As each LP Token on Gnoswap is unique based on its price range and liquidity, LP Tokens are minted as NFTs, called Positions, due to their uninterchangeable nature. To ensure that the underlying tokens and fees due are always derivable, position contracts store the following values:

  • User: The owner's account address.

  • Lower & upper bound: The price range in ticks.

  • Liquidity: The geometric mean of underlying tokens.

  • Collected fees: Accrued fees per liquidity unit.

Within a single pool, the liquidity of positions with overlapping pricing ranges are merged within the same tick, which results in a liquidity distribution that looks like the following graph:

As a result, LP tokens are not fungible and represent a unique position in the pool, allowing for finer control over liquidity provisioning and better capital efficiency.

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