Dune Says Idle DeFi Liquidity Leaves $150M in Fees on the Table

Dune Finds $542M Outside Active Liquidity Ranges

Concentrated liquidity lets a provider choose the price band where its assets will be available for swaps. That design was intended to keep more capital near the market price than an older constant-product pool, which spreads liquidity across every possible price.

When the market moves beyond a chosen band, however, the position is out of range. It no longer adds usable depth or collects swap fees unless the price returns or the owner moves the range. Dune called that the strictest measure of idle capital, and said the out-of-range share stayed mostly between 25% and 35% across its six-month sample, with an early-February peak near 41%.

The broader 85% result should not be read as 85% of all DeFi capital being abandoned. It includes 56.9% of v3-family liquidity that remained nominally in range but was not touched by a week’s trades, plus 29.4% that was out of range. Only 13.7% was actively used under Dune’s reconstruction of the methodology described in 1inch’s Aqua paper.

That makes the report useful beyond the headline figure. A pool can display a large deposit balance yet provide limited depth at the price where a trader needs to execute. For a participant comparing liquidity venues, the distance between total value locked and active liquidity can determine price impact more directly than a pool’s headline size.

The finding also adds context to the fee debate in Uniswap’s recent v4 governance proposals. Those proposals focus on how a share of swap fees could be directed to protocol revenue and UNI burns. Dune’s work addresses a separate starting point: how much deposited capital is actually in a position to earn the liquidity-provider portion of those fees.

Uniswap v4 Has Not Eliminated Idle Liquidity

Dune found Uniswap v4’s top 200 pools held about $230 million at the end of June and averaged 30.5% out of range, close to the v3-family results. Version four changes the underlying architecture by using a shared contract and allowing pools to attach custom hooks, but it retains the tick-based ranges that make a position active or inactive.

The hooks are relevant because they could, in principle, route assets that are waiting outside their range into a lending market such as Aave or Morpho. That could let capital earn a different return while it is unavailable for swaps. Dune said none of the hooked pools it examined used a rehypothecation or external-yield hook; the hooks it observed left assets in the pool while changing swap logic, fees or accounting.

The study did not establish that every inactive position is a mistake. Some LPs deliberately place a range away from the current price as a standing limit order, while others use automation to recenter positions. Dune found that 43.8% of out-of-range capital had been touched within 30 days, evidence that some of it was being actively managed rather than forgotten.

Still, the ownership data pointed to a difference between automated and individually held positions. On Ethereum, wallets held 91% of Uniswap v3 capital and 94 cents of each idle dollar in Dune’s analysis. On Base, contracts held about half the Uniswap v3 capital but only 6.5% of that contract-held amount was out of range, compared with roughly 30% for wallet-held liquidity.

The pattern helps explain why managed strategies are becoming more visible. Gauntlet’s institutional DeFi-vault expansion is a different product story, but it reflects the same demand for rules-based management, risk controls and continuous position monitoring rather than a one-time deposit. Those systems add smart-contract, execution and management risks of their own, so a lower idle rate is not by itself a verdict on their suitability.

$150M Estimate Is Not New Fee Revenue for Every LP

Dune estimated that out-of-range liquidity providers forwent roughly $150 million in annual fees. It calculated the result by applying the annualized fee rate earned by in-range liquidity, about 35 cents per dollar over the period, to the idle capital measured on Uniswap and PancakeSwap, then bounding an additional estimate for Aerodrome’s dynamic-fee pools.

The firm put about $116 million of the estimate on Uniswap, $25 million on PancakeSwap and roughly $6 million to $12 million on Aerodrome. It excluded Uniswap v4 because its dynamic fees could not be evaluated with the same fixed-tier method. Those are modeled results, not a transfer of cash Dune identified in a wallet.

Most importantly, Dune said the $150 million is not additive. Swap fees come from trading activity, not from the amount of liquidity deposited. If every idle provider shifted into range simultaneously, more positions would compete for the same fee pool and the yield earned by each active dollar would fall.

The report’s stronger conclusion is about market structure. Dune found that the idle share rose with the size of a weekly price move, while frequent small moves alone were less important. In a steady one-way market, ranges can be left behind just as traders need depth, while an equally volatile move that returns to its starting point can leave more positions active.

That tension matters for tokenized assets and other institutional uses of decentralized exchanges. The BUIDL trading route through UniswapX showed how traditional products can reach onchain liquidity through a controlled request-for-quote flow. Dune’s data suggests that the quality and placement of that liquidity remain as important as the size of the balances displayed on a protocol.

Market sentiment was still cautious around the publication. The Crypto Fear and Greed Index read 27, or Fear, on July 17, a broad-market reading that does not measure demand for any specific DEX pool.

The next evidence to watch is whether new v4 hooks, managed vaults or incentive designs reduce the out-of-range share without simply shifting risk elsewhere. Dune’s current conclusion is narrower: concentrated liquidity has improved on older automated-market-maker designs, but deposited capital and usable trading liquidity are still far from the same thing.