Classic Liquidity

Classic liquidity refers to the original model of Automated Market Makers (AMMs), where liquidity is provided across the entire price range for a given token pair. This was first popularized by Uniswap v2, and remains the simplest and most passive form of liquidity provisioning.

In this model:

• Liquidity Providers (LPs) deposit equal values of two assets into a pool (e.g., ETH/USDC).

• Swaps occur at a constant product formula: x * y = k.

Pros:

• Easy to use – No price range selection or rebalancing needed.

• Always available – Liquidity exists across all price ranges.

• Passive exposure – Good for LPs who prefer simple, set-and-forget strategies.

Cons:

• Capital inefficient – Most liquidity sits unused if prices remain in a narrow range.

• Impermanent loss – LPs are exposed to loss versus simply holding the tokens.

• Less competitive yields – Compared to concentrated or actively managed liquidity.

Why It Still Matters

While concentrated liquidity offer more capital efficiency, classic liquidity remains a great starting point for LPs new to DeFi, or for protocols aiming to seed initial pools with wide coverage and accessibility.

At Lynex, we support both classic and advanced liquidity models — giving users and protocols the flexibility to choose the approach that best suits their goals.