both their performance and ease of use:
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