CLMM (Concentrated Liquidity Market Maker)

A CLMM lets a liquidity provider concentrate their capital within a specific price range, rather than spreading it thinly across every possible price the way a traditional constant-product AMM does. Within that range, the LP earns a proportionally larger share of trading fees for the same amount of capital — capital efficiency is the whole point.

The tradeoff is that a concentrated position only earns fees while the price stays inside the chosen range. If the price moves outside it, the position stops earning fees and effectively becomes fully weighted in whichever single asset the price moved toward, until the LP adjusts the range or the price moves back.

Raydium, Orca, and Meteora all offer CLMM-style pools on Solana, sometimes under different branding (Whirlpools, DLMM). See our DEX complete guide and impermanent loss guide for how this affects returns in practice.