Approximately 29.5% of liquidity on major decentralized exchanges remained outside active trading ranges during the first half of 2026, according to a recent report. This idle capital amounted to roughly $542 million per week, costing liquidity providers an estimated $150 million in lost annual fee income across four protocols: Uniswap v3, Uniswap v4, PancakeSwap v3, and Aerodrome Slipstream. Overall, about 85% of capital was underutilized. Individual investors owned the majority of idle liquidity, while automated managers kept funds active. Even Uniswap v4, with its new hooks feature, saw 30.5% of liquidity out of range, and only 10% of its total value locked actually uses hooks.
Concentrated liquidity was designed to improve capital efficiency by allowing liquidity providers (LPs) to allocate funds within specific price ranges where trading is most likely. However, the study found that an average of 29.4% of liquidity was outside the range of active trading during H1 2026, generating no trading fees.
This idle capital represented approximately $542 million per week, with an estimated $150 million in lost annual fee income across the four protocols. Considering technically available but never used liquidity, roughly 85% of capital was underutilized.
More than $200 million in idle liquidity had not been repositioned in over 90 days, suggesting many LPs do not actively manage their holdings. This indicates that even though concentrated liquidity should increase efficiency, many LPs struggle to keep positions aligned with market prices.
The study also found that automated managers maintained capital activity, while individual investors owned the majority of 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 total liquidity. On Base, individual users managed 82% of idle capital, even though smart contracts held roughly 50% of liquidity.
Only 6.5% of automated manager positions were out of range, compared to about 30% for wallets. This indicates that automated managers have been far more successful at maintaining liquidity than individual LPs.
The idle liquidity issue has not been resolved by Uniswap v4. Like Uniswap v3, about 30.5% of its liquidity is still out of range, even after hooks were added that could allow idle capital to be used in external yield strategies. Only 10% of v4’s total value locked actually uses hooks, and none of them currently produce yield from idle liquidity.
