> For the complete documentation index, see [llms.txt](https://sparklexai.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://sparklexai.gitbook.io/docs/fundamentals/liquidity-mechanics.md).
# Liquidity Mechanics
### **Classic AMMs**
Old-style pools such as Uniswap v2 spread your liquidity across every possible price. The good news is simplicity — you set it once and walk away. The downside is efficiency — most of your capital sits where trades rarely happen, so the fees you collect per dollar are thin.
### **Concentrated-Liquidity AMMs (CLMMs)**
Platforms like Uniswap v3 let you choose a price band. Park capital near the current market price and you stand where trading volume is hottest, which means a much larger slice of every swap flows to you. The trade-off is attention. Once the market price leaves your band, fee flow drops to zero until you move the position.
### **Timing Matters**
Re-ranging costs gas. Move too often and fees get eaten; move too late and you miss trades. The sweet spot lives between those extremes and depends on volatility, gas prices, and trade volume. That’s hard to juggle manually—especially across multiple chains.
### **Where SparkleX Helps**
SparkleX Farming Vaults handle the whole cycle for you:
* Watch price and volatility to keep your liquidity **in range** where fees are highest.
* Pull, harvest, and **auto-compound** earned fees and incentives back into the position.
* Adjust band width when markets calm, widen when they chop, and hedge during sharp moves to reduce impermanent loss.
Done right—and done on time—the extra fees from staying in range easily outweigh the gas it takes to move. SparkleX automates that timing so your liquidity works like a pro, even when you're offline.
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