Mitigating Risk

Concentrated Liquidity pools and more specifically the capital efficiency that it provides allows liquidity providers to mitigate their risk to a certain extent. With the ability to earn the same kind of returns with much less capital liquidity providers do not have to expose as much assets as they would have otherwise with Standard Liquidity pools. That's not to say that there is no risk and in fact the potential for things like impermanent loss may have a greater impact and occur with more frequency in Concentrated Liquidity pools but concentrated liquidity definitely provides liquidity providers with more control to fine tune what kind of risk they are taking and can limit that risk if done thoughtfully.