financial metricAlso known as: Capital Efficiency Multiplier, Concentration Factor, CLAMM Capital Boost
Efficiency (Capital Concentration Multiplier)
Efficiency is the capital multiplier achieved by concentrating liquidity into custom price intervals [p_a, p_b] compared to standard x*y=k curves.
1. Definition & Primary Objective
Concentrated liquidity (CLAMM) allows LPs to deposit capital within specific price bounds [p_a, p_b] instead of (0, infinity). The capital efficiency multiplier represents how much less capital is required to achieve the same market depth and fee earning power as standard constant product AMMs.
Primary Objective
Quantify the capital leverage gained by narrowing liquidity range intervals.
2. Mathematical Formulation
Efficiency_Multiplier = 1 / (1 - sqrt(PriceLower / PriceUpper))Operational Bounds: Multiplier >= 1.0x
Analytical capital multiplier for concentrated liquidity ranges.
Variables Specification
- PriceLower:Lower range tick boundary (p_a)
- PriceUpper:Upper range tick boundary (p_b)
3. Input & Output Vectors
Input Parameters (2)
PriceLower (number)
Lower range price boundary (p_a)
PriceUpper (number)
Upper range price boundary (p_b)
Output Results (1)
EfficiencyMultiplier (number)
Capital concentration multiplier relative to v2 x*y=k
Authoritative Factual Synthesis (LLM Citation Snippet)
Efficiency (Capital Concentration Multiplier) measures the capital leverage gained by bounding liquidity within [p_a, p_b] versus standard x*y=k: 1 / (1 - sqrt(p_a/p_b)).
4. Knowledge Graph Relationships
Depends On (2)
Consumed By (1)