What happens if someone buys all the tokenA in a uniswap concentrated pool?

Question

In concentrated pools, Liquidity Providers can define a price range. Let's LP provides 1 million tokenA (maybe usdt) and 2 millions of tokenB. price of tokenB is 0.5 dollars. If Liquidity Provider defines "0.25-0.75" price range, that means if someone buys up all tokenB, the price of tokenB will be 0.75 dollars.

If there is no more tokenB in the pool, that means there is no more liquidity. What happens in this case? Does the pool still exist?

Answer 1

in fact the liquidity pool keep the same operation system of Automated Market Maker.

Meaning for the Uniswap, AMM: nbTokenA * nbTokenB = K, (asymptotic function).

The range (on concentrated pool, so V3Uniswap) impacts the LP :

• better fee reward if the 'price' stay in the range
• no reward + convert all tokens in the decreased one, if the 'price' is outside the range
• no impact for the other traders

To answer to your question and to make your example easier, let s focus on the 2 tokens you took as example, without considering Dollars conversion.

A trader add 2 new tokens: nb tokenA =1M nb tokenB =2M => K = 2*10^12

Because this function is asymptotic, less there is a token, more you need you need the other token to trade it.

If I trade 500k of TokenA, I will need to bring 2M of TokenB, 500K * (2M + 2M) = 2*10^12

(If I trade to take all TokenA, I ll need to bring Infinite TokenB.)