Koifinance v3 ties swap-fee earnings to a provider's chosen price range

Range width at the same pool price

Range width measures the distance between a position's lower and upper bounds. A wider interval can surround a narrower one while both contain the current price. Keeping capital commitments equal isolates how width affects concentration and coverage.

Narrower intervals

A narrower interval allocates that capital across fewer prices. The pool can therefore have more liquidity near the current price than the same capital would supply across a wider interval. That is the source of concentrated liquidity's capital efficiency. Fee earnings still require swaps that use active liquidity; capital concentration alone does not establish the amount earned.

When a wider interval surrounds a narrower one, the pool price can leave the inner interval while remaining inside the outer bounds.

Wider intervals

A wider interval spreads capital across more prices, extending the price movement that the position can accommodate. The position sacrifices some concentration for that coverage. A broad interval still has lower and upper endpoints, so the pool price can eventually leave it.

Range choices and price coverage

The current pool price, often called spot, determines which positions contribute active liquidity. Width measures the interval between a position's endpoints; placement determines its distance from spot in either direction. An interval can contain spot without centering on it.

A comparison of both endpoints therefore explains which price movement would take a position out of range. Custom intervals and multiple positions support the following arrangements.

When does a v3 position stop earning swap fees?

A v3 position stops earning swap fees when the pool price leaves its selected interval. The position's capital then sits outside active liquidity. The relevant price is the price within that pool, because its ticks govern the position's participation.

If the position remains in place, price reentry makes its liquidity active again. Fee earning can then resume within the original interval. Range selection sets a price condition for earning swap fees. It does not establish how long the pool price will remain inside the interval.

Asset composition at the boundaries

As swaps move the pool price toward a position's boundary, the provider accumulates one asset while traders take the other. At the end of that directional conversion, the position's liquidity consists entirely of one asset. The identity of that remaining asset depends on the price direction and the pair's quotation convention.

An out-of-range allocation can therefore have a different asset composition from an active one. A wider interval moves the boundaries farther apart; it does not prevent this inventory change. Range selection affects both fee participation and the prices at which that participation gives way to single-asset exposure.

Ticks and selectable price bounds

Ticks divide the v3 price scale into discrete boundaries, so a position's endpoints follow that scale. They connect a chosen price interval to the pool's liquidity accounting.

Lower and upper ticks

Each v3 position uses a lower tick and an upper tick as its boundaries. Together they identify the interval in which that position supplies active liquidity. The pool's permitted spacing determines which endpoints a position can use.

The size of a tick

Moving up one underlying tick increases the represented price by 0.01%. That percentage describes a price step. It does not describe the percentage that a trader pays as a swap fee. Several underlying ticks can separate the boundaries that a particular pool allows. A tick represents a proportional price change, so its absolute price difference varies with the starting price.

Swap fees and the spacing between boundaries

Swap-fee levels influence the spacing between usable ticks in the v3 design. Lower fee tiers allow closer potentially active ticks. Higher fee tiers use wider spacing between those possible boundaries. This relationship affects how finely a provider can position a range's edges. The pool's fee tier and an individual position's width describe different settings. A tighter range concentrates capital within the permitted grid; it does not establish a different swap fee. Comparing widths within the same pool keeps that fee context constant and makes the coverage tradeoff easier to understand.

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Several positions within one pool

A provider may hold several v3 positions in the same pool, each with its own interval. These allocations can create an individualized distribution of liquidity across prices. A single broad position and several narrower positions therefore describe different ways to distribute the provider's capital. Each position retains its own activity condition. Overlapping intervals can contribute liquidity at the same pool price, while intervals elsewhere remain inactive. Their aggregate coverage follows the actual intervals that the provider has selected.

Trading costs at active tick crossings

Crossing an active tick increases the transaction cost of the swap that crosses it. At the boundary, the pool can activate previously dormant liquidity from positions that use that tick as an endpoint. A price move through an unused tick does not cause that same liquidity activation.

Tick spacing therefore has an execution-cost dimension alongside its effect on range precision. More possible boundaries do not mean that every boundary carries liquidity. These execution costs concern the swap transaction, while the pool's swap fee remains a separate pricing input.

Stable-pair ranges and price coverage

Stablecoin pairs can make concentrated liquidity useful because their relative prices often remain within a comparatively small interval. Capital far outside that interval contributes little to trading near the prevailing price. Concentrating it nearer that trading region can supply deeper liquidity where swaps occur. The pair's stablecoin classification does not keep its price inside a provider's chosen bounds. A narrow range still becomes inactive when the pool price crosses its edge. The practical comparison remains capital concentration against the amount of price movement that the position covers.

Fee income and total position value

Fee eligibility establishes when a position participates, while actual fee income also requires trading activity. A narrow range can put more capital to work around a price without promising greater earnings over an entire holding period. Time outside the interval interrupts that participation.

Swaps change the assets within the supplied liquidity, and those assets can change value. Earned fees alone therefore do not establish the position's overall gain or loss. A comparison between range widths needs to keep that asset exposure alongside the fee stream.

Concentrated ranges and full-range v2 liquidity

Earlier v2 liquidity spreads capital across the price curve from zero toward infinity. A finite v3 position assigns capital to a selected portion of that curve. The distinction explains why concentration can make more of a provider's capital available around the prevailing price. A wider v3 range spreads the same capital across a broader finite interval. Its selected endpoints still determine where that capital participates. Full-range v2 liquidity distributes capital across the whole price curve, so it follows a different coverage model from a finite v3 range.