Concentrated Liquidity

In Uniswap V3, LPs have the ability to concentrate their capital within custom price ranges, which means they can provide more liquidity at desired prices. This is done by creating individualized price curves that reflect the LP's preferences. However, if the market prices move outside of an LP's specified price range, their liquidity is effectively removed from the pool and they won't earn any fees until the price comes back in range or they update their price range.

In Uniswap V3, fee earnings are stored separately as tokens in which the fees are paid because of the non-fungible nature of positions. The custom liquidity provision feature in Uniswap V3 allows for the collection and holding of fees by the pool as individual tokens, instead of automatically reinvesting them as liquidity in the pool. Moreover, trading fees are no longer automatically reinvested back into the pool on LPs' behalf.

This allows LPs to have more control over their liquidity provision and fee collection, which in turn enables greater customization of trading strategies and potentially higher returns.

Risk

It is important for liquidity providers to carefully consider and set their price range when providing liquidity to a pool. If the market price moves outside of their specified range, their liquidity becomes concentrated in the less valuable asset, and they will not earn fees until the price moves back into their range or they update their range to account for current prices. But after locking the position NFT for lending on DeFi Pool Share smart-contract, users will be unable to modify their range until the end of the loan duration or when they're able to withdraw their NFT.

Read more on Uniswap: https://docs.uniswap.org/concepts/protocol/concentrated-liquidity