A comprehensive study by Dune has revealed that 85% of concentrated liquidity contributed to decentralized exchanges remains technically available but never used during the first half of 2026. According to the research commissioned by decentralized exchange aggregator 1inch, an average of 29.5% of liquidity was positioned outside the range of active trading, resulting in no trading fees being generated. This translates to approximately $542 million in idle capital per week and an estimated $150 million in lost annual fee income for liquidity providers across four major protocols. The study covered $1.84 billion in average TVL across seven chains, with the out-of-range share staying mostly between 25% and 35%, rising to nearly 41% in early February. Dune tracked Uniswap v3 and v4, PancakeSwap v3 and Aerodrome Slipstream using weekly snapshots from January 6 to June 30.
The study found that individual investors bore the brunt of the underutilization problem, with 94% of idle capital and 91% of Uniswap v3 liquidity controlled by wallets on Ethereum. On Arbitrum, individual users oversaw 92% of idle liquidity and 78% of liquidity, while on Base, individual users controlled 82% of idle capital despite smart contracts holding roughly 50% of the liquidity. This disparity is significant as only 6.5% of positions for individual investors were out of range, compared to about 30% for wallets, indicating that automated managers have been far more successful than individual LPs at maintaining liquidity positions. Positions above $1 million had lower idle rates than tiny positions, yet still held 47% of all idle dollars - around $260 million. The research showed that 54% of liquidity in positions below $1,000 was out of range, compared with 26% for positions above $1 million, yet positions worth more than $1 million accounted for 47% of all idle capital.
The research highlighted a stark performance divide between protocols, with Uniswap v4 showing similar issues to its predecessor. Despite Uniswap v4 adding hooks that might allow idle capital to be used in external yield strategies, 30.5% of its liquidity still remains out of range. More critically, only 10% of v4's TVL actually uses hooks, with none of them currently producing yield from idle liquidity. On constant-product venues, Dune found 98.7% of capital sat outside the daily traded band. The study linked idle liquidity more closely to price movements than to volatility, with a steady price move in one direction being more likely to strand capital than a volatile week that ended near where it began. The research noted that contract-managed positions stayed within a more consistent range, while individual wallets accounted for between 82% and 94% of the attributed idle capital on Uniswap v3, depending on the chain.
The study's findings suggest that despite concentrated liquidity being designed to increase capital efficiency by enabling liquidity providers to distribute funds within specific price ranges where trading is most likely to occur, many LPs still struggle to maintain positions aligned with market prices. 1inch argues that idle liquidity will become more costly as markets grow, more capital will be stranded, and more trading fees will go unearned as liquidity becomes thinner. The research estimated that these out-of-range providers could be missing roughly $150 million in fees each year, based on a blended in-range fee APR of about 35%. However, the research noted that maintaining active positions involves transaction costs, execution risks and exposure to unfavorable price movements. The findings come as retail platforms bring more users and traditional assets onchain and financial firms expand their work on tokenized funds and blockchain-based settlement. The data shows that automated managers, bots, farms, and gauges generally kept capital in range, while individual wallets did not, highlighting the need for better liquidity management tools and strategies.
