Concentrated Liquidity

INTRODUCTION

MONDA is redefining decentralized trading with a concentrated liquidity model that maximizes capital efficiency and ensures deep liquidity across the Monad ecosystem. Unlike traditional AMMs, which distribute liquidity evenly across the entire price range, MONDA allows liquidity providers (LPs) to concentrate their funds within specific price intervals—ensuring that liquidity is always in the most active trading zones.

This approach gives LPs greater control over their capital, enables higher fee earnings, and significantly reduces wasted liquidity.

Why Traditional AMMs Waste Liquidity

In standard AMM-based DEXs, liquidity is spread uniformly across all prices, from 0 to infinity. While this ensures constant availability for swaps, it also leads to major inefficiencies:

• Most liquidity is never actually used, sitting idle and earning little to no fees.

• For stablecoin pairs, where prices barely fluctuate, 99% of liquidity often remains untouched.

• LPs earn less because their liquidity isn’t concentrated where trades actually happen.

With MONDA, liquidity is no longer wasted—it’s optimized.

How MONDA’s Concentrated Liquidity Works

With MONDA’s concentrated liquidity model, LPs choose specific price ranges where their liquidity will be active.

For example, in a stablecoin trading pair, an LP can allocate liquidity between $0.995 and $1.005—a range where most trading occurs. Instead of sitting idle across the full price spectrum, 100% of their capital is now working efficiently.

🔹 Higher Capital Efficiency – Funds are placed where they generate the most trading volume.

🔹 Greater Fee Earnings – Since liquidity is more concentrated, LPs collect a higher percentage of trading fees.

🔹 Custom Liquidity Strategies – LPs can set multiple positions in a pool, fine-tuning their exposure and fee collection.

Each price range where liquidity is allocated is called a liquidity position. LPs can create multiple positions within a single pool, tailoring their strategy based on market conditions.

Active Liquidity: Maximizing Earnings with Dynamic Positions

Liquidity in MONDA is active only within the LP’s chosen price range. If the market price moves outside this range, the position temporarily stops earning fees.

How Active Liquidity Works:

✔ If the price moves above the LP’s range, they hold 100% of one asset.

✔ If the price moves below the range, they hold 100% of the other asset.

✔ When the price moves back into range, the position re-activates, and fees start accruing again.

This dynamic system gives LPs complete flexibility—they can adjust positions at any time to follow market trends and maximize returns.

Price Ticks: Precision Liquidity Placement

MONDA’s liquidity system uses price ticks, which define small, discrete price intervals within a trading pair. Unlike traditional AMMs, where price moves continuously, MONDA’s tick-based structure allows for more granular liquidity management.

📌 Each tick represents a 0.01% price movement (1 basis point).

📌 Liquidity providers set an upper and lower tick, defining their active trading range.

📌 As new swaps occur, the smart contract moves liquidity between active ticks, ensuring efficiency.

This structure means MONDA can offer fine-tuned liquidity management for different asset types:

• Stablecoin pools use tighter tick spacing to reduce slippage and improve price efficiency.

• Volatile assets can use wider tick spacing, ensuring capital is placed efficiently across larger price swings.

A Smarter Liquidity Model for MONDA

By combining concentrated liquidity, active liquidity management, and tick-based pricing, MONDA delivers unmatched efficiency for both LPs and traders.

✅ Deep Liquidity – Capital is focused in active trading ranges, minimizing slippage.

✅ Higher Returns for LPs – Concentrated liquidity ensures greater fee collection per dollar invested.

✅ Optimized Trading Execution – Smart contract automation ensures liquidity is always positioned efficiently.

Whether you’re a liquidity provider looking for the best returns or a trader seeking the most efficient execution, MONDA ensures your capital is always working at peak performance.