Uniswap V3: Fees Stop When Price Moves Out of Range

Uniswap Labs has clarified that in Uniswap v3, liquidity provider positions stop earning fees once the trading price moves outside the provider's selected price range, with such liquidity classified as inactive. In concentrated-liquidity pools such as ETH/USDC, the position's composition shifts between the two assets while price remains within range, and once price crosses a boundary, the principal is converted entirely into a single asset — the token whose value is falling if price exits below the lower bound. The mechanism matters because inactive positions provide no liquidity to traders and generate no yield for LPs, making active range management a core operational requirement for v3 market makers. Key metrics to monitor include whether LPs rebalance ranges around volatile pairs like ETH/USDC, the share of out-of-range (inactive) liquidity in major pools, and any shifts in fee revenue distribution across Uniswap v3 deployments.