A DeFi liquidity analysis found that a large amount of capital in concentrated liquidity pools regularly sits outside active price ranges.

Around $1.6 billion of tracked liquidity was used inefficiently, while roughly $542 million in some weeks earned no fees and added no market depth.

This happens when an asset’s price moves beyond the range selected by a liquidity provider. The funds remain inside the smart contract but temporarily stop participating in swaps.

The findings highlight the difference between the total value deposited in a protocol and the capital that is actually available to traders at a given price and moment.