> For the complete documentation index, see [llms.txt](https://docs.houstonswap.io/houstonswap/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.houstonswap.io/houstonswap/guideline/learn-concept-in-5-minutes.md). # Learn Concept in 5 minutes ### Concentrated Liquidity You may read the [detail ](/houstonswap/litepaper/concentrated-liquidity-model.md)here. Here is some key points you need to aware of 1. Concentrated liquidity means providing liquidity at a **specific price range**. There will be a **lower bound and an upper bound** to the selected range. For example, you could provide ETH/USDC liquidity ranging from 1,000 USDC to 1,500 USDC. 2. In terms of fee earning, **Concentrated Liquidity** is approximately **10-50x more efficient** than the constant product formula, the x\*y=k model. 3. Concentrated liquidity is **similar to leveraged grid trading**. Imagine you are setting a bot to execute "buying ETH at 1000USDC" and "selling ETH at 1200USDC" with 10x leverage. This will have a similar effect of providing liquidity at a narrow price range. 4. The narrower the price range, the more concentrated the liquidity, also has the similar result of adding higher leverage to your position. When you use high leverage, you may enjoy **high capital efficiency and also bear higher risk**! ### Dynamic Fee Key Points: 1. **Uniswap V3** offers **four fee options(i.e. 0.01%, 0.05%, 0.3% and 1% )** for each pair in order to maintain a balance of interests. The options are initially designed to optimally match different price ranges, such as stable pairs range, normal price range, and aggressive price range. The fee options can be used to **redistribute profits and regulate the balance**. 2. HoustonSwap supports both **two models, Fixed Fee and Dynamic Fee**. All new pool will set **Dynamic Fee** as **default models**. 3. Please refer the [formula](/houstonswap/advanced-topics/formula.md) here. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.houstonswap.io/houstonswap/guideline/learn-concept-in-5-minutes.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.