Dune: 85% of Concentrated Liquidity in DeFi Goes Unused

A large share of liquidity supplied to decentralized exchanges is failing to support trading activity, leaving meaningful fee income on the table, according to a new report from Dune. Concentrated liquidity was designed to improve DEX capital efficiency by letting liquidity providers (LPs) deploy funds within selected price bands where trading is expected to occur. Dune's analysis found that in the first half of 2026, an average of 29.4% of liquidity sat outside the active trading range, generating no fees. The report estimates this translated into roughly $542 million of idle capital per week and about $150 million in foregone annual fee revenue for LPs across four protocols: Uniswap v3, Uniswap v4, PancakeSwap v3, and Aerodrome Slipstream. Looking beyond liquidity that was simply out of range, Dune also measured capital that was technically available but effectively never utilized. By that definition, around 85% of concentrated liquidity was underutilized. The report noted that more than $200 million of idle liquidity had not been repositioned for over 90 days, signaling that many LPs may not actively manage their positions, despite the need to track market prices to stay in range. Dune also found a clear split between automated managers and retail wallets. Automated strategies kept capital more active, while individual investors accounted for most idle liquidity. On Ethereum, wallets held 94% of idle capital and 91% of Uniswap v3 liquidity. On Arbitrum, wallets controlled 92% of idle liquidity and 78% of liquidity overall. On Base, individual users managed 82% of idle capital, even though smart contracts held roughly 50% of total liquidity. The report attributes part of the performance gap to positioning: only 6.5% of automated managers' positions were out of range, compared with about 30% for wallets. The study adds that Uniswap v4 has not materially solved the problem. Despite the introduction of hooks that could enable idle capital to be deployed into external yield strategies, about 30.5% of v4 liquidity remains out of range. Only 10% of v4's TVL currently uses hooks, and none of the active hooks generate yield from idle liquidity at this time. Dune's bottom line: in H1 2026, roughly 29.5% of concentrated liquidity sat outside active trading ranges, and individual investors' holdings made up the bulk of idle capital.