> For the complete documentation index, see [llms.txt](https://docs.tren.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tren.finance/get-started/what-is-tren-finance/concentrated-liquidity-positions.md).

# Concentrated Liquidity Positions

Hedge against impermanent loss on your concentrated liquidity positions

<figure><img src="https://548124530-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F1RFiSnFFNN5tL05uK9pV%2Fuploads%2FB1VoBMdgKB0uv6MIel9H%2Fconcentrated%20liq.png?alt=media&amp;token=51851c70-e7d4-48e5-92d5-48d46969e6c7" alt=""><figcaption></figcaption></figure>

**Step 1:** The user creates a concentrated liquidity position in UniswapV3 for ETH-USDT within a selected price range to maximize capital efficiency, receiving an LP NFT to represent their position.

**Step 2:** The user deposits their concentrated LP NFT as collateral in Tren Finance to borrow XY while maintaining liquidity provision rewards.

**Step 3:** Maintain liquidity rewards while reducing impermanent loss exposure through [hedging](https://www.investopedia.com/trading/hedging-beginners-guide/#:~:text=Hedging%20is%20a%20risk%20management,provides%2C%20known%20as%20the%20premium) with the following benefits:

* Reduced IL exposure while maintaining full LP rewards&#x20;
* Capital efficient liquidity provision in target range&#x20;
* Automated position management through hooks

<figure><img src="https://548124530-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F1RFiSnFFNN5tL05uK9pV%2Fuploads%2FI2bIxxzBkgeSldYvtVt6%2Fstrategy3.png?alt=media&amp;token=62a64762-8592-4ba1-9553-de008d9e6972" alt=""><figcaption></figcaption></figure>